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TMI Blog2021 (6) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... , the addition sustained by the ld. CIT(A) is deleted. Disallowance of Telephone Expenses, Travelling Expenses, Building Repair Maintenance Expenses and Office Expenses - HELD THAT:- As relying on own case except 10% of building repair and maintenance expenses, all other disallowances made by the A.O. and sustained by the ld. CIT(A) are hereby deleted and the ground is thus partly allowed. Disallowance being @ 15%, out of the commission paid and claimed by the assessee - HELD THAT:- We find that under identical set of facts and circumstances of the case, the disallowances were made in the earlier A.Y 2012-13 and the same have been partly confirmed by the ld CIT(A) and the assessee has not filed any appeal against the said decision before the Tribunal and the matter has thus attained finality. Therefore, following the earlier decision of his predecessor CIT(A), where the ld CIT(A) for the impugned assessment year has restricted the disallowance to 15%, we don t see any infirmity in the said decision and findings of the ld CIT(A) and are not inclined to interfere in the said findings and the ground of appeal so taken by the assessee is thus dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... in full." 3. During the course of hearing, the ld. AR submitted that the assessee doesn't want to press ground No. 1 of its appeal. Hence, the same is dismissed as not pressed. 4. In Ground No. 2, the assessee has challenged the rejection of books of accounts and trading addition sustained by the ld. CIT(A) on account of low yield ratio in comparison to the preceding year. 5. Briefly, the facts of the case are that the assessee is a partnership firm engaged in the manufacturing and trading of edible oil, oil cakes from mustard, Tarameera and groundnuts. The assessee filed its return of income on 25/12/2013 declaring total income of ₹ 57,06,490/-. Thereafter, the assessment was completed at ₹ 92,10,090/- by making additions of ₹ 9,44,277/- by the A.O. on account of low yield of oil from seeds i.e. from groundnuts, mustard and Tarameera seeds. The assessee challenged the action of the A.O. before the ld. CIT(A), who has restricted the trading addition made by the A.O. of ₹ 9,44,277/- on account of low yield ratio to ₹ 1,50,000/-. Against the said findings, the assessee is in appeal before us. 6. During the course of hearing, the ld. AR submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the additions to ₹ 1,50,000/- as against addition of ₹ 7,94,277/- made by the Assessing Officer. It was accordingly submitted that the addition so sustained by the ld. CIT(A) may be confirmed. 9. We have heard the rival contentions and perused the materials available on record. We find that the Co-ordinate Bench in assessee's own case for A.Y 2012-13 has dealt with similar issue on account of addition made by the Assessing Officer on account of low yield ratio and the relevant findings reads as under:- "6. We have considered the rival submissions as well as relevant material on record. The A.O. has noted that for the year under consideration, the assessee has declared low yield ratio in respect of groundnut, mustard and Tarameera seeds in comparison to the preceding years. The details of the perspective yield ratio were given by the A.O. as under: Product Yield Ratio in A.Y. 2011-12 Yield Ratio in A.Y. 2012-13 Ground nut 28.19% 27.9% Mustard 35.92% 34.37% Taramira 29.23% 27.35% Yield Chart Ground Nut Seeds (In KG) Mustard Seed (In Kg.) Taramira Seed (In Kg. Oil 1170204.600 27.90% 134646.040 34.37% 1185437.500 27.35% Cake 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me job at same station in the same conditions. Here I am of view that if the same businesses with same raw material even the party from whom raw material was purchased was, more or less same; carrying out function at the same station should yield more or less the same result and; this fact pointed out by the AO cannot be neglected. Therefore, respectfully following ratio laid down case laws and facts as discussed above I hereby restricted the addition of ₹ 3,00,000/-, the appellant gets relief of ₹ 15,74,102/-. Accordingly, the ground is treated as partly allowed." Thus, the ld. CIT(A) has accepted the contention of the assessee that a trading addition cannot be made without pointing out defects in the books of account. Though, in the case in hand, the addition made by the A.O. is not in the nature of trading addition but it is the addition on account of low production of oil from the oil seeds in comparison to the earlier years. We find variation in the yield ratio is very meager and in some of the cases it is less than 1%. Once the difference is very negligible which can be due to various factors and reasons including the quality of seed, oil contents in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 1,50,000/- without giving any basis for sustaining and therefore, such an adhoc addition without specifying the basis is not permissible, accordingly, the addition sustained by the ld. CIT(A) is deleted. 11. Regarding Ground No.3, the ld. AR submitted that a bare reading of the order of the AO shall reveal that in almost all the cases the disallowances have been made on ad hoc basis, simply on mere suspicion, surmises and conjectures. No specific instance of any nature whatsoever has been given by the AO in the impugned order to support his contention with the documentary evidence that the expenditures were incurred for non-business purposes, element of personal user was there. An allegation remains a mere allegation unless proved. Suspicion cannot take the place of reality are the settled principles (Dhakeshwari Cotton Mills 26 ITR 775 (SC)). 12. It was submitted that a businessman is the best judge to take care of its own interest & to take decisions and the AO is not supposed to intervene therein nor he can replace the assessee. Here, whatever decisions were taken by the assessee, has to be understood as taken out of commercial expediency. Kindly refer T.T. (P) Ltd. v/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has shown office expenses of ₹ 2,85,200/- and most of these were paid in cash and supported by the self-made vouchers. However, it is to be noted that if the expenditure is not found to be excessive and it is inevitable for the business of the assessee then the petty expenses incurred by the assessee on day to day basis is bound to be incurred in cash and without any vouchers from the other side due to such a small and petty expenses. Accordingly, once the said expenditure is not found to be excessive having regard to the nature of business and volume of the business of the assessee then an ad hoc disallowance is not justified. Accordingly, in view of the above facts and circumstances, except 10% of building repair and maintenance expenses, all other disallowances made by the A.O. and sustained by the ld. CIT(A) are deleted." 15. We have heard the rival contentions and purused the material available on record. We find that under identical set of facts and circumstances of the case, the disallowances were made in the earlier year and the same have been partly confirmed by the Coordinate Bench. Therefore, following the decision of the Coordinate Bench, except 10% of build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, submission and additional evidences filed by the A/R of the appellant, remand report of the AO and rejoinder filed by the A/R of the appellant. I find that this issue was already decided by CIT(A)-1, Jodhpur in the appellant own case for A.Y. 2012-13 as under:- "I have considered the assessment order, appellant's submissions and documents on record The AO stated that commission payment to a HUF being a separate entity could not enjoy any physical entity to perform any act. Therefore, only resource based income may be earned by a HUF such as interest, income house property income etc but an HUF itself have not any skill or expenses in its own therefore could not render any service for promoting business. On perusal of appellant's submission, 1 find that the appellant had claimed commission of ₹ 27,15,336/- which was 0.43% of total turnover as against ₹ 4,22,420/- claimed in the preceding year, out of total commission ₹ 21.00,000/- was paid to related persons covered u/s 40A(2)(b) of the act. Since the commission was paid to increase its sales which was reflected in its higher turnover. During the year under consideration the turnover of the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 3,60,000/-. Hence I confirm the addition of ₹ 3,60,000/- and balance amount of ₹ 20,40,000/- is deleted. This ground is partly allowed." 20. In the above factual background, it was submitted that the assessee this year has paid commission and brokerage of ₹ 28,76,659/- as against ₹ 27,15,336/- claimed in the preceding year. Detailed written submissions were filed before the AO as well as before the ld. CIT(A) along with detailed paper book, which has been reproduced in verbatim from Pg-20 to 28 of his order. The assessee fully justified and proved the necessity of such expenditure as also established the genuineness and the fact of making payment and that such expenses were incurred purely out of commercial expediency. It was submitted that the advantages of making transactions through the agents were also explained and established. The fact of rendering services was duly and fully established with the help of various evidences. It was submitted that the payments were made through cheque and TDS were deducted thereon. Moreover, the payees duly declared the receipt of commission in their hands and paid the taxes thereon. Moreover, there was no lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has restricted the disallowance to 15%, the ground so raised by the assessee may be dismissed. 23. We have heard the rival contentions and purused the material available on record. We find that under identical set of facts and circumstances of the case, the disallowances were made in the earlier A.Y 2012-13 and the same have been partly confirmed by the ld CIT(A) and the assessee has not filed any appeal against the said decision before the Tribunal and the matter has thus attained finality. Therefore, following the earlier decision of his predecessor CIT(A), where the ld CIT(A) for the impugned assessment year has restricted the disallowance to 15%, we don't see any infirmity in the said decision and findings of the ld CIT(A) and are not inclined to interfere in the said findings and the ground of appeal so taken by the assessee is thus dismissed. 24. In the result, the appeal of the assessee is partly allowed. 25. In appeal for A.Y 2014-15, in ITA No. 1180/JP/2019, the assessee has taken following grounds of appeal: "1. The impugned order u/s 143(3) dated 19.12.2016 is bad in law and on facts of the case, for want of jurisdiction and for various other reasons and hence the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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