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TMI Blog2014 (8) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... erials on ad-hoc basis @ 2% made u/s 145A – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that no details of the direct expenses were furnished, the AO estimated the direct expenses at 2% of the total value of closing stock of raw materials and stores, which resulted in to the addition to the closing stock in accordance with the provisions of section 145A of the Act - CIT(A) gave a finding that the assessee has been valuing its closing stock of raw material inclusive of freight charges as reflected from the purchase day book and general ledger of item and there is no change in the valuation of the stock - CIT(A) held that the closing stock of previous year would be the opening is stock of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account and the remaining amount has been carried to share premium account. In response to the show cause notice, the assessee submitted as under:- During the year, the assessee has incurred Bond Issue expenses of ₹ 251812290/- of which ₹ 24898771/- were debited to Security Premium Account and Fitch Rating expenses of Bonds of ₹ 913519/- was debited to other expenses. These expenses are towards the bonds of ₹ 100 crores which are redeemable at end of one year (Please rerer Schedule 4 Unsecure Loans to the Audited Balance Sheet. Considering the same, the Bond issue expense of ₹ 24898771/- which were not claimed as expenses in Profit Loss Account, the same are claimed in Computation of Income. Details of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner:- 10. As far as the second question is concerned, we find that the CIT (Appeals) as well as the ITAT merely followed the decisions in the case of this very Assessee in the preceding years in deleting the disallowance of ₹ 10,00,300 incurred towards bond registration charges and in view thereof, the ITAT came to the finding that the said expenditure was a revenue expenditure and hence allowable under section 37(i) of the Act. We are of the view that the aforesaid finding of the ITAT cannot be in any way said to be vitiated on the ground of perversity or any error apparent on the face of the record and therefore does not give rise to any substantial question of law which needs to be answered by this Court. Thus, we affir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,540 (which is inclusive of freight). The same copy is submitted at Page no.7 to 9. From the above your honours may observe that, the freight is included in the closing value of the stock. Therefore, the addition of ₹ 54,35,420 to closing stock of Raw Material and Stores and Spares is unwarranted and require deletion. Also, the issue is covered in favour of the appellant by CIT(A) for A.Y. 2006-07, 2007-08 and A.Y. 2008-09. The copy of the CIT(A) order for assessment year 2008-09 is enclosed for your reference at Page no.10 to 20. Considering above, your honours are requested to delete the addition u/s 145A of the act. 9. The learned Commissioner (Appeals), after following the earlier year order of the Tribunal in assessee s own c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t expenses had been furnished, the AO estimated the direct expenses at 2% of the total value of closing stock of raw materials and stores, which resulted in to the addition of ₹ 58,09,097/- to the closing stock in accordance with the provisions of section 145A of the Act. Aggrieved, the assessee carried the matter in appeal before the CIT(A). 13. Before the CIT(A), the AR of the assessee submitted that the AO had made addition of ₹ 58,09,97/- on estimate basis towards the transportation cost and other direct cost like freight, storage as incurred to closing stock of raw materials and a spare parts. He further submitted that no details were asked for by the AO. It was further submitted that the value of closing stock of raw ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -05 and 2006-07 dated 17/12/2010. In view of these facts, the addition made by the AO is deleted. This ground of appeal is therefore allowed. 14. Aggrieved by the order of CIT(A), the revenue is in appeal before us. 15. The learned DR besides relying upon the order of the AO submitted that since no details of direct expenses filed by the Assessee, the AO estimated the direct expenses at 2% of the total value of closing stock of raw materials and stores, which is proper and the same is in accordance with the provisions of section 145 of the Act. 16. On the other hand, the learned counsel for the assessee has strongly relied upon the order of the CIT(A). 17. We have considered the rival submissions, perused the record and gone th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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