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TMI Blog2015 (6) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... ties, which has been reconciled by the assessee before the ld CIT(A) and also explained the cash payment U/s 40A(3) of the Act. During the year, the assessee’s sale also has gone up compared to preceding year and there is a marginal decline in the G.P. rate. The ld DR had not controverted the finding given by the ld CIT(A). Therefore, we uphold the order of the ld CIT(A). Accordingly, this ground of revenue is dismissed. - Decided against revenue. Addition U/s 2(24)(x) r.w.s. 36(1)(va) - ESI & PF payments were not made in time as per audit report.CIT(A) deleted addition - Held that:- The ld CIT(A) has considered the various case laws on this issue including the SLP of Hon’ble Apex Court in the case of Vinay Cement Ltd. (2007 (3) TMI 346 - Supreme Court of India) and rejected the appeal after observing that the assessee had paid these payments U/s 43B of the Act on or before due date of return, therefore, SLP was rejected after considering the Hon’ble Delhi High Court decision in the case of said assessee. Therefore, we do not find any reason to intervene in the order of the ld CIT(A). - Decided against revenue. - ITA No. 786/JP/2012 - - - Dated:- 19-6-2015 - Shri R.P. Tolan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills of plant and machinery purchased. The ld Assessing Officer analysed Section 80IC from page 2 to 5 of assessment order. It is held that M/s Hariganga Polymer is engaged in manufacturing of PVC Pipe, which is an article or thing specified in Thirteenth Schedule as mentioned min the provisions of Section 80IC(2)(a). In the Thirteenth Schedule in Part-B at S.No. 20 plastics and articles thereof are mentioned and manufacturing of PVC Pipes is thus covered in plastics and articles thereof. Similarly in Part-C of the Fourteenth Schedule, manufacturing of PVC Pipes is not covered in audit report in form No. 10CCB dated 04/09/2009, the Auditor had certified that the undertaking or enterprise has been formed by the splitting up or the reconstruction of a business already in existence and in Point No. 26(b), the auditor has further certified/qualified that the circumstances and the period specified in Section 33B is not applicable. Further perusal of the Form No. 10CCB and audited P L account of M/s Hariganga Polymers reveals that deduction U/s 80IC has been claimed on other income of ₹ 17,779/- on account of interest on FDRs and bank interest which is not qualified for deduction U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have considered the assessment order as well as submission of the AR. The ld. A.O. has disallowed the claim of deduction U/s 80IC on two grounds: (i) PVC Pipe is an article or thing specified in the 13th schedule part B serial No. 20 and therefore deduction is not admissible. (ii) The auditor has initially mentioned yes against serial No. 26(a) of form No. 10CCB and has passed a corrigendum after two years stating that reply of 26(a) of form No. 10CCB should be read as No in place of yes and the same was not acceptable as there is not provision of passing a corrigendum in form No. 10CCB. Section 80IC provides a deduction from profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section 2 and sub-section 2 provides that this section applies to any undertaking or enterprise,- (a) which has begun or begins to manufacture or produce any article or thing, not being any article or thing specified in the 13th schedule . (b) which has begun or begins to manufacture or produce any article or thing, not being any article or thing specified in the 14th schedule The appellant has its enterprise/underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder schedule XIV. Therefore, it is eligible for exemption u/s 80IC(2) of the Act., Further, I am inclined to agree with the submission of the AR that there was a printing error in serial No. 26(a) of the report in form 10CCB and the auditor has already clarified by issuing a corrigendum. It is not the case that the A.O. has given a finding of fact, after examining the matter, that the undertaking ort enterprise has been formed by the splitting up or the reconstruction of a business already in existence. The appellant has also submitted that in A.Y. 08-09 the auditor had reported as no against para 26A of form No. 10CCB. In view of above facts and circumstances it is held that the appellant is eligible for deduction U/s 80IC of the Act. However, the appellant should have excluded the other income of ₹ 17,779/- on account of interest on FDRs and bank interest while claiming the deduction u/s 80IC of the Act. I find that the claim of deduction on this amount of ₹ 17,779/- is not correct as this income is not derived from the business referred to section 80IC(2). Therefore, the disallowance of ₹ 37,70,488/- made by the ld A.O. is restricted to ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and argued that Excise Department had carried out their audit with reference to stocks and had not observed anything adverse. The Excise Department is much particular with the quantity as it affects the ultimate excise. The Excise authority has accepted the declared result. The ld Assessing Officer verified the creditors with reference to copy of account received from the creditors particularly in case of M/s S.B. Shah Co. (P) Ltd. The ld Assessing Officer found difference of ₹ 34,790/- in the account. This difference was explained by the assessee that the creditors had issued credit note of ₹ 34,790/- but same has not been accounted for. Similar difference was found in the case of M/s J.M. chemical Co. at ₹ 34,912/-. The ld Assessing Officer observed that the assessee company claimed to have purchased raw material of ₹ 13,864/- through invoice No. 248 dated 20/06/2008 but M/s J.M. chemical Co. had declared such sale to the assessee company thereby the assessee had debited bogus purchase and raw material. Similarly, M/s J.M. chemical Co. claimed to have received payment of ₹ 46,505/- on 31/3/2009 through Standard Chartered Bank from the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t correct income cannot be worked out on the basis of the same. The ld. A.O. has observed in the assessment order that in support of the claim, during the assessment proceedings, AR of the assessee has produced sale/purchase bills of raw material and finished goods alongwith RG Register and stock register for verification. However, the ld A.O. has not been able to point out to any specific mistake or deficiency in the books of accounts which would result in satisfaction that the books of accounts are incorrect or incomplete. It has been submitted by the AR that in the case of Singhal Dal Mills Vs. ITO (1994) 123 Taxman 15 (Del.-Trib) it was held that unless the Assessing Officer report a finding that the method of accounting adopted by the assessee is such that it would not enable the A.O. to deduce the taxable income or the books of accounts are not correct and complete, the A.O. is not empowered to reject the book results. Decline in GP Rate : Regarding the lower rate of G.P. it has been stated that (i) During the year the sales has increased by more than 11.68% and in the competitive market it could be achieved by reducing the G.P. margin. (ii) There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft of ₹ 44607/- in favour of M/s Bureau of Indian Stadard, Ghaziabad payable at Delhi by paying cash vide No. 270496/- and this cannot be a ground for invoking the provisions of Section 145(3). A copy of confirmation from the Vijaya Bank dated 16/01/2012 has been submitted with the reply. Findings The two instances of the difference in the account of creditors as per the books of the assessee and as per the books of the creditor is only a matter of reconciliation of account and it cannot be said to be a defect in the books of accounts. Similarly, the instance of cash payment of ₹ 44607/- on 04/07/2008 is actually for purchase of a demand draft of ₹ 44607/- in favour of M/s Bureau of Indian Standard, Ghaziabad and this cannot be a ground for rejecting the books of accounts. As regard the lower rate of GP, I find that the GP rate is reflected at 27.43% as per the audit report. Further, the auditor has commented against column 28(b) of the report that the quantitative details of principal items of raw materials, finished products and by-products are not available. I find that the appellant is engaged in manufacturing of paints, primer and allied p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econciled by the assessee before the ld CIT(A) and also explained the cash payment U/s 40A(3) of the Act. During the year, the assessee s sale also has gone up compared to preceding year and there is a marginal decline in the G.P. rate. The ld DR had not controverted the finding given by the ld CIT(A). Therefore, we uphold the order of the ld CIT(A). Accordingly, this ground of revenue is dismissed. 12. Ground No. 3 of the revenue s appeal is against deleting the addition of ₹ 49,945/-. The ld Assessing Officer observed that ESI PF payments were not made in time as per audit report. The ld Assessing Officer gave reasonable opportunity of being heard on this issue and argued that these payments were deposited before due date of furnishing of return of income. The assessee relied upon various case laws on this issue but the Assessing Officer had not found the assessee s reply convincing and held that due date of deposit in ESI EPF is governed by ESI PF Acts which talk of 21st of next month for ESI and 20th of next month for EPF including relaxation of five days grace period u/s 14B of the Provident Fund Act provided the payment is made by cheque. Thus, he made addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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