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TMI Blog2019 (11) TMI 502X X X X Extracts X X X X X X X X Extracts X X X X ..... id to persons covered under section 40A(2)(b) it may please be allowed in full. 3. The issue arising in the present appeal is against disallowance of milk transportation charges paid to persons covered under section 40A(2)(b) of the Act. 4. Briefly, in the facts of the case, the assessee company was engaged in the business of collection of dairy milk and had processing unit, through which collected milk was packed and sold. The assessee was also engaged in trading of cattle feed and other by-products. The Assessing Officer took up the case of assessee for scrutiny. On verification of audit report in column 19, Note No.5, the assessee had declared the transactions with sister concern in respect of purchase of milk and transport payments. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2)(b) of the Act. Since the assessee had failed to produce any supporting and satisfactory evidence, the Assessing Officer held the assessee not to have discharged the onus cast upon it. From the furnished details, it was noted that in the year under consideration, the assessee had sold 41473364 litre of cow milk. It had claimed Rs. 2,70,42,882/- as transportation expenses. From these details, it was clear that the assessee had incurred Rs. 0.65 per litre as transportation expenses i.e. Rs. 2.70 crores / 4.14 crores litres. Reference was made to transportation expenses claimed by Malganga Dairy Farm for transportation of 2.46 crores litres, against which milk transportation expenses were Rs. 1.28 crores. In other words, Rs. 0.52 per litre w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 13 observed that Be that as it may, it is seen that even if we take a look at the expenditure incurred by the appellant itself on milk transportation expenses paid to directors with the milk transportation expenses paid to other transporters, it is clear that there is a considerable difference in the market rate vis-à-vis rate paid to the Directors and family members. The CIT(A) perused the agreement for transport filed though different vehicles and transportation charges charged by other transporters and by the directors of assessee company. The assessee was asked to furnish breakup of litres of milk sold / supplied through vehicles owned by directors. In reply, the assessee furnished a chart showing the quantity transported by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is in appeal against the order of CIT(A). 7. After taking us through the facts of the case, the learned Authorized Representative for the assessee stressed that the Assessing Officer had not confronted any information with regard to Malganga Dairy Farm to the assessee. Then, referring to the order of CIT(A), it was pointed out that CIT(A) had applied the ratio of litres / rupees, whereas in fact the ratio to be applied is rupees / litres. Consequently, rate would work out to 62 paise to related parties and 69 paise to unrelated parties. The learned Authorized Representative for the assessee has filed tabulated chart and in this regard has referred to para 7.4 of CIT(A), who had calculated the milk transportation charges per rupe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We find merit in the working of CIT(A) to this extent. However, while working out the cost of milk transportation per litre, the CIT(A) by an error has adopted the figures after taking the ratio of milk transported in litres per rupee, in fact the ratio to be applied is rupees/per litres transported. The assessee has filed the tabulation in this regard and the payment to related parties works out to 62 paise per litre as against 69 paise per litre paid to unrelated parties. In such circumstances, there is no merit in making any disallowance under section 40A(2)(b) of the Act. For this limited purpose, the Assessing Officer is directed to verify the working of assessee and delete the addition made in the hands of assessee. The ground of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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