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TMI Blog2015 (1) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... me are vital principles in the Tax Law, which cannot be ignored. Had this addition been sustained, it will disturb the returned income of the appellant for subsequent Assessment Years also i.e. for A.Y. 2010-11, 2011-12 and so on. - Decided in fvaour of assessee. Ad hoc addition - Job Work Charges,Manufacturing Expenses,Checking & Inspection Charges and Export Development Expenses - CIT(A) deleted the addition - Held that:- Assessing Officer has not pointed out any specific defect either in the maintenance of the books of account or any particular expense. He has made general observation that the expenses claimed by the assessee were not fully verifiable and thereafter he started making ad hoc disallowances, which are not permissible under the law. We, therefore, find no merit in this ground of the Revenue’s appeal, as the ld. CIT(A) has properly deleted the addition made on ad hoc basis. - Decided in fvaour of assessee. Disallowance of interest paid by the assessee to his wife, Smt. Anu Gupta amounting to ₹ 1,44,427/- for not charging interest on certain loans and advances - CIT(A) deleted the additon - Held that:- Revenue is in appeal before the Tribunal, but could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in deleting the additions out of following expenses inspite of the fact that these expenses were made in cash and were not supported by proper bills and vouchers. a. ₹ 2,00,000/-out of Job Work Charges. b. ₹ 50,000/- out of Manufacturing Expenses. c. ₹ 50,000/- out of Export Development Expenses. d. ₹ 50,000/- out of Checking and Inspection Charges. 6. That the Ld. Commissioner of Income Tax(Appeals)-II, Kanpur has erred in law and on facts in deleting the addition of ₹ 1,44,427/- be ignoring the fact that the assessee has paid the said interest on funds borrowed from his wife, even though it has itself not charged interest on loans/advances of ₹ 47,73,163/-. 7. That the order of the Ld. Commissioner of Income Tax (Appeals)-II, Kanpur being erroneous in law and on facts, be vacated and the order dated 26.12.2011 passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 by the Assessing Officer to be restored. 2. Apropos grounds No.1 to 4, it was contended that the issue involved these grounds are squarely covered by the judgment of the Hon'ble jurisdictional High Court and various orders of the Tribunal, par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t such payments also full under FTS. In this regard she has observed that normally the exporter appoints the agents as his selling agent, designer technical adviser for his products. He has further observed that being commission agent required managerial acumen expertise and therefore, would be covered under Section 9 (1) (vii) of the Act as managerial services. On perusal of the assessment order and assessment folder, I find that the A.O. has not brought anything on record which could demonstrate that these agents had been appointed as selling agents, designers technical advisers. Rather on me contrary I find that the agreement is of for procuring orders and nothing else. In absence of any such evidence, this observation of the A.O. is mere conjecture and therefore, no cognizance of the same can be taken. It is a trite law that suspicion, no matter how grave, cannot take place of evidence. In this case, there is even no case of suspicion, leave aside any evidence to the effect that the agents were not only selling agents but also designers and technical advisers. The confirmation from the respective foreign agents that the foreign agents did not have any branch or PE in Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Commissioner of C. Ex., Bolpur v. Ratan Melting Wire Industries, (2008) (231) E.L.T. 22 (SC) (para 6) is applicable in as much as in the present case there was no decision of the Supreme Court or High Court or any statutory provision, which was contrary to the circular, which was withdrawn on 22.10.2009. The questions of law are covered by the judgments of this Court cited as above, and are decided in favour of the assessee and a against the department. 3. We, therefore, following the aforesaid judgment of the jurisdictional High Court, decide the issue in favour of the assessee and confirm the order of the ld. CIT(A) in this regard. 4. Apropos ground No.5, it is noticed that the Assessing Officer has made an addition of ₹ 1,48,489/- towards valuation of export debtors as on the last day of accounting year on the basis of RBI Reference Rate; whereas the assessee has valued them on the basis of actual realization. 5. Against the addition, assessee preferred an appeal before the ld. CIT(A) with the submission that the assessee has valued the export debtors as on 31st March on the actual realization rates of the foreign exchange, which are available with the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly confirm the order of the ld. CIT(A), who has rightly adjudicated the issue. 9. Apropos ground No.6, it is noticed that the Assessing Officer has made ad hoc addition in respect of the following expenses:- a. ₹ 2,00,000/- out of Job Work Charges amounting to ₹ 46,04,894-. b. ₹ 50,000/- out of Manufacturing Expenses amounting to ₹ 5,78,121/-. c. ₹ 50,000/- out of Checking Inspection Charges amounting to ₹ 7,55,630/-. d. ₹ 50,000/- out of Export Development Expenses amounting to ₹ 5,33,200/-. 10. The assessee preferred an appeal before the ld. CIT(A) with the submission that the ad hoc disallowances are not permissible under the law. If the Assessing Officer is not satisfied with any particular nature of claim or expense, he can point out the defect therein and then to make addition. But the Assessing Officer has made ad hoc disallowances by making general observation that the claim of expenses is not verifiable. He has also placed reliance upon various judicial pronouncements. The ld. CIT(A) re-examined the same and being convinced with the explanations of the assessee, he deleted the addition. 11. No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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