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TMI Blog2015 (3) TMI 1364X X X X Extracts X X X X X X X X Extracts X X X X ..... A) has also not dealt with any of these aspects but has proceeded with his seemingly erudite discussion on the legal position though without properly establishing the fundamental facts. In view of these discussions and bearing in mind the entirety of the case, we are of the considered view that the authorities below was in error so far as their stand on disallowance of ₹ 33,01,961/- on raw material consumption is concerned. We, therefore, direct the Assessing Officer to delete the impugned disallowance. Addition of bad debs in respect of NTPC, Rihandnagar - HELD THAT:- The impugned disallowance is devoid of any legally sustainable merit. There is no dispute that this debt was so written off and yet the disallowed is made only because a certificate from the debtor is not produced. The conditions laid down for allowance and bad debt are clearly satisfied in the case and the disallowance, therefore, deserves to be deleted. We direct the A.O. to do so. Ground no.2 is thus allowed. Disallowance on adhoc basis of various administrative expenses - HELD THAT:- We find that the disallowance is made purely on the basis of surmises and conjectures and without pointing out any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antially as evident from the following chart: Size of Tyre Retreaded Consumption Serial No. and Date 18.00*25 98.200 Kg 17(10) Dtd. 11/05/2009 18.00*25 98.200 Kg 17(15) Dtd. 11/05/2009 18.00*25 96.200 Kg 11(7) Dtd. 10/05/2009 21.00*35 197.30 Kg 20(1) Dtd. 10/05/2009 21.00*35 195.800 Kg 19(2) Dtd. 10/05/2009 21.00*35 198.300 Kg 23(5) Dtd. 09/05/2009 4. The A.O. also noted that certain payments to labour and other similar type of expenses were made through self made vouchers . It was in this backdrop he required the assessee to show cause as to why the provisions of section 145(3) not be invoked. It was explained by the assessee that in a manufacturing concern, it is un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - which is nothing but inflation of cost of consumption in the trading account by the assessee. Hence, treating the amount of ₹ 33,01,961/- as excessive claim in the consumption of raw material, is disallowed and added in the income of the assessee as extra profit. (Addition: ₹ 33,01,961/-) 5. Aggrieved by the stand so taken by the A.O., the assessee carried the matter in appeal before the ld. CIT(A) but without any success. 6. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. We have noted that the basic reason in rejecting the consumption of material as shown by the assessee is the variation in consumption of material in respect of two tyres of the same size. This approach, however, proceeds on the fallacious assumption that the consumption of material in retreading tyres of the same size will be exactly the same irrespective of the condition of tyre which is sought to be retreaded. It is elementary that the consumption of material in the process of retreading of tyre would depend upon the condition in which tyres are to be retreaded. The proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see was asked to furnish the certificate from NTPC, Rihandnagar, that the NTPC has finally not considered the amount of ₹ 2,10,958/- reasonable as correct amount and accordingly bill was reduced by NTPC and the assessee did not produce certificate even on asking to produce such certificate. 9. Aggrieved by the stand so taken, the assessee carried the matter before the ld. CIT(A) but without any success. The assessee is aggrieved and is in further appeal before us. 10. Having heard the rival contention perused the material on record, we are of the considered view that the impugned disallowance is devoid of any legally sustainable merit. There is no dispute that this debt was so written off and yet the disallowed is made only because a certificate from the debtor is not produced. The conditions laid down for allowance and bad debt are clearly satisfied in the case and the disallowance, therefore, deserves to be deleted. We direct the A.O. to do so. Ground no.2 is thus allowed. 11. In ground no.3, the assessee has raised the grievance against the ld. CIT(A) s confirming the disallowance on adhoc basis to the extent of ₹ 1,00,000/- out of vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se by nature is not fully verifiable in absence of complete record and justification of expenses as per proper bills and vouchers which was not kept, out of which, many are made from self made vouchers. In the circumstances, disallowance of 10% of wages amount of ₹ 30,74,421/-, worked out at ₹ 3,07,442/- is made and added in the income of the assessee. (Addition: ₹ 3,07,442/-) 17. When the matter was carried before the ld. CIT(A), the ld. CIT(A) upheld the disallowance in principle but restricted the quantum of disallowance to 5% of expenditure. The assessee is not satisfied and is in further appeal before us. 18. Having heard the rival contentions and perused the material on record, we find that the disallowance is made purely on the basis of surmises and conjectures and without pointing out any specific defects in the vouchers in support of these expenses. We are unable to see any legally sustainable merits in this kind of approach based on sweeping generalisation for making disallowance. We direct the A.O. to delete the same. Ground no.4 is thus allowed. 19. In the result, appeal filed by the assessee is allowed. 20. As w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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