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TMI Blog2018 (11) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... ntional energy like transmission lines, distribution networks, substations, solar installations, bio mass based power generation etc. Its area of operations is mainly in the African continent in countries like Burkina Faso, Nigeria, Togo, Mozambique, Cote d'ivoire, Gambia etc. These projects are generally financed under lines of credit extended by the Government of India or international funding agencies like World Bank and regional development banks. The assessee is not a manufacturer. The raw material and component parts are obtained from third parties suppliers/manufacturers, exported and thereafter erected/installed at site by the assessee or through local subcontractors under supervision. The turnover during the year was Rs. 74,51,17, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different entities. According to the assessee, basing of their earlier experience, they valued the DEPB license at 90% and the chart filed in the paper book shows that as a matter of fact the DEPB was sold at a price much lower than 90% and some licenses were even lapsed in the year 2014. The authorities below held that the estimate of sale price of DEPB at 90% of its actual value was without any justification and a provision is made notionally to cover future probable forecast of loss. It is further recorded that Section 37(1) states that only expenses incurred during the year is allowed as deduction and since the provisions are not expenses, those are not allowed as deduction. 5. It is the argument of the learned AR that here the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essitating them to written off the loss. So also in the year 2014, there was lapse of DEPBs. There is no dispute from the revenue as to the actual value realized by the assessee in respect of the DEPB on their sale which is something around 90% or less of their actual value. The statistics furnished by the assessee suggests that there is a basis for the assessee to estimate the realizable value of the DEPBs as against their actual value and inasmuch the DEPBs that fetched the highest price from Bajaj Overseas Impex was at 90%, we are convinced to believe that there is a scientific basis for the assessee to estimate the probable realizable value of the DEPB at 90%. 8. Further in view of the Notification No. SO 69(E) dated 25.1.1996, it is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned AO proceeded to disallow 10% of the expenses to prevent the leakages of revenue. 10. Learned CIT(A) granted relief to the assessee on this score to some extent to sustain the disallowance of 10% of mobile expenses of the employees to the tune of Rs. 27500/-, 10% of local conveyance expenses to the tune of Rs. 44,000/- and a sum of Rs. 10,48,368/- in respect of the export promotion expenses. 11. Though the learned CIT(A) had given some relief to the assessee on this still there is no reason or logic behind the sustaining of the disallowance as enumerated above. It is purely an ad hoc addition on estimate basis without reference to the books of accounts of the assessee or finding out any particular discrepancy therein. The assessee pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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