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TMI Blog2012 (9) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... wability of discount of Rs. 20,37,506 was the figure considered by the Assessing Officer in his order when it was considered by the Assessing Officer that discount amounting to Rs. 61,12,431 have been claimed as irrecoverable debt by the assessee. On the assessee's submission before the learned CIT, the learned CIT did not appreciate that the expenditure of Rs. 20,37,506 was categorically allowed by the Assessing Officer as discount in accordance with the provisions of Section 36(1)(vii) of the I.T.Act,1961 on the identical findings. 3. Initiating his arguments, the learned Counsel for the assessee submitted that the assessee had claimed of Rs.1,51,242 and Rs.1,312 towards demand tax and fringe benefit tax respectively under the head "Expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the computation of assessable total income being not examining the conditions laid down U/s. 36(i)(vii) of the IT Act." In this context, the learned Counsel for the assessee perused paragraph-1 of page-2 of the order of assessment, which reads as under: "The assessee-company had claimed expenditure under the head discount allowed amounting to Rs.81,49,937.00 out of which Rs.14,27,312.00 was on account of debit note allowed to Sree Metaliks Ltd. being net debit note adjusted after charging interest on L/c. A further discount of Rs.61,12,431.00 was also allowed to Sree Metaliks Ltd. on account of debit note issued by them for supply of low grade coke. From the perusal of account it transpired that Sree Metaliks had to pay Rs.61,12,431.00 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the details of expenses at Schedule-15 under Annexure-1 page-31 of the paper book in the head of A/c. "Discount allowed" at Rs.81,49,937.67. The AO has examined the same in details and disallowed Rs.61,12,431 by expressing his opinion as the said claim has not backed up by any documentary evidence like report from Laboratory or from a competent valuer. But, while allowing Rs.20,37,506 the AO has fully satisfied as the same amount is discount as clearly revealed from the ledger A/cs. of the said parties as follows:- i) SRG Minerals and Metal Discount Rs.9,985.00 Page-34 of paper book under Annexure-2 ii Sree Metaliks Ltd. disallowing the debit not for Rs.61,12,431.15 out of claim of Rs.75,39,743.16 page-36 of paper book under Ann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve done more or should have acted in a manner which is considered by the CIT as more appropriate. Even though, CIT does not have power U/s. 263 to divest AO to verify the expenses incurred or not incurred by the Assessee. Hence, entire action u/s. 263 is completely illegal ought to be quashed as per the facts and circumstances of the case. The learned Counsel for the assessee relied on various decisions namely, Fab India Overseas (P) Ltd v. CIT [244 CTR (Del) 380], Puranlal Agrawal (HUF) v. CIT (29 VST 214 Madras),Gujrat Road & Infrastructure Co. Ltd., v. CIT [139 TTJ (Ahd.B.Trib) 718], and Development Construction & Allied Services (India) P. Ltd v. Income-tax Officer [12 Taxmann.com 327 (Mum ITAT)]. 3.2. The learned Counsel for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 81,49,937.00 out of which Rs. 14,21,312.00 was on account of debit note allowed to Sree Metaliks Limited being net debit note adjusted after charging interest on L/c . A further discount of Rs.61,12,431.00 was also allowed to Sree Metaliks Limited on account of debit note issued by them for supply of low grade coke. From the perusal of account it transpired that Sree Metaliks had to pay Rs. 61,12,431.00 as on 31.03.2006 . By allowing the debit note of Rs.61,12,431.00 without contesting the contention of their debtor regarding supply of substandard coke which was not backed up by any documentary evidence like report from the laboratory or from a competent valuer, the assessee had in fact written off a debt almost unilaterally without comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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