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TMI Blog2016 (6) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... would be tax neutral. Furthermore reading purchases of fuel it was not the case of ld AO that the bils of the material are not available or material has not been procured. Stating that purchases have been made in cash cannot be the basis for making disallowance . For cash purchases exceeding specified monetary limit is disallowable u/s 40 A (3) of the act. No such disallowance has been made by the ld AO. In view of this , We do not find any infirmity in the order of the Ld. CIT(A) hence, we confirm the order of Ld. CIT(A) in deleting the disallowance on account of expenses of tools and fuel expenses. - Decided in favour of assessee - ITA No. 1786/Del /2014 - - - Dated:- 16-6-2016 - Shri I. C. Sudhir, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Department : Shri P. Damvanunjna Sr. DR For the Assessee : Shri Ved Jain, Adv ORDER Per Prashant Maharishi, A. M. 1. This appeal is filed by the revenue against the order of Ld. CIT (A) XVI, Delhi dated 30th December 2013. In the appeal following grounds of appeal have been raised :- I. On the facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the addition on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pporting vouchers are handmade bills 10% of the expenses are disallowed. On appeal before the Ld. CIT (A), the same were deleted as supporting bills were produced and further the sales have been shown to increase by 100% compared to increase in such expenditure by only 40% compared to last year. 5. Ld. DR relied on the orders of the lower authorities and Ld. AR submitted that the issue is now covered in favour of the assesee by the order of coordinate bench for preceding assessment years vide order dated 4th December, 2015. 6. We have carefully considered the rival contentions. Ld. CIT(A) has deleted the addition on account of freight expenditure for the reason that sales have increased by 100% such expenses have increased only by 40% and these expenses are directly linked with turnover of sales and purchases. Furthermore, the Ld. AO did not point out any defect in the bills submitted by the appellant and disallowed arbitrarily 10% of that expenditure. In ITA No. 4562/Del/2010 in assessee s own case the disallowance by applying percentage of expenditure was made which was deleted vide order dated 4.12.2015 as under :- 7. We have carefully considered the rival contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old disallowances. In this back drop, ad hoc disallowance made by AO cannot he sustained and CIT (A) has rightly deleted the same. Therefore we confirm the order of CIT (A) and dismiss the appeal of revenue. 8. The appeal of revenue is dismissed. 7. As the disallowance not specific and Ld. AO has not pointed out a single instances of the expenditure, which are not, supported by the vouchers and bils. Further, the estimated amount of disallowance by applying the percentage is also not proper. Therefore, we confirm the order of the Ld. CIT(A) in deleting the disallowance on account of freight and cartage expenses. 8. Regarding the disallowance of ₹ 6,28,939/- out of tools and consumables expenses the AO has held that out of the total expenditure of ₹ 94.72 lacs has increased to ₹ 11.28 lacs has been increased in the month of March. He further held that out of this material worth ₹ 5 lacs would have been used and therefore there has to be a closing stock balance of ₹ 6,28,939/-. Similarly, in case of fuel expenses assessee has claimed expenditure of ₹ 2.10. crores against previous year expenditure of ₹ 1.23 crores and therefore th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of material are nearby. It was also submitted that the material purchased for tools and consumables are standard products and are easily available in the market. It is a fact that creating closing stock for one year by reducing expenses does affect interest of the revenue as the same is claimable as an expense for the next year. In view of the above, the adhoc and arbitrary addition made by the AO on surmises and conjectures cannot be sustained. As such the same is deleted. 4.5.1 Disallowance of fuel expenses : The assessee has claimed fuel expenses of ₹ 2,10,83,266/-. AO observed that assessee has made purchases of fuel in cash and the fuel purchased on 25.03.2009 and 30.03.2009 of ₹ 2,54,900/- and ₹ 2,56,4311- respectively have not been disclosed in closing stock. The assessee has not been able to prove/justify that all the fuel purchased in month of March 2009 have been utilized fully. The unutilized fuel should have been reflected in the closing stock as on 31.03.2009. Taking conservative figure that the fuel purchased on 25.03.2009 and 30.03.2009 of ₹ 2,54,900/- and ₹ 2,56,4311- totalling to ₹ 5,11,331/- must not have been utilized by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointing out any single instance of expense not vouched or not properly vouched. In this context, the appellant was directed to produce the ledger account with supporting bills and vouchers for the month of June, 2008 and March, 2009 which were produced by the AR of the appellant. The above bills and vouchers were test checked by me at random and found to be in order. In view of the above, the adhoc and arbitrary disallowance of ₹ 5,0,000/- made by the AO cannot be sustained. As such the same is deleted. 10. Ld. DR could not controvert how the order of ld CIT (A) is erroneous. You cannot be stock of the material when it was purchased on need basis. Further in previous year also there is no opening stock therefore it cannot be said that explanation of the assessee is not proper. In any way the closing stock of this year becomes opening stock of next year and therefore at the most there would be shifting of profit from one year to another year and tax rates being same for both the years the issue would be tax neutral. Furthermore reading purchases of fuel it was not the case of ld AO that the bils of the material are not available or material has not been procured. Stating ..... X X X X Extracts X X X X X X X X Extracts X X X X
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