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TMI Blog2015 (4) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the purview of same). The month-wise and branchwise charts of salary for both as per salary register and books of accounts were submitted to the AO. The above difference was also explained by way of another chart wherein details of salary paid to the 2 employees not covered under ESI were also shown. Also, it is pertinent to note that both of these employees have been paid by cheques and they are assessed to income tax. Further, the difference of ₹ 72,153/- was on account of arrears paid to employees which were duly verified by the AO from the books of account during the course of assessment proceedings. Thus AO was not justified in making addition on account of difference of salary as above - Decided in favour of assessee. Disallowance of difference between stock loss claimed and insurance claim made by assessee - CIT(A) deleted the addition - Held that:- The concerned VAT legislation does not provide for availability of input credit against the output tax liability in case of loss of stock by fire, etc. Moreover, the input credit is even not available in a case where there has been normal loss, like evaporation credit is available only in respect of goods which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll additions made come within the purview of section 40A(3) as per clear findings given in the assessment order. 2. Whether in the facts and circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 4,60,462/- made on account of difference of salary between salary sheet submitted and P L a/c citing that the difference of ₹ 72,153/- was on account of arrears paid b to employees which were duly verified by the AO from the books of accounts disregarding the fact that such was not the case and the difference of salary (Faridabad Branch) between salary sheet submitted and P L account amount in to ₹ 4,60,462/- was disallowed since even though vide submission dated 13.12.2010, assessee submitted that the difference is due to salary paid to two employees not covered under the ESI Act, upon examination of contention, it was found that without prejudice, even if the contention of the assessee was conside4red, there was still a difference of ₹ 72,461/- since the salary amount paid to two employees is ₹ 3,88,0001- and accordingly, it was clear that the assesses' s explanation was incorrect and difference of salary (Faridabad Branch) be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar amount. Ld. A.R. further submitted that pages 11 to 15 also comprised of payments made through imprest account and each individual payment was less than ₹ 20,000/-. Similarly, he took us to paper book page 18, wherein ₹ 22,000/- was debited and imprest account was credited with the similar amount therefore, in view of above Ld. A.R. submitted that individual payments were less than ₹ 20,000/- except a payment of ₹ 45,000/- which was made for sales promotion expenses. Ld. A.R. submitted that the supplier was new to the assessee and, therefore, assessee had to make payments in cash as the supplier was not accepting payments through banking channel and such payment was covered by exceptions. 3.1 Arguing upon 2nd ground of appeal, Ld. A.R. submitted that difference in salary account was due to the fact that assessee had employed persons for which EPF was being deducted and, there was another group of people from the salary of whom no PF was deducted. He submitted that remaining difference as pointed out by A.O. was on account of arrears of salary. He submitted that complete reconciliation was submitted before Ld. CIT(A) and Ld. CIT(A) had dealt with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh paid to Kalinga International- The expenses pertained to, 7 cash bills (pertaining to different dates) and just the fact that one voucher has been prepared cannot result in conclusion of the fact that cash payment had been paid exceeding sum of ₹ 20,000 in a single transaction. One of the employees in the appellant's firm was given imprest to make payments on account of certain expenses and the above payments had been made on different dates out of such advance. Copy of the voucher along with purchase bills had already been furnished in the course of assessment proceedings and the same are again furnished in support which have been placed on record. The voucher clearly proves the fact that imprest had been used for making the payments on different dates. ⦁ ₹ 22,000/- cash paid to Sharma Transport on account of van hire - This amount has also been paid out of imprest on different dates. This practice is commensurate with the trade norms in the business. The pick-up van was hired by the appellant for 20 days in the month for picking up local supplies. While the fuel payment was made by the appellant's employees from their imprest account, the final pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng cricket match - The caterer was hired for the aforesaid tournament and even in his case, the entire payment was effected on milestone basis. Further, payments were made on different dates from the imprest account. The voucher clearly proves the fact that imprest had been used for making the payments. The caterer was unknown to the appellant and there was no reason to pay the entire payment upfront. Also, it is the normal practice of trade, wherein payments to caterers are released on periodic basis over the entire contract period. However, single voucher was prepared to book the amount which does not mean that entire payment was made in a single day. ⦁ ₹ 45,000/- cash paid for purchasing TV for gift - The appellant had provided for sales promotion program for 3 business executives. The scheme was that the one who would achieve the targets would receive TV as gift. One of the executives won the scheme. The appellant had to make the payment in cash as there was no other way the person could have purchased the television (considering that a lot of shopkeepers do not accept cheques and want down payment of cash). In this regard, the appellant had also relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at firstly, the difference of ₹ 3,88,OOO was on account of the fact that salary register being maintained was for ESI purposes and did not cover the salary of two employees (i.e. Gunjan Chhabra and Vandana Desai) working in Faridabad branch (as they were not covered under the purview of same). The month-wise and branchwise charts of salary for both as per salary register and books of accounts were submitted to the AO. The above difference was also explained by way of another chart wherein details of salary paid to the 2 employees not covered under ESI were also shown. Also, it is pertinent to note that both of these employees have been paid by cheques and they are assessed to income tax. Further, the difference of ₹ 72,153/- was on account of arrears paid to employees which were duly verified by the AO from the books of account during the course of assessment proceedings. In view of the above submissions and documents placed on record, it is hereby held that the Assessing Officer was not justified in making addition on account of difference of salary as above. The addition of ₹ 4,60,462/- made on this count is, accordingly, hereby deleted. 10. Ground No. 6 rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant [(G)=(D)+(F)] 404,484 The essence of VAT legislation is that it provides credit/ set-off for input tax, i.e. tax paid on purchases, against the output tax, i.e. tax payable on sales. VAT credit is available in respect of all purchases made and taxes paid thereon within the state. It is pertinent to note the fact that the concerned VAT legislation does not provide for availability of input credit against the output tax liability in case of loss of stock by fire, etc. Moreover, the input credit is even not available in a case where there has been normal loss, like evaporation credit is available only in respect of goods which have been or would be actually sold by the dealer. It is on the premise that where the goods have not been disposed by way of sale and there is no output tax liability in respect of such goods, the dealer is not entitled to get the benefit of input tax credit. Thus, the input tax credit is also a loss for the dealer, as VAT department does not allow the availability in view of specific provisions in the Act and the insurance company does not make the payment on account of same in the event of loss. In essence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, all the depots are registered with the VAT department in the respective states. In view of the above discussion, it is hereby held that the Assessing Officer was not justified in making addition on account of rent expenses as above. The addition of ₹ 11,76487/- made on this count is, accordingly, hereby deleted. 6. From the above findings of Ld. CIT(A), we find that for each and every addition made by A.O. on the basis of submissions of assessee, Ld. CIT(A) has analyzed the facts and figures and has very rightly allowed the relief to assessee during appellate proceedings. In respect of first addition made u/s 40A(3), Ld. CIT(A) has analyzed each transaction and has held that individual payments made through imprest account were less than ₹ 20,000/-. In respect of items of expenditure exceeding ₹ 20,000/-, he has upheld the addition. Similarly, the addition on account of salaries paid to employees was well explained by assessee. Similarly, loss claimed by assessee on account of lower claim received from insurance company has been fully analyzed by Ld. CIT(A). In respect of last addition on account of rent paid, the Ld. CIT(A) has held that payments agains ..... X X X X Extracts X X X X X X X X Extracts X X X X
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