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TMI Blog2018 (11) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... 4A of the Act. - Decided in favour of assessee. Nature of expenses - Foreign Travel Expenses of Employees - revenue or capital expenditure - Held that:- n the issue of capitalization of the expenditure, in view of the assessee’s submission that the expenses incurred for the purpose other than the purchase of machinery, needs to be verified by the AO, we find this issue needs to be remitted back to the file of AO for verification of correctness of the facts relating to this claim. AO is directed to verify the expenses in this regard after granting reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Classification issues qua the depreciation rates - held that:- AO classified certain items as Furniture and allowed depreciation at the rate applicable to Furniture and certain items as Plant and Machinery and allowed depreciation at the rate applicable to them by applying functional test. Eventually, in the assessment made u/s.143(3) r.w.s. 153A of the Act, the AO made addition of ₹ 1,44,126/- being difference in depreciation @10% and 15% on some items under block of Plant and Machinery treating the same as Furnitur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion that the matter should be remanded to the file of CIT(A) for considering the above decision of the Tribunal in the case of Chhabi Electricals Pvt. Ltd. (2017 (6) TMI 514 - ITAT PUNE) after due verification of the facts of the present case. Accordingly, the ground raised by the assessee on merits is allowed for statistical purposes. MAT computation - Disallowance on account of Wealth Tax paid - Held that:- The wealth tax payment constitutes an ascertained liability for MAT purposes. Considering the favourable decision in favour of the assessee, we allow Ground raised by the assessee. - ITA No. 548/PUN/2016, ITA No. 606/PUN/2016 - - - Dated:- 2-11-2018 - Shri D. Karunakara Rao, AM And Shri Vikas Awasthy, JM For the Assessee : Shri R.S. Abhyankar For the Revenue : Shri Rajeev Kumar, CIT ORDER PER D. KARUNAKARA RAO, AM : These are cross appeals filed by the Assessee and the Revenue against the order of CIT (Appeals)-11, Pune, dated 29-01-2016 for the Assessment year 2010-11. 2. Background facts of the assessee include that the assessee is a company engaged in the business of manufacture and sale of life saving drugs, vaccines etc. The cases of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(A) erred in : 1a. in confirming the disallowance u/s.14A amounting to ₹ 3,18,85,207/- as per rule 8D. 2. in confirming the disallowance of foreign travel expenses of employees amounting to ₹ 6,77,682/- who travelled abroad. 3a. in directing the AO to classify items of fixed assets of ₹ 40,60,897/- like stainless steel tables stools, racks etc. located in manufacturing unit into Furniture and Fixtures and Plant and Machinery b. in not applying correctly the functional test to the facts of the case while deciding whether certain items like stainless steel table, stools, trolleys etc. constituted plant or not. 4. in confirming the disallowance of the provision for Leave Encashment amounting to ₹ 18,16,795/- pertaining to DTA unit ascertained on the basis of actuarial valuation for the specific employees of the Appellant Company. 5. in confirming the disallowance of demat charges amounting to ₹ 4,01,453/- made by the Assessing Officer. 6. in not treating the expenditure on laying of water pipeline amounting to ₹ 31,39,226 as revenue expenditure which has been laid down in the vicinity area of the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find there is no issue which needs separate adjudication in the cross appeals. Therefore, we proceed to extract the issue wise findings of the Tribunal in the following paragraphs. 7. Ground Nos. 1 Modified Grounds (a) (b) by the assessee relates to the issue of invoking the provisions of section 14A r.w. Rule 8D of the I.T. Rules, 1962. The said grounds and modified grounds raises the issue of satisfaction of the AO and also relate to the merits of the disallowance u/s.14A r.w.Rule 8D of the Act/Rules. In the assessment, AO disallowed sum of ₹ 3.19 crores (rounded off). CIT(A) partly allowed the appeal directing the AO to exclude the investments made in Debt linked Mutual Funds. Debt-linked Mutual Funds yield taxable income. In the modified grounds, assessee raised the issue of recording of satisfaction before invoking the provisions of section 14A Rule 8D. 7.1 Before us, assessee filed a chart stating the following : 1. AO should comply with mandatory requirement of sec.14A(2) r.w.r 8D (1)(a) and record his satisfaction as required thereunder. 2. This issue is covered in favour of assessee vide order of A.Y.2009-10 dt.08-06-2018 (ITA No.1184 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . DR for the Revenue relied on the orders of the AO/CIT(A). 30. We heard both the parties on the issue relating to the issue of recording of satisfaction and perused the above extracted satisfaction recorded by the AO on this issue. We find the legal position was explained by the Hon ble Apex Court and the Para No.37 of the judgment of Hon ble Apex Court in the case of Godrej and Boyce Manufacturing Company Ltd. (supra) are relevant. Hon ble Supreme Court explained the provisions of sub-section (2) and (3) of section 14A of the Act. For the sake of completeness, we proceed the extract the same here as under : 37. We do not see how in the aforesaid fact situation a different view could have been taken for the assessment year 2002-03. Sub-sections (2) and (3) of section 14A of the Act read with rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. Whether such determination is to be made on application of the formula prescribed under rule 8D or in the best judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed ₹ 50,00,000/- in the computation of income. 35. The requirement of section 14(2) of the Act is that the Assessing Officer is to record as to why the disallowance made by the assessee i.e. ₹ 50 lakhs under section 14A of the Act is not correct. The Assessing Officer takes note of the disallowance, considers the explanation of assessee and holds that the contention of assessee cannot be accepted. The preliminary satisfaction to be recorded by Assessing Officer, before making disallowance under section 14A of the Act read with Rule 8D of the Rules, is missing in the case; in the absence of the same, there is no merit in the disallowance made by the Assessing Officer. We find support from the ratio laid down by the Hon'ble Supreme Court in Godrej Boyce Manufacturing Co. Ltd. Vs. DCIT Anr. (2017) 394 ITR 449 (SC). 37. We do not see how in the aforesaid fact situation a different view could have been taken for the assessment year 2002-03. Sub-sections (2) and (3) of section 14A of the Act read with rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise. Thus, this ground No.1(b) is dismissed as academic. 7.3 In this case, the satisfaction recorded by the AO is same on that of the one recorded in the cases decided and referred to above. Considering the above legal proposition on one side and the facts of the present case on hand on the other, we find the assessee is entitled to relief on the issue of satisfaction raised in the addition Ground (1a). Accordingly, the said ground is allowed. Consequently, the other ground raised on the merits is dismissed as academic. Accordingly, the said grounds adjudicated as above. 8. Ground No.2 by the assessee relates to Foreign Travel Expenses of Employees amounting to ₹ 6,77,682/-. In the assessment, AO held the said expenses as capital in nature. CIT(A) confirmed the same. Aggrieved with the order of CIT(A) assessee filed the present appeal with Ground No.2. 8.1 Before us, Ld. Counsel filed a chart giving the following background facts and arguments. We proceed to extract the same below : 1. In this regard detailed submissions were made before the CIT(A). 2. Without prejudice to claim as Revenue expenditure, AO has not allowed depreciation on the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urred towards foreign travel of employees as capital in nature. 28. Both sides heard. The assessee has assailed the order of Commissioner of Income Tax (Appeals) in upholding the disallowance made by the Assessing Officer amounting to ₹ 25,77,069/- in order dated 04-02-2011 passed u/s. 154 of the Act. We find that the assessee had claimed the expenditure as revenue in nature. However, in an alternate submission before the Assessing Officer, the assessee prayed for treating the foreign travel cost as part of cost of machinery and allow depreciation on the same. The Assessing Officer allowed the capitalization of expenditure and also allowed depreciation on the same as admissible to the plant and machinery. Subsequently in rectification order u/s. 154 the Assessing Officer disallowed ₹ 25,77,069/-. In first appeal before the Commissioner of Income Tax (Appeals) upheld the findings of Assessing Officer. We find that the issues relating to capitalization of foreign travel expenditure of employees in connection with the finalizing the purchase of machinery had come before the Tribunal in assessee s own case in ITA No. 679/PN/2009. The Tribunal upheld the action of Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce against the assessee. In our opinion, the said judgments are relevant and applicable to the facts of the case. Accordingly, the grounds raised by the assessee should be allowed in his favour. 25. A perusal of the aforesaid clearly shows that in the assessment year 2002-03, the Tribunal allowed the foreign travel expenses as revenue expenditure primarily for the reason that Revenue did not make out a case that the foreign travel expenditure was incurred in connection with any capital asset. However, the factual position in the instant year is quite different, inasmuch as we have noted earlier that the assessee itself submitted before the Assessing Officer vide letter dated 27-11-2008 that the expenditure on foreign travel in question was undertaken for purchase of machinery, though the purchase of such machinery was finalized in subsequent year. Therefore, the decision of the Tribunal in the case of the assessee for A.Y. 2002-03 does not help the assessee in the instant year and thus on this Ground, assessee has to fail. 29. The ld. AR of the assessee has admitted that the issue in the present appeal is identical to one adjudicated by the Tribunal in 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 1,44,126/- being difference in depreciation @10% and 15% on some items under block of Plant and Machinery treating the same as Furniture. Before the CIT(A), the assessee submitted that this issue has been decided in favour of the assessee for the A.Yrs. 2006-07, 2007-08 and 2008-09. The CIT(A) after considering the submissions of the assessee and the order of CIT(A) for the A.Y. 2008-09 partly allowed the appeal of the assessee. Contents of Para No.13.3.3 of the order of CIT(A) are relevant. 34. After hearing both the sides, we find this issue has already been adjudicated by us against the Revenue and in favour of the assessee while dealing with the appeal of the Revenue. Considering the same, this ground raised by the assessee is allowed. 9.2 From the above, it is evident that similar issue now stands in favour of the assessee vide the decision of the Tribunal in the assessee s own case for the A.Y. 2009-10. Considering the same, Ground No.3 raised by the assessee stands allowed. 10. Ground No.4 by the assessee relates to disallowance of Provision for Leave Encashment. 10.1 Before us, Ld. Counsel for the assessee submitted that the issue has been decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Leave Encashment stands decided against the assessee. Considering the same, this Ground No.4 raised by the assessee is dismissed. 11. Ground No.5 raised by the assessee relates to disallowance of Demat charges amounting to ₹ 4,01,453/-. 11.1 As seen from the chart furnished by the Ld. Counsel for the assessee, we find this issue is also a decided issue in favour of the assessee by virtue of the order of Tribunal in the assessee own case for the A.Y. 2009-10. On hearing both the sides on this issue, we find it relevant to extract the relevant paras from the order of Tribunal (supra) and the same reads as under : 43. Sixth issue : Ground No.6 raised by the assessee relates to addition of ₹ 1,10,605/- u/s.48 of the Act made on account of demat charges which was claimed as expenditure incurred for earning income from capital gains. 44. Relevant facts on this issue include that assessee debited the said sum to the profit and loss account and claimed that the same should be allowed while computing the capital gains. Assessee relied on the decision of Bangalore Bench of the Tribunal in the case of Infosys Technologies Vs. JCIT 109 TTJ 631 (Bang.). As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Agreement dated 01.01.2005. Following his decision for the earlier assessment years i.e. assessment year 2004-05 to 2007-08, the Assessing Officer disallowed the expense against which assessee went in appeal before the CIT(A). The CIT(A) noted that similar issue for assessment years 2004-05 to 2006-07 was adjudicated by the Tribunal in the assessee s own case in favour of the assessee and against the Revenue vide order dated 31st May, 2011 (supra). However, the CIT(A) noticed that subsequently Mumbai Bench of the Tribunal in the case of one Shri Homi K. Bhabha vs. ITO in ITA No. 3287/Mum/2009 decided a similar issue against the assessee and therefore he held the issue against the assessee. In view of the aforesaid, assessee is in further appeal before us. 11. At the time of hearing, the learned counsel for the assessee submitted that similar stand of the CIT(A) in the assessee s own case for assessment year 2007-08 came up before the Tribunal in ITA No. 356 240/PN/2011 dated 25.07.2012 and after considering the divergent view of the Mumbai Bench of the Tribunal in the case of Shri Homi K. Bhabha (supra) which has been relied upon by the CIT(A), the issue has been decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC)]. Further, in the instant case the Tribunal in assessee s own case has already taken a view in favour of the assessee. Since the AO CIT(A) have followed the order for earlier year in the case of the assessee and since the order of CIT(A) for earlier year has been reversed by the Tribunal, therefore, unless and until the decision of the Tribunal is reversed by a higher court, the same in our opinion should be followed. In this view of the matter, we respectfully following the order of the Tribunal in assessee s own case for A.Y. 2004-05 allow the claim of the Portfolio Management fees as an allowable expenditure. The ground raised by the assessee is accordingly allowed. 14. Following the aforesaid precedent, which has considered the similar objections of the CIT(A), in our considered opinion, the order of the CIT(A) in the present case is untenable and we accordingly setaside the same and direct the Assessing Officer to delete the impugned addition. Respectfully following the above decision of the Tribunal, we reverse the order of CIT(A). The Demat expenditure of ₹ 1,10,605/- is allowable u/s.48 of the Act. The ground No.6 raised by the assessee. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel prayed for allowing this ground in favour of the assessee. 12.3 Ld. DR for the Revenue relied on the orders of AO/CIT(A). 12.4 We heard both the sides and perused the orders of the Revenue and the order of the Tribunal in the assessee s own case for the A.Y. 2009-10. We proceed to extract the observation made by the Tribunal and the same reads as under : 51. We heard both the sides and perused the orders of the Revenue as well as the cited binding judgment in the case of CIT Vs. Chowgule Chemicals Pvt. Ltd. 216 ITR 234. There is no dispute on the facts that the assessee spent ₹ 72.96 lakhs (rounded off) on the project of laying water pipeline to carry the water from the source-Pond/Reservoir to the factory premises for continuous supply of water to the company for its business purposes. The whole of the project involves a number of obligations or undertakings given to the Irrigation Department of Maharashtra Government It involves number of controls and discretion of Government of Maharashtra in matters pertaining to supply of water, rights on land used for canal and also the entire continuation of the project. As such, the assessee is not the owner of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification of the legal rights, if any, secured in the process. In other words, in order to arrive at a just and proper conclusion, one must look at the type, nature and character of the advantage in a commercial sense (without giving undue emphasis to the form thereof or the terminology used) in the light of the surrounding circumstances and in the larger context of necessity and expediency. If the expenditure is so related to the carrying on or conduct of the business that it may be regarded as an integral part of the profit making process and not for acquisition of an asset or a right of permanent character, the expenditure may be regarded as revenue expenditure even though the advantage may endure for some indefinite future. What is relevant is the purpose of the outlay and its intended object and effect, considered in a commonsense way, having regard to the business realities. In a given case, the test of 'enduring benefit' might break down...... 5. It was held in the above case : The 'purpose of the outlay', 'its intended object and effect', considered in a commonsense way, having regard to the business realities, are more relevant factors f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rieved with the confirmation of disallowance by the CIT(A) on this issue, the assessee is in appeal before us. 13.3 Before us, Ld. Counsel for the assessee submitted that the CIT(A) failed to appreciate the fact that the assessee company is one of the largest vaccine manufacturing company. During the year, assessee company launched various new products, such as Hibpro Pentavac. In order to make the doctors aware of this innovation, assessee company conducted a campaign involving private doctors for encouraging the doctors to conduct vaccination on infants. In the process, a scheme was formulated offering discount on the basis of purchases made by them. He submitted that the AO failed in placing relying on the Notification issued by Medical Council of India dated 14-09-2009. The said circular prohibits medical practitioners, professional associates from taking any gift, travel facility, hospitality etc. AO failed to appreciate that the Pharma companies are not the members of Medical Council and hence, the notification is not applicable to them. AO failed to appreciate the facts on records that the expenditure incurred by the assessee company by giving discounts as incentive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly covered by the decisions of Mumbai Bench of the Tribunal in the case of DCIT Vs. PHL Pharma Pvt. Ltd.decided on 12-01-2017 and in the case of M/s. Solvay Pharma India Ltd. Vs. Pr.CIT decided on 11-01-2018. For the sake of completeness of the order, we proceed to extract the operational finding from the aforesaid orders of the Tribunal. Finding from PHL Pharma Pvt. Ltd. 6. On a plain reading of the aforesaid notification, which has been heavily relied upon by the department, it is quite apparent that the code of conduct enshrined therein is meant to be followed and adhered by medical practitioners/doctors alone. It illustrates the various kinds of conduct or activities which a medical practitioner should avoid while dealing with pharmaceutical companies and allied health sector industry. It provides guidelines to the medical practitioners of their ethical codes and moral conduct. Nowhere the regulation or the notification mentions that such a regulation or code of conduct will cover pharmaceutical companies or health care sector in any manner. The department has not brought anything on record to show that the aforesaid regulation issued by Medical Council of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements cited by learned AR and DR during the course of hearing before us as well as referred by CIT in his order passed u/s.263 of the IT Act, in the context of factual matrix of the case. In this case, we found from record that the assessee is engaged in the manufacturing of pharmaceutical products. In the course of its business it has incurred expenditure on advertisement and publicity. While framing the assessment, AO has called for the detail of expenditure so incurred and examined the nature of expenditure and thereafter only AO has allowed the expenditure as having been incurred for the purpose of business. We had also carefully gone through the notification dated 11/03/2002 notifying the regulations issued by the Medical Council of India (MCI). The code of conduct laid down in the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 ('MCI Regulations') issued with effect from 10th December 2009 applies only to doctors and not to Pharmaceutical and Medical device companies. Accordingly, MCI Regulations are not app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts and dissemination of knowledge etc and not with a view to giving something free of charge to the doctors. The act of giving something free of charge is incidental to the main objective of product awareness. Accordingly, it does not amount to provision of freebies. Consequently, there is no question of contravention of the MCI Regulations and applicability of Circular no. 5 of 2012 for disallowance of the expenditure. 22. The department has not brought anything on record to show that the aforesaid regulation issued by Medical Council of India is meant for pharmaceutical companies in any manner. On the contrary, the assessee has brought to the notice of the bench the judgment of the Delhi High Court in the case of Max Hospital v. MCI in [WPC 1334 of 2013, dated 10-1-2014], wherein the Medical Council of India admitted that the Indian Medical Council Regulation of 2002 has jurisdiction to take action only against the medical practitioners and not to health sector industry. From the aforesaid decision, it is ostensibly clear that the Medical Council of India has no jurisdiction to pass any order or regulation against any hospital or any health care sector under its 2002 reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of 'Indian Medical Council Regulation 2002' by making it applicable to the pharmaceutical companies or allied health care sector industries. Such an enlargement of scope of MCI regulation to the pharmaceutical companies by the CBDT is without any enabling provisions either under the provisions of Income Tax Law or by any provisions under the Indian Medical Council Regulations. The CBDT cannot provide casus omissus to a statute or notification or any regulation which has not been expressly provided therein. The CBDT can tone down the rigours of law and ensure a fair enforcement of the provisions by issuing circulars and by clarifying the statutory provisions. CBDT circulars act like 'contemporanea expositio' in interpreting the statutory provisions and to ascertain the true meaning enunciated at the time when statute was enacted. However the CBDT in its power cannot create a new impairment adverse to an assessee or to a class of assessee without any sanction of law. The circular issued by the CBDT must confirm to tax laws and for purpose of giving administrative relief or for clarifying the provisions of law and cannot impose a burden on the assessee, leave alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is evident that the scope of the CBDT Circular cannot be extended to the pharmaceutical companies without having any enabling Notification or Circular for Medical Council of India. Consequently, the present assessee being a pharmaceutical company is outside the scope of the said circulars of MCI and the CBDT. Considering the above, we are of the opinion that the Ground No.10/Modified Ground No.10 raised by the assessee should be allowed in favour of the assessee. 13.6 Thus, the above ratio of our decision in A.Y.2009-10 is applicable to this year too. Consequently, the circular of CBDT is in-applicable to the present case as held by us. Considering the settled nature of the issue and following the rule of consistency, this ground raised by the assessee needs to be allowed in favour of the assessee. Accordingly, Ground No.7 raised by the assessee is allowed. 14. Ground No.8 raised by the assessee relates to disallowance of rent paid for Bungalow located at 70, Koregaon Park , Pune. 14.1 Before us, Ld. Counsel for the assessee submitted that Serum Institute paid rent of ₹ 30 during the year under consideration. Allowability of the said expenditure incurred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is accordingly allowed. 27. We find that the arguments raised by the Ld. DR for the Revenue are identically raised in the said appeal proceedings for A.Y. 2005-06. Following the decision of the Tribunal in assessee s own case for A.Y. 2005-06 (supra), we are of the opinion that this issue also should be allowed in favour of the assessee. Accordingly, Ground no.4 raised by the assessee is allowed. Although, the above finding did not specify the rent expenditure in fact, the ground is on the rent only. Therefore, the ground raised by the assessee stands allowed in favour of the assessee. Considering the above decision of the Tribunal in assessee s own case, we are of the opinion that the expenditure on account of rent paid on the house property is allowable in favour of the assessee. 55. Regarding the other limb of ground relating to allowability of depreciation of capital expenditure in connection with the said house property at 70, Koregaon Park, it is now settled legal issue that the expenditure by Serum Institute of India Ltd. constitutes an allowable expenditure so long as there are revenue in nature. Regarding the expenditure of capital nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Tribunal (supra) and the same read as under : 40. In view of the above said ratios, the present issue of bogus purchases is to be decided on the basis of facts of each case. The first aspect is the information received by the Assessing Officer from the Sales Tax Department in respect of alleged hawala dealers. In many cases, the Assessing Officer has not even received the copy of statement recorded or any other evidence from the Sales Tax Department, except the list of hawala dealers and on the basis of the said list, the assessment proceedings have been completed in the hands of assessee, who had made the purchases from the said parties. In case, no such evidence has been received by the Assessing Officer before making addition, then there is no warrant in making aforesaid addition in the hands of assessee merely on the basis of so called list of hawala dealers. There are other cases, where the Assessing Officer had received the statement of the persons who were hawala dealers and who had admitted to have just issued bills of sale without delivery of goods. In such circumstances, there is evidence against the respective assessee that where the seller of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d information during assessment proceedings. II. Where the Assessing Officer had received the statements of persons who had admitted to have just issued bills of sale without any delivery of goods. In view of such evidence, where the assessee had not entered into real transaction of purchase of goods and in the absence of any delivery of goods, the sales are bogus and the entire sales are to be added in the hands of assessee. Admittedly, the dealer had not even paid VAT against such passing of goods. III. The case where the Assessing Officer had confronted the information received from the Sales Tax Department and had supplied copies of statements recorded and had also issued notice under section 133(6) of the Act, where hawala dealer was not traceable and in the absence of the assessee failing to file any documentary evidence of delivery of goods, addition is to be upheld in the hands of assessee on account of such bogus purchases. IV. The next instance is the case of goods which have been admittedly sold by the hawala dealer and has been received by the assessee, who in turn had maintained quantitative details and also evidence of its movement i.e. transportation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its onwards consumption in the manufacturing process of the assessee. In such circumstances, where the assessee has established the trail of goods purchased to the final consumption, then there is no merit in the addition made by the Assessing Officer. Thus, the grounds of appeal raised by the assessee are allowed and appeal of the assessee is allowed. 15.4 Considering the above and in all fairness, we are of the opinion that the matter should be remanded to the file of CIT(A) for considering the above decision of the Tribunal in the case of Chhabi Electricals Pvt. Ltd. (supra.) after due verification of the facts of the present case. Accordingly, the ground raised by the assessee on merits is allowed for statistical purposes. 16. Ground No.10 by the assessee relates to disallowance on account of Wealth Tax paid amounting to ₹ 21,40,955/-. Relevant facts include that the assessee has not debited the Wealth Tax paid to the profit and loss account. Assessee claims that though the Wealth tax is not debited to the profit and loss account the same is deductible from the book profit for the purpose of section 115JB of the Act. AO denied the same and the CIT(A) confirmed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Considering the settled nature of the issue in favour of the assessee, the Ground No.9 raised by the assessee is allowed. 16.3 Therefore, the wealth tax payment constitutes an ascertained liability for MAT purposes. Considering the favourable decision in favour of the assessee, we allow Ground No.10 raised by the assessee. 17. In the result, the appeal of the assessee is partly allowed for statistical purposes. Now we shall take up the appeal of the Revenue. ITA No.606/PUN/2016 By Revenue A.Y. 2010-11 18. Grounds raised by the Revenue are extracted here as under : 1. On the facts and the circumstances of the case, the Ld. CIT(A) has erred in directing the AO to exclude investments in Debit Oriented Mutual Funds for the purpose of disallowance u/s.14A r.w.r.8D when no such exclusion has been mandated by the Act. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in directing the AO to segregate assets into furniture and Plant and Machinery when both assets are indistinguishable and fall in the category of furniture and not plant and machinery. 3. On the facts and circumstances of the case the Ld. CIT(A) has erred in allowin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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