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TMI Blog2015 (5) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... 52/- 4. He observed that the obligation of the assessee to make the payment stood extinguished due to expiry of the limitation period of three years and, therefore, he made addition of Rs. 39,17,182/- to the total income of the assessee by invoking provisions of section 41(1) of the Act. 5. Before the CIT(A) the assessee argued that these amounts were outstanding for more than one year and assessee continued to show the same in its books of account and, therefore, it acknowledged the liability to make the payment, hence section 41(1) of the Act was not applicable. The assessee had not received any benefit by way of remission or cessation of liability. CIT(A) observed that Section 18 of the Limitation Act, 1963, provides that "where a debt is acknowledged in writing before the expiry of limitation period, this would amount to sufficient acknowledgement and fresh limitation shall be computed from the time when such acknowledgement is made". It was held that the liabilities were not barred by limitation and, therefore, held that the CIT(A) was not justified in adding the same under section 41(1) of the Act. 6. Departmental Representative has relied on the order of the A.O. 7. Befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no.2 of the appeal of the Revenue is directed against the order of CIT(A) in deleting the addition of Rs. 2,39,642/- on account of excessive payments made for purchase of metal from the person specified under section 40A(2)(b) of the Act. 11. The brief facts are that the assessee is engaged in the business of construction of roads. The A.O. found that the assessee has purchased metal from M/s MRB Builders Pvt. Ltd. at an average price of Rs. 120/- per MT and grit @ Rs. 120/- per MT. He observed that M/s MRB Builders Pvt. Ltd. was the person specified under section 40(a)(2)(b) of the Act. He also observed that metal was purchased by the assessee from M/s Amar Mining Company who was not a related party at the average price of Rs. 107.50 per MT and grit at Rs. 87.50 per MT. In reply to the show cause, the assessee submitted that the purchases made from M/s MRB Builders Pvt. Ltd. and Amar Mining Company were at the rates charged by those parties even from other purchasers. There was no inflation of purchase price. It was also submitted that both M/s MRB Builders Pvt. Ltd. and Amar Mining Company were paying tax at the same rate as the assessee. However, the explanation of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) restricted the disallowances at the rate of 10.42% of total purchases which worked out to Rs. 1,50,607/-. 17. According to us, the lower authorities should have disallowed at the rate of 27% of purchase of metal from M/s MRB Builders Pvt. Ltd. and at the rate of 10.42% on purchases of grit from M/s MRB Builders Pvt. Ltd. Thus, both the lower authorities were not justified in their action. We find that the bifurcation of total purchases of Rs. 14,45,366/- as to how much for metal and how much was for grit has not been brought on record by either of the lower authorities and by either of the parties before us. We, therefore, set aside the orders of the lower authorities, and restore the matter to the file of the AO with direction to restrict the disallowance under section 40A(2) (b) to the extent of 27% in respect of purchases of metal from M/s MRB Builders Pvt. Ltd. and at the rate of 10.42% in respect of purchases of grit from M/s MRB Builders Pvt. Ltd. Thus, this ground of appeal of the Revenue is partly allowed for statistical purpose. 18. In ground no.3, the grievance of the Revenue is that the CIT(A) erred in deleting the addition of Rs. 8,55,313/- made on account of gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustained. We, therefore, do not find any good and justifiable reason to interfere with the order of the CIT(A), which is hereby confirmed and the ground of appeal of the Revenue is dismissed. Assessee's appeal 24. In assessee's appeal ground nos.1 to 3 are directed against the order of CIT(A) holding that retention money of Rs. 27,81,076/- accrued to the assessee company during the previous year to A.Y. 2009-10. 25. The brief facts of the case are that the A.O. observed that the assessee company while computing its income from business deducted an amount of Rs. 27,81,076/- from the net profit arrived at as per Profit & Loss Account. This amount represented retention money/security deposits returned by persons for whom the assessee had undertaken contract work during the year. In reply to the show cause notice, the assessee submitted that it was engaged in the business of construction of civil works, dams, roads etc. The company had undertaken work for various government agencies who had retained security deposits with them. The amount of Rs. 27,81,076/- was withheld by government agencies pending verification of satisfactory completion of work. The assessee has claimed deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no.4 of the appeal the grievance of the assessee is that the CIT(A) erred in confirming the disallowance of Rs. 10,000/-. 32. The brief facts of the case are that the assessee claimed deduction of Rs. 10,000/- under the head voluntary retirement expenses. According to the assessee, the expenses were payable to the employees on retirement/resignation. He observed that the expenses are not covered under section 35DDA and same had been disallowed in preceding years. There was no scheme for voluntary retirement with the company for which assessee's expenditure was allowable under section 35DDA. Therefore, the same was disallowed by the A.O. and was confirmed in appeal by the CIT(A). 33. At the time of hearing, the Authorised Representative of the assessee submitted that he is not pressing this ground of appeal and hence the same is dismissed for want of prosecution. 34. Ground no.5 of the appeal of the assessee is directed against the of CIT(A) confirming addition of Rs. 2,81,124/- under section 40A(2)(b) of the Act. 35. The brief facts of the case are that the assessee claimed commission paid to Samrat Trading Corporation, Proprietor Ashok M. Patel (HUF) of Rs. 2,81,124/-. A.O. o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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