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TMI Blog2015 (10) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... t produced even before the CIT(A). In the interest of justice, we remit the issue back to the file of the CIT(A) to examine the bills and thereafter consider the claim of depreciation made by the assessee. - Decided in favour of assessee for statistical purposes. Disallowance of various expenses incurred by the assessee - Held that:- CIT(A) has not applied his mind on disallowance pertaining to (1) packaging charges, commission expenses and (2) distribution charges and, therefore, we remit the issue of disallowance of expenditure in respect of the above three items to the file of the CIT(A) with a direction to adjudicate upon these items in the light of the evidences produced by the assessee before him, and decide in accordance with law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocessed u/s. 143(3) r.w.s. 144 of Income-tax Act, 1961. The AO passed an ex-parte order u/s. 144 and determined the income at ₹ 4,16,23,519. The AO disallowed an amount of ₹ 5,55,31,298 out of expenditure claim. Further, the AO made disallowance u/s. 40(a)(ia) of the Act amounting to ₹ 2,89,05,040. The AO also disallowed depreciation of ₹ 46,14,443. Aggrieved the assessee preferred appeal before the CIT(A). 3. The first issue before the CIT(A) was with respect to disallowance made by the AO of a sum of ₹ 2,89,05,040 us. 40(a)(ia) of the Act. Before the CIT(A), the assessee stated that it had remitted TDS into Government account on 5.10.2009. The CIT(A) held, following decision in the case Merilyn Shipping an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumption was disproportionately high and could not be explained merely as a result of price fluctuation. The AO, therefore, disallowed the claim of material consumption on the following basis: Gross revenue for FY 2007-08 (A) ₹ 34,63,64,919 Gross revenue for FY 2008-09 (B) ₹ 71,04,78,996 Material consumption for FY 2007-08 (C) ₹ 16,03,82,275 Material consumption for FY 2008-09 C*B/A ₹ 32,89,83,195 Add: 20% for price fluctuation ₹ 6,57,96,639 Total ₹ 39,47,79,834 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 217% 222% 7. The CIT(A) held that the advertising revenue per se does not have any increase with the consumption of material. He also observed that when the circulation revenue raised there would be a corresponding increase in the material consumption. He accepted the submission of the learned AR that there is no nexus between the advertising revenue and consumption of raw material and, therefore, the advertising revenue should not be taken into consideration for analysis of its reasonability by the AO. The CIT(A) pointed out that as per the data submitted by the assessee, the increase in material consumption is commensurate with the increase in circulation revenue and held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed viz., material consumption and deleted the disallowance of ₹ 4,45,22,334, the CIT(A) has not, by over sight, adjudicated upon the disallowance made with respect of packaging charges amounting to ₹ 9,68,958 and commission expenses of ₹ 33,69,667. The CIT(A) has also not adjudicated upon the expenditure incurred for distribution charges of ₹ 66,70,339. We find that the CIT(A) has not applied his mind on disallowance pertaining to (1) packaging charges, commission expenses and (2) distribution charges and, therefore, we remit the issue of disallowance of expenditure in respect of the above three items to the file of the CIT(A) with a direction to adjudicate upon these items in the light of the evidences produced by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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