9911796707
TMI Blog2012 (12) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... med that the materials had been discarded - write off on account of discarded material allowed by giving benefit to the assessee that the goods have been “discarded” five years back, the same can never be traced or even found at the present moment. Even in the books the assessee has treated the same as discarded and therefore written them off - direct the AO to allow the claim of write off as discarded materials Disallowance of depreciation - disallowance of depreciation claimed on building and furniture – Held that:- Even if the unit is closed for production activity, some activity or even the usage of the factory and furniture and fixture, even by the chowkidar, who is employed to keep a watch and upkeep of the premises would be there - accounts are maintained by the assessee - direction to the AO to allow the depreciation as per law to the “assessee” – ground allowed for statistical purposes Non-consideration of additional ground of appeal - claim for allowance of set off of brought forward losses – Held that:- Assessee had filed additional ground of appeal. This ground, though filed well in advance has not been adjudicated. He, therefore, prayed that this issue has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no manufacturing activity carried on from there, but in the unit at Daman, there was certain manufacturing activity. 4. During the course of assessment proceedings, the AO called for details concerning stock, sales and purchase and production. From these details, the AO found that in the year under consideration the assessee had shown sales of Rs. 51,41,285/- and in the details filed with the return the sales shown were at Rs. 39,85,784/-. On being enquired, the assessee submitted vide letter dated 16-07-2008 that it was the sale of fixed assets worth of Rs. 11,81,900/- which was erroneously included in trading sales. From the monthly statements on production and sale, as given to the bank, the AO concluded that there was actually a discrepancy of Rs. 11,81,900/-. The AO has reproduced the table, which is as under: Month Value of closing Finished stock (A) Rs. Value of closing finished stock (B) (Rs.) Total value of Closing Stock at the End of the Month (Rs.) (A+B) Production during the month (Meters) Sales shown during the month as per the statements submitted to bank (Rs.) Sales shown as per books of accounts (Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bank. The contention made by the assessee that more weight has to be given to the excise record than the bank statement is hearsay in view of the facts mentioned herein above. Moreover, clerical mistakes as contended can not be twice as production quantity also differs. In this regard it is worth mentioning to note that the assessee has merely filed the invoice of sale of machineries without supporting the same with proof of delivery and receipt of sale proceeds in any bank statement so as to substantiate its claim in a meaningful manner. In view of the above facts of the case I am of the humble opinion that the contention of the assessee on the issue us untenable . 7. Before the CIT(A), the assessee further placed on record, copy of general ledger, bank statement, delivery challan, consignment note of transporter, which the CIT(A) considered as fresh evidence and rejected them by holding that there existed no reason by which the appellant was prevented in producing them before the AO. The CIT(A) thus, sustained the observation of the AO that the details as asked for were not submitted before the AO. He, therefore, sustained the addition. 8. Aggrieved, the assessee is b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d need the approval of the seniors of the appellant company. Therefore bank statement submitted cannot be taken to be a wrong statement regarding clerical error . He, therefore, concluded that the addition is correctly made. 11. We have heard the arguments of both sides and perused the material placed on record. We must observe that the DR at no point of time has categorically objected to the evidence placed in the APB, which incidentally had been rejected by the CIT(A). From the evidence in the APB, we find that the assessee has placed before the CIT(A) copy of ER 1 and invoice of sale of DG set along with certain other machine items worth Rs. 11,81,900/-. We find from the order of the revenue authorities that the AO had so heavily rely upon the suppression of sales that he ignored the facts which were before him and on which basis he prepared the table, that has been reproduced in the assessment order, and the AO holds that during the month of July, 2005, there was total sale of Rs. 11,83,300/- on production of 8 meters of finished products. We are unable to accept this argument of the AO, wherein he observes, If production of 8 meter was taken into account, the sales should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and damaged conditions. These being absolute stocks the same could not have been sold even as scrap the details are attached herewith. It may please be noted that this obsolete stock found only after the entire production activity was stopped in July 2005 and cleaning up of factory was taken up thereafter, hence written off . This reply, of the assessee was considered by the AO, but he did not agree with the contentions, according to him, the assessee was manufacturing PVC insulated wire cables, which cannot get damaged by rain, easily. The AO, therefore, rejected the submissions made and added back the stock written off or discarded. 17. Aggrieved, the assessee approached the CIT(A), before whom, the assessee reiterated its submissions made before the AO and in addition to that placed and copy of report by the Chartered Engineer (CE) dated 30-06-2006. The CIT(A) observed that the assessee had not produced the stock register nor had it specified the mode of disposal of the discarded stock and why the report of CE was not placed before the AO. The CIT(A), thus held that the onus to establish the claim lies with the assessee. The CIT(A) observed that the main document being the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. Even in the books the assessee has treated the same as discarded and therefore written them off. 22. We, therefore, set aside the order of the CIT(A) on this issue and direct the AO to allow the claim of write off as discarded materials at Rs. 13,00,000/-. 23. Ground No. 6 is against the disallowance of depreciation at Rs. 1,79,376/-. 24. The facts emanating from the assessment order are that the AO has rejected the claim of depreciation claimed at Nashik unit. The assessee had claimed depreciation at Rs. 1,77,028/- on factory building and Rs. 2348/- on furniture and fixture. The AO observed that since manufacturing and business activities are not carried out from this factory, the claim for depreciation is rejected. 25. Being aggrieved, the assessee approached the CIT(A) on this issue, where the assessee furnished details on depreciation claimed by the assessee (for both the units). The CIT(A) restored the issue to the file of the AO to verify the exact depreciation claimed on factory building, furniture and fixture etc. at Nashik from the records available with them and disallow the same . 26. Before us, the A.R. submitted that depreciation is computed on the bloc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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