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TMI Blog2012 (9) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... cer could not be controverted by the assessee. Restrict the disallowance upto 50% of disallowed amount. Addition on account of Bad debts – AO disallow the same on the basis of that the assessee had not taken any steps to recover the bad debts – Held that:- As the assessee submitted that these are really not bad debts but various outstandings on account of sales which should have been reversed. Issue remand back to AO. Disallowance on account of stipend to trainees - Training was given at the factory premises by the Senior Member of the factory - AO noted that no statistical data, no dates of training, no agenda of the training, no venue of the training are submitted – Held that:- As concluded from the facts of the case addition made by the AO on the ground that such huge expenditure under the head “stipend” does not look justified. Merely because the disallowance is a small percentage of the total expenditure cannot be a ground for sustaining the addition. If the claim is bogus, the entire amount has to be disallowed and if not bogus the whole amount should be allowed as deduction but no adhoc addition can be made on the basis of presumptions and surmises. Therefore disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year was shown at 84.51% as against the yield of 83.51% in the preceeding assessment year which was given to the AO during the course of assessment proceedings vide letter dated 15-12-2008. After considering the work in progress a revised statement was filed before the CIT(A) according to which the yield for the impugned assessment year was 85.76% as against 86.18% in the preceeding year. Accordingly it was submitted that although there is a minor fall in the yield for the impugned assessment year, however, this fall in yield is due to various factors and cannot be a ground for making the addition. It was submitted that in view of the higher waste and lower production the assessee has to modulate/revise and adopt the working to suit customers requirement. For bringing those changes also some trial and errors are required initially which results in wastage depending on the number of times the changes are to be brought in. It was submitted that interruption in power supply is also one of the reason for wastage as the batch in progress at the time of interruption of power gets affected. The various stages through which the production takes place was explained to the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Assessing Officer has a ground to resort to estimate disallowance out of the value of lower yield claimed in this year. The addition has been made at ₹ 3,00,000/- on estimate basis. On consideration of totality of the facts and circumstances available, I find that the estimation is on the higher side as the fall in yield is not very significant. In my considered opinion, the disallowance can be restricted to ₹ 1,00,000/-. The assessee therefore, gets part relief and this ground of appeal is held partly allowed. 5.1 Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 6. We have considered the rival submissions made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. We find the AO made the addition due to variation in the yield and higher wastage as compared to the preceeding assessment year and made adhoc addition of ₹ 3 lakhs to the total income of the assessee. We find on the basis of the various arguments advanced by the assessee the learned CIT(A) sustained addition of ₹ 1 lakh although he has observed that the assessee has demonstrated clearly that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has submitted details in respect of various expense heads as well as list of deposits closing stock etc. however, neither the details in respect of carriage inward/outward was submitted nor any evidence was produced or claim made about the genuineness of self made vouchers questioned by the AO. He further noted that the disallowance of ₹ 1 lakh out of the total expenses of ₹ 66.48 lakhs is slightly more than 1% which is reasonable. He accordingly upheld the addition made by the AO. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 11. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. The finding given by the learned CIT(A) that as per the letter dated 26-08-2008 addressed to the AO, (a copy of which was submitted during the course of appeal proceedings) neither the details in respect of carriage inward/outward was submitted nor any evidence was produced or claim made about the genuinuity of self made vouchers questioned by the Assessing Officer could not be controv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 550098.00 3 Hotlilne Electronics Ltd. Plot No.8A, Udyog Vihar, Part-I II, Noida, G.B. Nagar, Noida (JP) 175833.75 TOTAL 1550970.75 16. On being questioned by the AO it was submitted that the amount of ₹ 8,25,039/- in the name of Bigesto Foods Pvt. Ltd., has been recovered in the subsequent year and offered for taxation in the assessment year 2008-09. Therefore, the AO did not make any addition on this amount. However, as regards the other 2 parties which has been claimed as bad debt the AO rejected the claim of the assessee on the ground that for claiming such deduction the assessee has to prove that ; i) The transaction has been out of routine business ii) The transaction had been offered for the purpose of computation of income in the earlier years. iii) Sufficient recovery steps have been taken. iv) Recovery steps taken have proved to be futile. v) There is no possibility of recovery in the near future. 17. Since in the instant case the assessee has not taken any steps to recover the bad debts the AO disallowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raining. It was submitted that the training was given at the factory premises by the Senior Member of the factory. No specific agenda of the training was submitted except copies of the application seeking an employment. From the various details given by the assessee the AO noted that no statistical data, no dates of training, no agenda of the training, no venue of the training are submitted. The reply given by the assessee is a general statement. Therefore, according to the AO there is no justification for payment made as stipend to the trainees. According to him stipend is nothing but salary/wages payment made by the assessee to the workers. He observed that if stipend is clubbed with manufacturing wages/salary, there appears to be excessive payment. Rejecting the various explanations given by the assessee the AO made adhoc disallowance of ₹ 4 lakhs and added the same to the total income of the assessee. 21. In appeal, the learned CIT(A) upheld the addition made by the AO by holding as under : I have carefully considered the issue in appeal as is emanating from the assessment order as well as from the submissions of the appellant. The appellant has claimed an expe ..... 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