2010 (11) TMI 55 - HC - Income Tax

Waste Bones - under the Trading Account - total purchases were made in cash Sellers of meat were not available at the addresses and were not produced before AO for examination and for verification of weight and the rate of sale - Building Repair Expenses - expenditure related to the capital works - Buiding repair at Meerut - Building was on rent from a person specified under section 40(A) (2)(b) and copy of Agreement was not produced to prove that the repair expenses were to be borne by the Tenant - disallowance of out of Transport charges - Inquiry Letters u/s 133(6) sent to the Transporters at the addresses furnished were either received back Unserved or the replies were not received and the assessee failed to produce the Transporters - Held that - amount were for Bilding Repair & Maintenance at Mumbai and Meerut is revenue expenditure - payment has been made to the butchers whose genuineness has never been doubted - regular bills issued by the respective transporters and similar disallowance were deleted in the sister concern - Appeal is dismissed

Summary

Issues:
Appeal by Income Tax Department against Tribunal's order for assessment year 2001-02 under the Income Tax Act, 1961. Department raised five substantial questions of law: 1. Reduction of addition for 'Waste Bones' in Trading Account. 2. Deletion of 'Building Repair Expenses' as capital expenditure. 3. Deletion of disallowance for 'Building repair at Meerut'. 4. Deletion of addition under section 40A(3) of the IT Act, 1961. 5. Deletion of disallowance for Transport charges.

Analysis:
1. The Tribunal decided in favor of the assessee for the first question based on a previous judgment related to a sister concern. The department's appeal against the judgment was dismissed, and the first question was deemed to have no merits.

2. Regarding the second and third questions, the Tribunal found that the amounts were for 'Building Repair & Maintenance' at specific locations, Mumbai and Meerut. These findings were considered factual, and no illegality was found in them.

3. Concerning the fourth question, the Tribunal deleted the addition made under section 40A(3) of the Act, as the payments to butchers were deemed genuine. This finding was also considered factual, with no illegality noted.

4. As for the fifth question, the Tribunal deleted the sum related to Transport charges, as they were supported by regular bills from transporters, and similar disallowances were overturned in a sister concern. No substantial question of law arose, and the appeal was dismissed for lacking merit.