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TMI Blog2016 (5) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... found defective and rejected were not physically returned to the assessee. The Learned CIT(Appeals) also found strength in the claim of the assessee on the basis that as a prudent businessman, the assessee considered it appropriate to not incur freight expenses and instead allowed the overseas customers to scrap the goods returned by them. Since necessary confirmation was also furnished by the assessee in support, we are of the view that the Learned CIT(Appeals) was justified in deleting the addition in question - Decided against revenue Addition made on account of excess depreciation on certain assets - Held that:- The claimed depreciation of the assessee was based upon its submission that it had not only installed but had also put to u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2)(ii). Accordingly, he held that for making disallowance under Rule 8D(2))(ii) interest expenses of ₹ 3,88,932 alone is to be considered. He observed further that for the purpose of average investment, an amount of ₹ 71 lacs which was towards making investment resulting in taxable income are also to be excluded. He accordingly worked out disallowance under sec. 14A at ₹ 2,49,843 giving relief of ₹ 1,03,912 in this regard to the assessee. We thus find that the first appellate order on the issue is comprehensive and reasoned one. - Decided against revenue - ITA No. 1579/Del/2013 - - - Dated:- 22-4-2016 - SHRI I.C. SUDHIR AND SHRI O.P. KANT For The Assessee : S/Shri Rakesh Gupta, Adv. Sumit Jain CA For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the extent of ₹ 40,26,720 not recorded in the said register was not allowed as sales return. Without appreciating this material fact, the Learned CIT(Appeals) has deleted the addition. The Assessing Officer was justified in not accepting the explanation of the assessee in respect of such sales that recording in the books was not made as the rejected goods were scrapped by the buyers at their own end in absence of evidence in support. 4. The Learned AR on the other hand placed reliance on the first appellate order with the submission that the assessee had furnished sufficient material in support of its claim and the Learned CIT(Appeals) being convinced and satisfied with the same has deleted the addition in question. He submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had furnished confirmation from M/s. Vee Three North America, USA. After verifying the explanation of the assessee, the Learned CIT(Appeals) found that certain items which were shown as sales return, not shown in RGI registers at the end of the assessee itself supports the claim of the assessee that such items were not physically returned to the assessee keeping in view the high cost of shipping of the goods that were found defective and rejected were not physically returned to the assessee. The Learned CIT(Appeals) also found strength in the claim of the assessee on the basis that as a prudent businessman, the assessee considered it appropriate to not incur freight expenses and instead allowed the overseas customers to scrap t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first appellate order deleting the disallowance made on account of claimed depreciation. The same is upheld. The ground No. 2 is accordingly rejected. 9. Ground No.3: It is regarding disallowance of ₹ 1,03,912 made under sec. 14A of the Act deleted by the Learned CIT(Appeals). In support of this ground, the Senior DR referred CBDT Circular No. 5/2014 dated 11.2.2014 clarifying the position regarding disallowance of expenses under sec. 14A of the Income-tax Act, 1961 in cases where corresponding exempt income has not been earned during the financial year. The Learned Senior DR tried to justify the action of the Assessing Officer in making the disallowance under sec. 14A of the Act in question. 10. The Learned AR on the other hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of its own working in the books of account and the Assessing Officer applied the provisions of Rule 8D as per his own working without finding any fault with the working given by the assessee. The Learned CIT(Appeals) held that as per provisions of sec. 14A(2), the Assessing Officer was firstly required to record his dissatisfaction with the working of the assessee with cogent reason. The Learned CIT(Appeals) found that the assessee itself had made disallowance through the mechanism of Rule 8D in its return of income as per the details furnished before him. The contention of the assessee remained that the investment which had not resulted in tax exempt income ought to have been excluded from the terms average investment for cal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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