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TMI Blog2018 (9) TMI 1306X X X X Extracts X X X X X X X X Extracts X X X X ..... and providing goods to its sister concerns on credit basis. In our view, the conclusion. drawn by the Assessing Officer is based on mere presumptions and surmises, rather than evidence - decided in favour of assessee - ITA No. 2/Hyd/2017 - - - Dated:- 19-9-2018 - Smt. P. Madhavi Devi, Judicial Member And Shri S. Rifaur Rahman, Accountant Member For the Assessee : Shri P. Murali Mohana Rao For the Revenue : Shri J. Siri Kumar ORDER PER S. RIFAUR RAHMAN, A.M.: This appeal filed by the assessee is directed against the order dated 30/06/2016 of CIT(A) 9, Hyderabad for AY 2011-12. 2. Brief facts of the case are, the assessee company engaged, in the business of trading in steel, filed its return of income for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is in the trading of steel and surprisingly, the assessee with such huge turnover, did not debit any expenditure on account of material handling charges or transport charges or labour charges or any other expenditure that is related to the actual delivery of the traded goods. When asked to explain, the AR of the assessee filed a note which was extracted by the AO at page 3 of his order and the same is reproduced below: The company makes bulk sales and purchases based on preorders from its customer basis. The purchases are made only after the company receives confirmed orders from its customers. Once the orders are received, the company makes enquires and procures the material from the lowest quoting party. Once the purchase part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of CIT(A), the assessee is in appeal before us raising the following grounds of appeal: 1. The Ld. CIT (A)-9 has erred in both in law and on facts in passing the appellate order upholding the Assessment order passed by the AO u/s 143(3) for the AY 2011-12. 2. The Ld. CIT (A)-9 ought to have appreciated the fact that the assessee is maintaining the books of accounts and the same are audited by a qualified Chartered Accountant under the provision of 44AD of the Income Tax Act, 1961. 3. The ld. CIT (A)-9 erred in not appreciating the fact that the assessee company incurred the expenditure exclusively for trading activity related to business activity only but not for any unrelated activity. 4.The Ld. CIT (A)-9 Hyderabad e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AR of the assessee submitted that the financial charges were incurred on a letter of credit granted by various financial institutions and the letter of credit proceeds were utilized for payments to various trade creditors and for these services, the amounts charged by the banks were shown under the head financial charges. He submitted that the assessee furnished the bank account copies and other evidences before the AO to accept the financial charges of ₹ 7,66,83,299/-. But, the AO rejected the submission and disallowed the said financial charges on the ground that the assessee was a mere paper company which was not dealing any real trading activity. He submitted that books of account, proper ledger accounts have been maintained wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, we are of the view that the assessee established the fact that it incurred the financial charges during the course of its business, which are genuine. Moreover, in its own case (formerly known as M/s Global Forgings Ltd. (supra), similar issue came up for consideration before the Tribunal and the Tribunal dismissed the appeal of the revenue by holding as under: 15. We have heard the arguments of both the sides and also perused the relevant material on record. As can be seen from the impugned order of assessment, the Assessing Officer has not disputed the fact that the assessee has incurred the expenditure in question. The only reason for the disallowance made by the Assessing Officer was that the assessee has incurred the expend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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