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TMI Blog2018 (4) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for. We hold accordingly. Addition on account of loss in transit - amount of sale was not realized, therefore, the same was written off as bad debt but under the wrong head “loss in transit” - Held that:- In the claim made by assessee was within the provision of law as specified u/s.36(1)(vii) r.w.s. 36(2) of the Act. Thus, merely claiming the deduction under the wrong head i.e. “loss in transit” would not disentitled the assessee from claiming the benefit of the bad debt. It was also observed that copy of ledger was duly provided to AO at the time of assessment proceedings and in this regard, Ld. DR has not brought anything contrary to the finding of Ld. CIT(A). Thus, we have no alternative except to confirm the order of Ld. CIT(A). - Decided against revenue - ITA No. 1292/ Kol/2014 - - - Dated:- 4-4-2018 - Shri N. V. Vasudevan, Judicial Member And Shri Waseem Ahmed, Accountant Member By Appellant : Shri S. Dasgupta, Addl. CIT-DR By Respondent : Shri Dev Kumar Kothari, FCA ORDER Per Waseem Ahmed, Accountant Member This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-VI, Kolkata dated 25.03.2014. Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) granted relief to assessee on the basis of additional evidence which was accepted in contravention to Rule 46A of Income Tax Rules, 1962. 3. Briefly stated fact are that assessee in the present case is a private limited company and engaged in business of trading and manufacturing of compact disc. The assessee during the year has purchased huge plant and machinery for ₹ 35,71,65,000/- and it has also incurred cost in relation to such plant and machinery. Therefore, the same was capitalized by assessee by adding the same to the cost of plant and machinery. The cost of plant machineries and incidentally cost incurred in relation to such plant and machineries are detailed as under:- (i) Plant and machinery 35,71,65,000/- (ii) L.C. Opening charges 12,25,920/- (iii) Clearing charges 14,22,772/- (iv) Difference due to foreign exchange fluctuation 4,91,89,267/- (v) Addition for pre-operative charges 6,204/- ₹ 40900 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as received on 11.01.2013, however, the assessment ordered was received on 09.01.2013. As per the said letter for CDR plans the date of completion of installation is 02.04.2009 and that of CR Replication line is 19.05.2009. However, it must be stated here that why the Tax audit report is silent on the date of put to use of these plans and machineries is difficult to understand. Moreover, it is seen from the letters that CD Replication line was purchased by Space Matrix Agencies Pvt Ltd and the Ld CIT(A) may clarify this. The ld. CIT(A) ma9y draw necessary inferences in respect of these supporting documents and came to a logical conclusion as the undersigned is not in a position to comment on the genuineness and authenticity of these letters as it could not be verified within this short time. Without prejudice to the above, the undersigned does not find any infirmity in the content of the said letters regarding installation and trial production. However, the Ld. CIT(A) my examine other supporting documents to correlate the same. Ld. CIT(A) after considering the submission made by assessee has deleted the addition made by AO by observing as under:- 3.6 I have cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of ₹ 7,08,182/- only and the turnover was of ₹ 5,82,12,285/- only. Prior to that, there was no manufacturing. The above facts clearly indicate that this was the first year in which the appellant company carried out significant and substantial manufacturing operation and thus achieved a quantum jump in turnover. According to the appellant, this could not have been possible without installation of the machinery imported by it from Singapore. The assessing officer has stated in his order that the business of the appellant was manufacturing of compact discs. The appellant was, prior to purchase of machinery under consideration, having substantially less machinery. As per schedule 4 to the balance sheet, plant machinery as on 1.4.2009 were of ₹ 6.18 crores as against addition of ₹ 40.9 crores. Thus, it does appear that the appellant could carry out substantial production achieved during the year on account of installation and use of the imported machinery. It may be recalled, that in the present case the addition is not based on any definite finding that the machinery was not put to use. Rather, the assessing officer took the lead from the fact that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant and machinery for ₹6,92,40,656/-which was consisting of depreciation on WDV as well as plant and machinery purchased during the year. Thus, in our considered view, the AO has grossly erred in making the disallowance of the depreciation on the opening WDV on plant and machinery. We also note that Ld. CIT(A) duly complied the provisions of 46A(3) of the IT Rules, 1962 by calling the remand report from AO on the submissions / details filed by the assessee at the time of appellate proceedings. Thus the allegation of the Revenue that the additional documents have been accepted by the ld. CIT-A in contravention to the provisions of Rule 46A has no basis. At this juncture we also find important to reproduce the remand report furnished by the AO which is as under:- The assessee has filed these supporting issue by G-Steelmet PTE Limited, Singapore and was received on 11.01.2013, however, the assessment order was passed on 09.01.2013, As per the said letter, for CDR plants the date of completion of installation is 02.04.2009 and that of CD Replication line is 19.05.2009. However, it must be stated here that why the Tax audit report is silent on the date of put to us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer had disbelieved the appellant s claim that the plant and machinery had been installed, he was of the view that interest and bank charges pertaining to the same should have been capitalized and not claimed as revenue expenditure. While deciding ground no.1 and 2, I have already held that the machinery had been put to use by the appellant. Therefore, the appellant is entitled to claim interest and bank charges after commissioning of the machinery as revenue expenditure. It is seen that as per the certificate issued by the supplier, the entire machinery was run for trial production dated 22.05.2009. In the submissions made before the Assessing Officer (reproduced in the assessment order) also the appellant has stated that the plant and machinery being capitalized on 22.05.2009. Thus, it follows that the appellant shall be entitled to claim interest and bank charges as revenue expenditure if incurred after 22.05.2009. On going through the details of interest, it is seen that an amount of ₹ 4,00,954/- was incurred on 18.05.2009. Similarly in bank charges an amount of ₹ 95,793/- pertains to the period before 22.05.2009. Thus interest and bank charges of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the appellant had made export sale to M/s Dicker International Ltd. in the financial year 2007-08. However, the customer did not receive the items exported by the appellant due to loss in transit and therefore, did not make payment to the appellant. The appellant has produced the ledger account of the party which supports the contention that the amount has been shown as sale in the financial year 2007-08 and thereafter no payment has been received. Thus, the amount was satisfying all the conditions prescribed u/s. 36(1)(vii) read with section 36(2) of the IT Act, 1961 and a per these provisions, the appellant was not required to produce any evidence such as insurance certificate etc. considering the above position, the appellant is entitled to claim the deduction u/s.36(1)(vii) of IT Act. The disallowance of ₹ 19,57,500/- is therefore, deleted. The Revenue, being aggrieved, is in appeal before us. 15. Before us Ld. DR vehemently relied on the order of AO and he left the issue to the discretion of the Bench where Ld. AR drew our attention on page 13 and 14 of the paper book where the copy of ledger of M/s Dicker International Ltd. was placed. Ld. AR further submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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