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2023 (4) TMI 527 - AT - Income TaxDisallowance of some portion of cost of material consumed - Non rejection of books of accounts - HELD THAT - We find that neither ld. AO nor ld. CIT(A) had pointed out any specific discrepancy in the audited books of accounts of the assessee nor books of accounts are rejected and disallowance of some portion of cost of material consumed expenses is merely on the basis of conjectures and surmises which cannot be held justified and since ld. D/R has failed to place any contrary material to doubt the book results, therefore, the estimate disallowance made by ld. AO as well as ld. CIT(A) cannot be accepted. Hence, the impugned disallowance made by ld. AO @ 5% of material consumed is deleted. Accordingly, the ground no.1 raised by the assessee is allowed and that of the Revenue is dismissed. Addition under the head of Vehicle Running Expenses and Repairs Maintenance - CIT(A) allowed the claim of the assessee and deleted the addition made by ld. AO on this account with the finding that that ld. AO should have conducted relevant enquiries, made some comparisons with other assessees placed in same situations or other assessees working in similar locations and should have also pointed out specific expenses which, based on such relevant enquiries, were exaggerated but the same was not done by ld. AO - HELD THAT - In order to disallow expenses, rather than making a bald assertion without any enquiry to assail the so called exaggerated expenses of the assessee, ld. AO should have conducted relevant enquiries, made some comparisons with other assessees placed in same situations or other assessees working in similar locations and should have also pointed out specific expenses which, based on such relevant enquiries, were exaggerated. However, no independent third-party enquiries were conducted by ld. AO and no comparisons were made by ld. AO. In the absence of relevant enquiries and relevant comparisons, no part of the expense claimed by the Appellant could have been treated as exaggerated expense' or not reasonable expense . The onus is on the Revenue to establish that the expenses claimed by the assessee has been booked twice in the books of accounts. However, the Revenue has not brought in any evidence before this Tribunal to show that the expenses has been booked twice. Before us, ld. D/R has not identified or pin pointed even a single transaction or a single instance in any of the corresponding ledger accounts (i.e. pertaining to the Vehicle Running Maintenance Expense and pertaining to the Machinery Repair Maintenance Expense) which would prove that the assessee had debited/claimed a particular expense item more than once as alleged. Therefore, we are inclined to hold that the claim of the assessee on account of vehicle running expenses on account of repairs maintenance expense deserves to be allowed. We, further hold that none of the expenses as alleged by ld. AO above have been claimed twice by the assessee. Therefore, no infirmity is called for in the finding of ld. CIT(A) and, thus, dismiss ground no. 2 raised by the Revenue. Addition under the head of excess depreciation applying 15% rate as against 30% claimed by the assessee - HELD THAT - Since the issue of excess depreciation is squarely covered against the Revenue by the decision of Coordinate Kolkata Benchin 2019 (3) TMI 1702 - ITAT KOLKATA and since ld. D/R failed to put forth any binding precedence in its favour, we fail to find any infirmity in the finding of ld. CIT(A) deleting the disallowance of excess depreciation of Rs. 3,23,72,494/-. Accordingly, Ground No. 3 raised by the Revenue is dismissed. Disallowance u/s 14A r.w.r 8D - Suo moto addition made by assessee - HELD THAT - This issue is no more res-integra as held in the case of PCIT Vs. Era Infrastructure (India) Ltd 2022 (7) TMI 1093 - DELHI HIGH COURT that the amendment made in Section 14A of the Act by Finance Act, 2022, will be applicable prospectively and also held that disallowance u/s 14A of the Act should not exceed the exempt income earned by the assessee during the year. Thus we hold that disallowance u/s 14A of the Act cannot exceed the exempt income earned by the assessee and the same holds good prior to amendment made in Section 14A of the Act by Finance Act 2022. Thus, no infirmity is called for in the finding of ld. CIT(A). Accordingly, Revenue s ground no.4 is dismissed. Assessment u/s 153A - Deduction claimed u/s.80IA - whether fresh claim of deduction u/s 80IA(4) of the Act can be made in returns filed pursuant to section 153A of the Act when the same has not been claimed in original returns u/s 139? - HELD THAT - In the instant case, since the Returns of Income filed u/s 153A(1) of the Act for the impugned assessment years substituted the original Returns filed u/s 139(1) of the Act, the said Returns u/s 153A(1) of the Act would be construed as the one filed u/s 139(1) of the Act and as specifically laid down u/s 153A(1)(a) of the Act, all the provisions of the Act including Chapter VI-A and the impugned deduction u/s 80IA(4) of the Act would apply to such Returns u/s 153A of the Act and the assessments u/s 153A of the Act framed pursuant thereto. We are, thus, of the considered view that the assessee in the instant case was entitled to all legitimate claims of deduction, including its claim u/s 80IA(4) of the Act, in its Returns filed pursuant to Notices issued u/s 153A for the impugned A.Ys although the same were not claimed in its original Returns u/s 139 of the Act. Assessee in the instant case was very well within its rights to claim deductions u/s 80IA(4) of the Act in its Returns filed in compliance to Notices issued u/s 153A of the Act in respect of pending/abated assessment proceedings for the impugned AYs 2017-18, 2018-19 2019-20 although such deductions were not made in the original Returns filed u/s 139(1) of the Act (prior to search) and such claims were also not raised vide revised Returns of Income filed u/s 139(5) of the Act. Disallowance of deductions claimed by the assessee u/s 80IA in returns filed pursuant to notice issued u/s 153A of the Act on the ground that the assessee did not furnish audit report and particulars for claim of deduction u/s 80IA of the Act within the specified time - Where the Return u/s 153A of the Act is filed within the time permitted u/s 153A of the Act, the same is to be taken as filed within the time limit as per section 139(1) of the Act. Thus, where the Audit Report in Form 10CCB is furnished on or before the time allowed for filing Return of Income in the Notice issued u/s 153A of the Act, the said Form 10CCB is to be taken as filed on or before the time permitted u/s 139(1) of the Act and thus within the time allowed u/s 80IA(7) r.w.s 80AC. See Shrikant Mohta vs. CIT 2018 (8) TMI 200 - CALCUTTA HIGH COURT Decided in favour of assessee.
Issues Involved:
1. Disallowance of cost of material consumed. 2. Disallowance of vehicle running expenses and repairs & maintenance. 3. Disallowance of excess depreciation. 4. Disallowance under section 14A read with Rule 8D. 5. Fresh claims of deduction under section 80IA in returns filed under section 153A. Summary: 1. Disallowance of Cost of Material Consumed: The Tribunal examined the disallowance of Rs. 9,58,27,184/- made by the Assessing Officer (AO) on an estimated basis at 5% of the cost of material consumed. The CIT(A) reduced this to Rs. 2,15,53,154/- (0.64% of gross receipts). The Tribunal noted that the AO did not reject the books of accounts nor provided any evidence to show the expenses were not genuine. The Tribunal held that without rejecting the books of accounts, the AO cannot make an estimated disallowance. Therefore, the disallowance made by the AO was deleted. 2. Disallowance of Vehicle Running Expenses and Repairs & Maintenance: The AO disallowed Rs. 84,89,467/- for vehicle running expenses and Rs. 1,86,95,467/- for repairs & maintenance, alleging they were claimed twice. The CIT(A) deleted the disallowance, noting that the AO did not identify any specific instances of double claims. The Tribunal upheld the CIT(A)'s decision, emphasizing that the AO's disallowance was based on suspicion without concrete evidence. 3. Disallowance of Excess Depreciation: The AO disallowed Rs. 3,23,72,494/- by applying a 15% depreciation rate instead of 30%. The CIT(A) allowed the assessee's claim, relying on the Tribunal's earlier decisions in the assessee's favor. The Tribunal upheld the CIT(A)'s decision, noting that the issue was already adjudicated in the assessee's favor in previous years, and there was no change in facts or law to warrant a different view. 4. Disallowance under Section 14A read with Rule 8D: The AO disallowed Rs. 3,05,471/- under section 14A read with Rule 8D, while the assessee had already disallowed Rs. 11,600/- being the exempt income earned. The CIT(A) restricted the disallowance to the exempt income earned, following judicial precedents that disallowance under section 14A cannot exceed the exempt income. The Tribunal upheld the CIT(A)'s decision. 5. Fresh Claims of Deduction under Section 80IA in Returns Filed under Section 153A: The AO disallowed the fresh claims of deduction under section 80IA made in returns filed under section 153A, arguing they were not claimed in the original returns filed under section 139(1). The CIT(A) allowed the claims, noting that returns filed under section 153A substitute the original returns and should be treated as filed under section 139(1). The Tribunal upheld the CIT(A)'s decision, stating that the assessee was entitled to make fresh claims in returns filed under section 153A, and the audit reports in Form 10CCB filed within the time permitted under section 153A should be treated as filed within the time specified under section 139(1). Conclusion: The Tribunal allowed the assessee's appeal for AY 2014-15 and dismissed the Revenue's appeals for AYs 2014-15, 2017-18, 2018-19, and 2019-20, upholding the CIT(A)'s decisions on all issues.
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