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TMI Blog2013 (10) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunity of hearing to the Assessing Officer so that the requisite information could have been verified. It is not a simple disallowance on ad hoc basis, but the impugned 1/7th disallowance was made by the Assessing Officer due to the gross failure on the part of the assessee. The situation was not that the assessee has produced books of account and got verified the reasonableness as well as the genuineness of the expenses, but even then a partial adhoc disallowance was made. Rather the admitted position is that the assessee has not substantiated the genuineness or the reasonableness of the claim of expenses, though the opportunity was granted to the assessee - Issue restored back to the stage of first appellate authority. CENVAT Credit - excise duty on capital goods not considered - Deduction under Service Tax and Excise Duty claimed - Held that:- The assessee had not claimed any depreciation on service tax/Excise portion of capital goods. The same had been utilized for payment of excise. The learned AO had verified all the aspect and allow the deduction - Decided against Revenue. - ITA No.1173/Ahd/2010 - - - Dated:- 31-5-2013 - G C Gupta and T R Meena, JJ. For the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd. The services provided are composite and can be termed as business support services also. The company is providing sitting facilities in a well furnished centrally air-conditioned corporate house. It also allowed uses of its computer and also provided services of data processing staff. Such addition made in the A.Y. 2002-03 and 2003-04 has already been deleted in appeal by the CIT(A). However, AO has given various reasons to make addition i.e. no justification, no detailed bills or vouchers, reasonableness of expenses, total salary and wages paid by the appellant and the assessee company was having sufficient and other infrastructures on its own. It was not necessary for the assessee to make huge payment under the head House Keeping Expenses to its sister concern. Thus, he made addition of Rs.12 lakh. 3. The assessee carried the matter before the CIT(A) who had deleted the addition by observing as under: I have considered the facts and submission of the Ld. AR carefully. In terms of the provisions of section 40A(2)(b) of the Act, the Assessing Officer is required to demonstrate that the amount paid by the appellant to its sister concern is excessive and unreasonab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that at the moment there is nothing left for our afresh adjudication of the issue. Furthermore, once for the same assessment year, i.e. Assessment Year 2003-04 in one of the sister-concerns' case, which is also a service receiver as the assessee is, it had already been held by the Ahmedabad Tribunal that the payment was not excessive and the transaction was genuine, therefore, the view taken on the same lines by the first appellate authority for the year under consideration in assessee's case as well ought to be affirmed. We hold accordingly. Thus, the first ground in both the assessment years of the Revenue is hereby dismissed. By following respectively the decision of the Hon ble ITAT Ahmedabad Bench B Ahmedabad in the assessee s own case on identical issue, we are of the considered view that no interference in the order of learned CIT(A) is required. Thus, we dismiss the appeal of the revenue. 6. The second and fourth grounds of appeal is against disallowance to the tune of Rs.6,00,000/- instead of Rs.13,07,470/- deleting the addition of courier charges made by the Assessing Officer out of miscellaneous expenses and courier charges. The AO held that assessee had debit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the machinery, etc. The miscellaneous amount includes house keeping charges, commission, rate differences and exchange rate differences. The AO had not examined the details of the miscellaneous expenses. However followed the earlier years order. Further the earlier year order has been set aside by the Hon ble ITAT and full expenses have been allowed in appeal effect order by the AO. He further argued that the assessee is not in appeal before the ITAT but he is in support of the order of the Revenue. He relied upon the decision of Hon ble ITAT Ahmedabad in the case of DCIT Vs. Sandeep Patel and wherein it has been held that Hon ble ITAT has got powers to grant relief to the expenditure even though the appellant is not in appeal. The learned AO had not appreciated the fact that these expenses were incurred in the interest of business and for commercial expediency during the year. The learned CIT(A) had confirmed the addition of Rs.6,00,000/- by following the decision of the assessee s case in preceding year and in the interest of justice the full expenditure may be allowed even the appellant had not filed appeal or cross appeal by relying upon the decision of Hon ble Gujarat High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Assessing Officer had adopted a very reasonable ratio of disallowance which could have been affirmed by the first appellate authority. From the side of the assessee, Learned Authorised Representative of the assessee Shri Nimish Vayawala has tried to explain that there was no substantial variation in percentage claim of expenses if compared with the past years hence it was totally allowable. The Learned Authorised Representative of the assessee filed a Chart showing the comparative figures of above few years. It could have been possible that there was no substantial variation in the percentage of expenses, but it is also an admitted position that the ratio of expenses under question was not uniform if compared with the past history of the case. The details and the Charts produced before us have depicted the same information. In such a situation, it was expected from the first appellate authority to either called-for a remand report or in the alternate would have granted an opportunity of hearing to the Assessing Officer so that the requisite information could have been verified. It is not a simple disallowance on ad hoc basis, but the impugned 1/7th disallowance was made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.73,80,899/- was made by him. The assessee carried the matter before the CIT(A) who has set aside the issue to the AO and directed to allow the MODVAT credit after verifying the CANVET credit Rules 2004. 12. The revenue is before us. It was contended by the Revenue that the Section 145A amended and all taxes, duties, cess, etc. is to be included in opening stock, purchase and sale and closing stock to determine the correct income of assessee for the year under consideration and prayed to confirm the addition made by the AO. 13. At the outset, learned counsel for the appellant contended that payment of excise of CENVAT/MODVAT, claim of payment is entitled to avail equal to excise duty on capital goods. According to 106 ECT3 when the excise is set off against CENVAT its payment in view of this. It is allowable deduction. As per CBEC Circular, no depreciation is allowed on CENVET it can not be claimed revenue expenditure. On this issue, clarification was issued only in 2003 (Finance Act, 2003) allowing the set off as Revenue expenditure, the only best way to disallow depreciation on CENVET portion. Accordingly, first time in financial year 2005-06 as a matter concern with c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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