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TMI Blog2016 (4) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 1,81,20,360/- made u/s 35 of the Act being the amount spent for purchase of plant and machinery 2. The ld. CIT(A) ignored the finding recorded by the AO and the fact that the assessee could not file any document during the assessment proceedings to substantiate the claim". 4. We have heard the rival submissions and have perused the relevant material on record. Supporting the action of the AO, the ld. DR submitted that no trust-worthy evidence of any nature was submitted by the assessee during the assessment proceedings to substantiate the claim regarding purchase of plant and machinery from three vendors viz. Krishna Machine Tools, Ghaziabad, Shree Krishna Machine Tools, Ghaziabad and Vas Techno Engg. Ghaziabad. Hence the so called machinery purchased from these vendors was rightly held to be only an entry in the books of accounts of the assessee. The ld. DR vehemently contended that since no such plant and machinery has been purchased by the assessee, therefore, the claim of deduction u/s 35 of the Income tax Act, 1961 [for short, 'the Act'] was correctly disallowed by the AO. The ld. DR further pointe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... threshold. The ld. AR has also drawn our attention towards assessee's paper book pages 68 to 73 and submitted that the assessee vide letter dated 11.12.2000 submitted copies of bills, receipts, vouchers, inspection report and copy of account of two parties i.e Exim Trading Company and Ganesh Corporation with the AO but the same was not considered in a proper and judicious manner which clearly supports the claim of the assessee and said evidence was rightly considered and accepted by the ld. CIT(A) while granting relief to the assessee. The ld. AR further submitted that the AO further required the assessee to file certain documents on machinery supplied and accordingly the assessee filed copy of Central Excise Registration Certification, copy of Sales Tax Challans in respect of two vendors i.e. Krishna Machine Tools and Vas Techno Engineers and copy of confirmation of account from Exim Trading Company and Ganesh Corporation was also filed before the AO vide letter dated 22.12.2008 which has been placed and available at assessee's paper book pages 74 to 87. The ld. AR also contended that the assessee vide its reply dated 24.12.2008 clarified the inconsistency noticed by the AO which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the above rival submissions, we note that the ld. CIT(A) has granted relief to the assessee with the following conclusion and findings: "4.11 I have carefully gone through the reasons of disallowance in the assessment order and the written submissions and oral arguments of the Authorised Representative of the appellant. I feel that the additional evidence filed by the appellant needs to be admitted especially on account of the facts that in the remand report, the learned Assessing Officer has not commented upon the para 1 of appellant's letter dated 25th August, 2009 in which it has been claimed that sufficient opportunity of being heard was not granted to the appellant. I, therefore, hold that the additional evidence/papers would be relevant to examine the issue, and hence I admit the same. 4.11 Now coming to the merits of the addition made, I am of the considered opinion that the learned Assessing Officer has not viewed the matter in the right perspective. The learned Assessing Officer has simply been influenced too much by certain dates. The learned Assessing Officer has imagined a very ideal situation about the flow of documents that the same should have taken place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant about freight bills, loading and unloading charges etc. become important piece of evidences to substantiate its claim. All such details leave no doubt in anybody's mind that the purchases made by the appellant were genuine and duly supported by all the evidences and the inferences drawn by the A.O. are not justified and cannot be upheld as the same are based on certain suspicions and doubts only. 4.12 The most important and clinching evidence which has been filed by the appellant is that the payments for the purchases of the plants and machinery were all made through the banking channels and the same have not doubted by the Ld AO have not been doubted as to how the purchase/acquisition of the goods can be doubted. 4.13 the non availability of the suppliers rightly raised a serious doubt in the mind of the AO, who instead of stopping there and making the same as one of reasons for disbelieving the purchase, should have carried on the investigation to its logical conclusion. I am afraid that non availability of the suppliers at the addresses after delay in the receipt delivery of goods are not the purchase in view of the documentary evidences filed by the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence on record to substantiate or prove that the actual purchase of plant and machinery were not made by the assessee. 12. Per contra, from the documentary evidence and explanation of the assessee, we are in agreement with the conclusion of the ld. CIT(A) that the assessee has proved and furnished every possible details pertaining to the purchase of transaction of plant and machinery including bills of payments of freight to the transporters and bills of loading and unloading charges have also been duly recorded in the books of account. From the assessment order, it is vivid that the assessee produced books of accounts and other relevant documents before the AO during the assessment proceedings but he AO made additions ignoring the vital piece of evidence which was correctly considered by the first appellate authority while granting relief to the assessee. We further note that there was doubt in the mind of the AO about the delay in receiving goods but it was properly explained by the assessee by showing that there was break down of the truck in one case and reduction of freight payment in another case. Obviously, such delay in receiving goods did create a doubt in the mind of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crutiny by other statutory bodies such as Registrar of Companies and SEBI etc. which fact cannot be ignored or rejected at the threshold which conclusively supports the claim of the assessee towards purchase of plant and machinery for R & D purpose. On the basis of foregoing discussion, we are unable to see any ambiguity or perversity or any other valid reason to interfere with the impugned order of the ld. CIT(A) and thus we uphold the same. Accordingly, we approve the conclusion of the ld. CIT(A) who deleted the baseless addition and disallowance made by the AO and hence the sole ground of the Revenue being devoid of merits is dismissed. 15. In the result, the appeal of the Revenue stands dismissed. ASSESSEE'S APPEAL IN ITA NO. 1505/DEL/2011 16. The assessee has raised the following grounds of appeal: "1. That the learned CIT (Appeals) has grossly erred in law and on facts and in the circumstances of the case in upholding the action of the Assessing Officer in disallowing a sum of Rs. 28,17,360/- out of the software purchase made by the appellant for the purposes of its R&D. 2. That the learned CIT (Appeals) grossly erred in holding that the purchases of software for Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee may be directed to be allowed. The ld. AR placed his reliance on the decision of the Hon'ble High Court of Delhi in the case of CIT Vs. Rice India Exports Pvt. Ltd [supra]. 18. Replying to the above, the ld. DR strongly supported the impugned order and submitted that the initial burden to prove was on the assessee and the assessee could not discharge its burden, hence addition was correct and sustainable. The ld. DR also contended that the assessee could not file confirmation of the supplier, hence the AO and the ld. CIT(A) were quite justified in making and upholding the addition. 19. On careful consideration of ht above rival submissions, firstly we observe that the ld. DR has not disputed this contention of the ld. AR that the AO allowed and accepted purchase amounting to Rs. 14.85 from M/s Exim Trading Company. From the assessee's paper book page 19 it is amply clear that a per accounts confirmation given by the supplier/vendor M/s Exim Trading Co. from 3.10.2005 to 31.3.2006 [FY 2005-06/2006-07] there was total purchases of Rs. 43,31,864/- whereas the AO disputed only two purchases of 12.1.2006 Bill No. 330 and 14.1.2006 Bill No. 539 totalling to Rs. 28,17 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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