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TMI Blog2014 (11) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... ultaneously without reducing the relief available u/s 80I of the Act by the amount of deduction granted u/s 80HHA – Decided against revenue. Computation of deduction u/s 80HHC - 90% of gross interest receipt to be included from eligible profit under clause (baa) of the Explanation or not – Held that:- The contention of the assessee is required to be verified by the AO – thus, the matter is remitted back to the AO for verification and adjudication – Decided in favour of assessee. Deletion of amount of sale of oil tins out of books – Held that:- CIT(A) rightly was of the view that the AO has made addition purely on assumption and without bringing any corroborative evidence to establish that in case of appellant, inflated purchases have been recorded in the books of account - AO has ignored the claim of appellant that difference is due to shortages and in handling of material, such type of shortages are bound to incur - Even in case of assessee, such shortages are 0.10% to 1% of total purchase made during the year - the addition made by AO treating the negligible difference in quantity as per stock movement register and books of account as inflated purchases for ₹ 13,91,54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solidated order for the sake of convenience. 2. First, we take up the Revenue s appeal in ITA No.2504/Ahd/2007 for AY 2003-04. The Revenue has raised the following grounds of appeal:- 1. The CIT(A) has erred in law and on facts in deleting the addition of ₹ 17,06,797/-, ₹ 56,919/- and ₹ 31,296/- and the gross profit estimated thereon of ₹ 1,00,000/-, ₹ 3,000/- and ₹ 3,000/- respectively made by the A.O. U/s.14A of the Act. 2. The CIT(A) has erred in law and on facts in allowing the income from insurance commission and power generation for calculating deduction u/s.80IA of the Act, which do not form part of income derived from manufacturing activities. 3. The CIT(A) has erred in law and on facts in reducing the amount of deduction U/s.80IA/80IB of the Act, before calculating the deduction allowable u/s.80HHC of the Act. 4. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the A.O. 5. It is, therefore, prayed that the order of the CIT(A) be set aside and that of the A.O. be restored to the above extent. 2.1. Briefly stated facts are that a notice u/s.153A of the Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been made through banking channels. The AO has made addition purely on assumption and without bringing any corroborative evidence to establish that in case of appellant, inflated purchases have been recorded in the books of account. The AO has ignored the claim of appellant that difference is due to shortages and in handling of material, such type of shortages are bound to incur. Even in case of appellant, total shortages found for wash cotton during the year is 44119 kgs which is just 0.18% of total purchases of wash cotton and same is very negligible. Considering the same, the addition made by AO treating the alleged difference in quantity as per stock movement register and books of account as inflated purchases for ₹ 17,06,797 is deleted and consequential addition of gross profit of ₹ 1,00,000 is also deleted. The ground of assessee is allowed. 5.1. The above finding of the ld.CIT(A) has not been controverted by the Revenue. Therefore, we do not find any reason to interefere with the order of the ld.CIT(A), same is hereby upheld. Thus, this ground of Revenue s appeal is rejected. 6. Ground Nos.2 3 of Revenue s appeal are inter-related and, therefore, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 11. Ground No.2 of assessee s cross-objection is against in confirming the finding of the AO by the ld.CIT(A) that deduction u/s.80IA is not admissible in respect of Kasar/Vatav written back in the Profit Loss account. 11.1. The ld.counsel for the assessee pointed out that similar disallowance was made in earlier year and the issue has been decided by the Tribunal in ITA Nos.2502 2503/Ahd/2007(supra) in favour of the assessee. He has drawn our attention towards the Tribunal s order dated 12/09/2014(supra), wherein the Tribunal after considering the submissions of the assessee had come to the conclusion that the amount in respect of the Kasar/Vatav is directly related to the business activity of the assessee. Therefore, the claim of the assessee is squarely covered by the decision of the Coordinate Bench, dated 12/09/2014(supra). 11.2. On the contrary, ld.CIT-DR supported the orders of the authorities below. 12. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the Coordinate Bench of this Tribunal in ITA Nos.2502 2503/Ahd/2007(supra) had decided this issue in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he authorities below as well as the decisions relied upon by the ld.counsel for the assessee. After considering the submissions, we are of the view that the contention of the assessee is required to be verified by the AO, hence this ground is remitted back to the file of AO for verification and adjudication. Thus, this additional ground raised by the assessee in its cross-objection No.189/Ahd/2009 is allowed for statistical purposes. As a result, CO filed by the assessee is partly allowed for statistical purposes. 16. Now we take up the Revenue s appeal in ITA No.2505/Ahd/2007 for AY 2004-05. The Revenue has raised the following grounds of appeal:- 1. The CIT(A) has erred in law and on facts in deleting the disallowance of ₹ 4,54,575/- made by the A.O. u/s.14A of the Act. 2. The CIT(A) has erred in law and on facts in deleting the addition of ₹ 10,37,291/- made by the A.O. on account of sale of oil tins out of books without considering the facts that the entries in this regard were made in the documents found and seized from the premises of the assessee. 3. The CIT(A) has erred in law and on facts in deleting the addition of ₹ 14,91,868/- made by the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this ground of the Revenue s appeal is rejected. 17. Ground No.2 of Revenue s appeal for AY 2004-05 is against the deletion of addition of ₹ 10,37,291/- made by the AO on account of sale of oil tins. The facts with regard to this ground are that the AO found during the course of assessment proceedings the difference in sales with regard to empty tin of ground-nut oil. The assessee made submission which was not accepted by the AO and made the addition of ₹ 10,37,291/-. However, ld.CIT(A) after considering the facts, deleted the addition made by the AO. 17.1. The ldCIT-DR submitted that the AO has analyzed and has rightly came to the conclusion that there were discrepancies which were not reconciled by the assessee. Therefore, ld.CIT(A) was not justified in deleting the addition. 17.2. On the contrary, the ld.counsel for the assessee reiterated the submissions as were made before the lower authorities. 18. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the AO rejected the explanation of the assessee by observing as under:- i) As regards to contention of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at such empty tins were used for sale with any supported evidentiary documents and entire addition made by AO seems to be purely on assumption. The AO has ignored the fact that stock movement register includes the tins used for packing of finished goods and tins damaged/broken during the process of packing or handling of goods treated as scrap material whereas tins used for packing as per books of account includes only actual tins used for packing of finished goods. The difference during the year is only 0.08% of total purchases of tins made during the year. The Appellant company is selling such scrapped tins and sale value have already been offered to tax on year to year basis which proves the fact that in handling of material and in usage of such tins for packing, breakages/damages happen. Even during the course of search proceedings, authorized officer has not pointed out any discrepancy in physical stock and book stock of oil which proves that no tins have been utilized for making any unaccounted sale of finished goods. Considering such facts, addition made by assessing officer is deleted. 18.2. After considering the totality of the facts of the case and the submissions m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of appellant, inflated purchases have been recorded in the books of account. The AO has ignored the claim of appellant that difference is due to shortages and in handling of material, such type of shortages are bound to incur. Even in case of appellant, such shortages are 0.10% to 1% of total purchase made during the year. The same is very negligible. Considering the same, the addition made by AO treating the alleged difference in quantity as per stock movement register and books of account as inflated purchases for ₹ 13,91,547 is deleted and consequential addition of gross profit of ₹ 1,00,000 is also deleted. The ground of assessee is allowed. 20.1. The above finding of the ld.CIT(A) has not been controverted by the ld.CIT-DR by placing any material on record, therefore we do not find any infirmity in the order of the ld.CIT(A), same is hereby upheld. Thus, this ground of Revenue s appeal is rejected. 21. Ground Nos.4 5 are general in nature require no independent adjudication. 22. As a result, Revenue s appeal in ITA No.2505/Ahd/2007 for AY 2004-05 is dismissed. 23. Now, we take up the Assessee s Cross Objection No.190/Ahd/2009 for AY 2004-05 (in IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned CIT(A) is not justified and the same may be deleted. 24.1. On the contrary, ld.CIT-DR supported the orders of the authorities below. 25. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) has confirmed the addition by observing that the expenditure has been debited in the books of account which have been approved by Board of directors however as assessee has not submitted any proof regarding foreign travelling expenditure claimed in profit and loss account. Even before this Tribunal, the assessee has not placed any supporting evidence on record. Therefore, we do not see any infirmity in the order of the ld.CIT(A), same is hereby upheld. As a result, assessee s this cross-objection for AY 2004-05 is partly allowed for statistical purposes. 26. Now we take up the Revenue s appeal in ITA No.2506/Ahd/2007 for AY 2005-06. The Revenue has raised the following grounds of appeal:- 1. The CIT(A) has erred in law and on facts in deleting the disallowance of ₹ 1,37,906/- made by the AO u/s.14A of the Act. 2. The CIT(A) has erred in law and on facts in deleting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld.counsel for the assessee submitted that the AO did not consider the explanation of the assessee in a right perspective. 30. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the AO while making the addition on this issue has observed as under:- 5. During the course of search proceedings at Vimal House, Highway, Mehsana, item No.14 15 of Annexure-A found from the office premise of Vimal Oil Foods Ltd. which contains details of purchase and sale of shares from 11.06.2002 to 18.08.2004. While confronting with the same Shri Chandubhai I.Patel, Managing Director of the assessee company has denied of having any knowledge about the transactions recorded in these two files. As the seized papers were found from the premises of the assessee company as per section 132(4A) of the Act, onus lies on the assessee to explain the details of transactions noted. In view of the above mentioned facts and circumstances the assessee was asked to explain the same vide notice u/s.142(1) dated 15.12.006. Contents of the notice are as under:- Please refer to item No.14 15 of Annexure-A found fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. It is observed that AO has not brought any other evidence to support his plea that such transactions belong to appellant company and addition has been made on presumption/assumption. The addition cannot be in any case made on such assumption hence same is deleted. 30.2. We find that the ld.CIT(A) has given a finding on fact that the loose-papers seized from the premises of the Vimal House, where various companies are operating and number of staff are working. On such loose-papers, the name of the appellant-company is not mentioned. This finding of the ld.CIT(A) is not controverted by the Revenue by placing any material on record, therefore, we do not find any infirmity in the order of the ld.CIT(A), same is hereby upheld. Thus, this ground Revenue s appeal is rejected. 31. Ground Nos.4 5 are general in nature require no independent adjudication. 32. As a result, Revenue s appeal for AY 2005-06 is dismissed. 33. Lastly, we take up the Assessee s Cross Objection No.191/Ahd/2009 for AY 2005-06 (in ITA No.2506/Ahd/2007 for AY 2005-06). The assessee has raised the following effective ground in its cross-objection:- 1. On the facts and in the circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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