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TMI Blog2015 (10) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... iew thereof, as the facts and circumstances are identical to the facts and circumstances in preceding years, we uphold the order of Commissioner of Income Tax (Appeals). However, the issue decided vide present ground of appeal shall not be a precedent used by any other assessee - Decided against revenue. Addition made under section 40A(2)(a) - CIT(A) deleted the addition - Held that:- The ld. DR for the revenue has failed to controvert the findings of the Commissioner of Income Tax (Appeals) and in view thereof, we find no merit in the addition made by the Assessing Officer especially where the assessee had compared the purchase rates in respect of the items purchased from sister concern with the purchase rates of items purchased from independent parties and the tabulated details reflect the same to be on the lower side. Upholding the order of Commissioner of Income Tax (Appeals), we reject ground of appeal raised by the revenue.- Decided against revenue. Addition paid on account of bank charges - CIT(A) deleted the addition - Held that:- The facts and circumstances and the issue raised vide present ground of appeal is identical to the issue before the Tribunal in assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to profit and loss account by the treating these as revenue expenditure. 4. On the facts and in the circumstances of the case, the Ld. CIT(A)-II, Ludhiana has erred in law and on the facts of the case while deleting addition of ₹ 3,06,251/- of capital nature expenditure debited by the assessee to profit and loss account by treating these expenses as revenue expenditure. 3. The issue in ground No. 1 raised by the revenue is against the deletion of addition made under section 36(1)(iii) of the Act. 4. The brief facts relating to the issue are that the assessee was engaged in the business of manufacturing and sale of denim fabrics. During the course of assessment proceedings, the Assessing Officer noted that the assessee had advanced interest free advances to its subsidiary company at ₹ 112 lacs. The assessee was show caused to explain as to why the corresponding interest attributable to such interest free advances should not be disallowed out of the interest expenditure debited to the Profit Loss Account. In reply the assessee explained that the said advances were made to its subsidiary in which the assessee had acquired stake, which company in tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011 had allowed the claim of the assessee upholding the order of Commissioner of Income Tax (Appeals). In view thereof, as the facts and circumstances are identical to the facts and circumstances in preceding years, we uphold the order of Commissioner of Income Tax (Appeals). However, the issue decided vide present ground of appeal shall not be a precedent used by any other assessee. The ground of appeal No. 1 raised by the revenue is thus, dismissed. 10. The issue in ground of appeal No. 2 raised by the revenue is against deletion of addition made under section 40A(2)(a) of the Act. The Assessing Officer observed that the assessee had made purchases from its sister concern M/s Malwa Cotton Spinning Mills totaling ₹ 1,84,56,763/-. Further, similar purchases were made from independent parties. The assessee was asked to produce complete bills in respect of the said purchases. The Assessing Officer, on comparison found that the assessee had paid more price to its sister concern than to the outside parties. The month-wise tabulated details are available under para 2 at page 3 of the assessment order. The assessee was accordingly, show caused to explain as to why the disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchases made on specific dates of the month of November 2006 from related concern and from parties other than the sister concerns were duly produced before the A.O. and it was contended that on the date on which flat waste was purchased from M/s Malwa Cotton Spinning Mills Ltd, the rates of same item purchased from outside parties was higher. However, the AO did not accept this explanation and this evidence and observed that the assessee has inflated the purchases made from M/S Malwa Cotton Spinning Mills Ltd. In my opinion the Assessing Officer was not justified in observing as above. I agree with the Ld. Counsel that the method adopted by the A.O. for comparing the rates of purchases made from the sister concerns is not correct method. In view of the fact that there are fluctuations in price of waste on day to day basis, the correct method is to compare the rates of purchases made by the appellant from sister concerns at a particular point of time by comparing the same with the rates given for the similar goods to other outside parties at the same point of time. As mentioned above the relevant details were duly produced at the time of assessment proceedings but the AO chose to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re levied each year on renewal of the said facilities. The Commissioner of Income Tax (Appeals) further noted that similar issue arose before the Tribunal in assessment years 2005-06 and 2006-07 and the said addition had been deleted by the Tribunal. In view thereof, the Commissioner of Income Tax (Appeals) allowed the claim of the assessee, against which the revenue is in appeal. 16. On the perusal of the record, we find that this issue arose before the Tribunal in assessee's own case relating to assessment year 2005-06 and 2006-07 (supra). We find that the Tribunal in assessment year 2005-06 (supra) vide para 29 observed as under : 29. We have considered the rival submissions carefully. In para 5 of the assessment order, the Assessing Officer has referred to the details of loan processing charges amounting to ₹ 15,23,883/-. After enumerating the detail, it is noted by the Assessing Officer that the said sum is disallowable u/s 37 (1) of the Act being capital in nature. The reasoning advanced by the Assessing Officer is that the charges have been paid for getting the secured loans sanctioned for the expansion of the business of the assessee . On the contrary, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal No. 4 raised by the revenue is against deletion of addition of ₹ 30,625/-. The said addition was made by the Assessing Officer by holding that the sum of ₹ 125,030/- and ₹ 181,221/- debited to the building repair and maintenance account were capital in nature. The plea of the assessee was that the said expenditure had been incurred on repair of road and boundary wall of the factory building respectively during the year under consideration. However, the same was rejected by Assessing Officer/ 19. The Commissioner of Income Tax (Appeals) allowed the claim of the assessee holding the said expenditure to be revenue in nature. We find that the Assessing Officer has not doubted the genuineness of the said expenditure and the only issue raised by the Assessing Officer was whether the said expenditure was capital or revenue in nature. The nature of the expenditure incurred by the assessee towards maintenance of an existing asset is an expenditure towards repair and maintenance and is revenue in nature. Upholding the order of Commissioner of Income Tax (Appeals), we dismiss ground of appeal No. 4 raised by the revenue. 20. In the result, appeal of the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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