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TMI Blog2016 (1) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon’ble jurisdictional High Court. We, therefore, order for the deletion of the entire addition. - Decided in favour of assessee. Addition on account of lower scrap sale can be made as a percentage of turnover - Held that:- Scrap is ordinarily considered with reference to production. It is further pertinent to note that percentage of scrap to production may not remain consistent over the years. The generation of scrap depends on various factors, such as, quality of raw material, age of machine, quality of work force, etc. If good raw material is used, naturally, it will lead to lower scrap and vice versa. The relevant factors discussed above ultimately find their reflection on the gross profit rate. If the gross profit rate of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncern in the Annual accounts for the year under consideration is ₹ 21,84,964/-, but, there is no corresponding figure of closing balance of this sister concern in the immediately preceding year, as such figure has been shown as Nil. As such, the entire basis on which the addition has been deleted by the ld. CIT(A), ceases to exist. We cannot countenance the impugned order on this line of reasoning which has not been shown to exist. Under such circumstances, we set aside the impugned order on this score and remit the matter to the file of CIT(A) for deciding this issue afresh, as per law, after taking note of the correct facts. - ITA No.1027/Del/2013, ITA No.1444/Del/2013 - - - Dated:- 23-10-2015 - SHRI R.S. SYAL, AM MS SUCHITRA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, there can be no disallowance u/s 14A. Recently, the Hon ble jurisdictional High Court in Joint Investment Pvt. Ltd. Vs. CIT (2015) 372 ITR 694 (Del) has held that disallowance u/s 14A cannot exceed the exempt income. In view of the fact that the assessee did not admittedly earn any exempt income during the year, there can be no question of making any disallowance u/s 14A of the Act in terms of the aforestated precedents from the Hon ble jurisdictional High Court. We, therefore, order for the deletion of the entire addition. The ground taken by the assessee is allowed and that of the Revenue fails. 5. Ground No.2 of the Revenue s appeal is against the deletion of addition of ₹ 83,53,148/- (wrongly mentioned as ₹ 88,53,148/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailed by the assessee due to better performance or good quality of raw material etc. Adverting to the facts of the instant case, we find that the assessee declared GP rate of 9.77% in the year under consideration as against the last year s GP rate of 8.61%. These gross profit rates are available in the written submissions filed before the CIT(A), a copy of which is available on page 19 of second paper book. When the gross profit rate itself has registered an increase of over 1% in the current year, we fail to appreciate as to how any addition on account of lower scrap sale can be made as a percentage of turnover. We, therefore, uphold the impugned order on this issue. 7. The only other ground which survives for consideration is deletion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nate interest expenditure u/s 36(iii) of the Act. That is how, he deleted the addition. On a specific query to point out the balance of M/s Tobu India Ltd., in the assessee s account for the preceding year as reflected in the balance sheet, the ld. AR invited our attention towards annual accounts, a copy of which is available on pages 1-39 of the paper book. Details of Schedule of Loans and advances to Balance sheet is available on page 14 of the paper book and the name of M/s Tobu India Ltd., appears on page 15, which is part of Schedule 10. It can be observed that the closing balance of the sister concern in the Annual accounts for the year under consideration is ₹ 21,84,964/-, but, there is no corresponding figure of closing balan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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