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TMI Blog2018 (7) TMI 1916X X X X Extracts X X X X X X X X Extracts X X X X ..... kers and Shareholders Pvt. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT]. Therefore, we are of the view that this issue should be remanded to file of AO. AO is directed to examine the details furnished by the assessee at page 4 of the paper book regarding the genuineness of expenditure and the reasons for not receiving the bills in time, and not including the expenses in the returns of income for the A.Yrs. 2010-11 and 2011-12, as the case may be. Ground No.1 raised by the Revenue is allowed for statistical purposes. Addition on account of sale of scrap - understatement of sales - rates of scrap per Metric Tonne shown by the assessee - HELD THAT:- As perused the Metallurgical Guidelines issues by the Ministry of Mines in the Indian Minerals Yearbook, 2011 where the melting scrap for the year 2009-10 is indicated as 19133 per tonne. Considering the same, the rates of scrap per Metric Tonne shown by the assessee are within the prescribed limits. We hold that assessee has not understated the sale of scrap in any manner and AO failed to establish with cogent evidences. AO only proceeded to make addition on surmises and conjectures. Therefore, we uphold the order of CIT(A) deleting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Relevant facts include that assessee is a company and engaged in the business of manufacture and sale of LCV, utility vehicles, three wheelers, tractors and spare parts thereof. Assessee filed the return of income on 29-09-2010 declaring total income of ₹ 42,75,76,770/- u/s.115JB of the Act. Assessee earned exempt income of ₹ 6,94,375/- from sale of shares of ICICI Bank Ltd. valuing ₹ 26,96,250/- and claimed the said income as exempt u/s.10(34) of the Act. Assessee claimed expenditure of ₹ 20,999/- for earning the said exempt income. Assessee made strategic investment and did not earn any dividend income from the said strategic investments. However, the AO applying the provisions of section 14A r.w. Rule 8D2(ii) of the Act made addition of ₹ 1,33,82,121/-. In the First Appellate proceedings, the CIT(A) sustained the addition made by the AO. 6. Aggrieved with the order of CIT(A) the assessee is in appeal before the Tribunal with the ground extracted above. 7. At the outset, Ld. Counsel for the assessee submitted that the assessee made a suo moto disallowance of ₹ 20,999/- and followed a analytical method in quantifying the same. However, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Allahabad High Court and CIT Vs. Lakhani Marketing in ITA No.970/2008 decided on 02.09.2014 by the Hon'ble Punjab Haryana High Court, held as under: 9.4 Since in the instant case the assessee has not received any dividend income out of the shares held as investment and since no disallowance u/s. 14A has been made in the preceding as well as succeeding assessment years, therefore, we agree with the contention of the Ld. Counsel for the assessee that no disallowance u/s.14A can be made under the facts and circumstances of the case. Accordingly, the order of the CIT(A) is set aside and the Assessing Officer is directed to delete the disallowance of ₹ 5,86,962/- made u/s.14A. Ground raised by the assessee is accordingly allowed. Thus, in view of the undisputed fact that the assessee has not received any tax free income during the assessment year under appeal and decisions referred above, we hold that no disallowance u/s. 14A r.w.Rule 8D is called for during the assessment year under appeal. We do not see any infirmity in the findings of Commissioner of Income Tax (Appeal) in deleting the said disallowance. Accordingly, ground No. 2 raised in appeal by the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure was made before the AO who could not admit the same, in view of the Supreme Court decision. However, in view of the decision of the Bombay High Court in the case of Pruthvi Borkers and Shareholders Pvt. Ltd. such claims can be entertained by the appellate authorities. Following the jurisdictional High Court decision, the claim made by the appellant is admitted and the same is allowed as expenditure for the current year, as the expenses relate to the current year though accounted in the subsequent years. The AO is directed to ensure that these expenses have not been claimed in the returns filed for the subsequent years. Subject to this, the ground is allowed. 14. Aggrieved with the order of CIT(A), the Revenue is in appeal before the Tribunal. 15. Ld. DR for the Revenue relied on the order of the AO. 16. At the outset, Ld. Counsel for the assessee filed the details of expenses incurred in the year under consideration but accounted in the subsequent years. Page 4 of the paper book contains the said details. Ld. Counsel submitted that the assessee is a big company and the bills for certain expenses could not be received in the year under consideration. Hence, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not read the tables in the Indian Minerals year book, 2011 where the prices of Steel bars, MS Angles, MS Squares, Scrap, Induction Ingots etc. are mentioned for each of the items. He opined that income on sale of scrap of such ferrous and non-ferrous items cannot be estimation on such presumption. AO did not compare the scrap dealers who are into the similar business. AO also has not proper analysis rates at which the assessee purchases the scrap with the rates with the other manufacturers. Eventually, the CIT(A) deleted the addition in the hands of the assessee. 20. Aggrieved with the order of CIT(A) the Revenue is in appeal before the Tribunal. 21. Ld. DR for the Revenue relied on the order of the AO. 22. We heard both the sides and perused the reasoning given by the CIT(A) on this issue and find it relevant to extract the same. The said finding is reproduced as under : 5.10.2 The scrap is generally melted in either the induction furnace or in the Arc furnace to make steel ingots. These ingots are then rolled into billets which are further rolled or forged to make angles, squares etc., which are actually marketed. The Indian Mineral book indicates melting scrap to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imits. We also perused the comparative chart on sale of scrap (Page 88 of the paper book) by United Steel, R. M. Pathak, Gems Enterprises, Pathak Steel Industries, Geeta Steels and Nageshwar Steels as well as the comparative quotes of various scrap dealers placed at pages 88 to 112 of the paper book. Considering all the above evidences placed by the assessee, We hold that assessee has not understated the sale of scrap in any manner and AO failed to establish with cogent evidences. AO only proceeded to make addition on surmises and conjectures. Therefore, we uphold the order of CIT(A) deleting the addition on this issue. Accordingly, the Ground No.2 raised by the Revenue is dismissed. 24. In the result, the appeal of the Revenue is partly allowed for statistical purposes. Now we shall take up the cross appeals for A.Y. 2011-12. ITA No.1206/PUN/2016 By Assessee A.Y. 2011-12 25. We find the grounds, issues, decision of AO/CIT(A), arguments of the parties are common to the appeal of the assessee for A.Y. 2010-11. Therefore, our decisions in appeal No.1205/PUN/2016 shall apply to this assessment year as well. Accordingly, the Ground No.1 raised by the assessee is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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