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TMI Blog2022 (4) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... e, whereas, the assessee claims that it has filed reconciliation explaining reversal of CENVAT credit. The fact needs to be verified. Hence, we set aside this issue to the file of the Assessing Officer and direct the Assessing Officer to reexamine claim of the assessee in light of our findings given hereinabove. In case, the assessee is able to explain CENVAT credit with necessary details, then the Assessing Officer is directed to delete additions made towards disallowance of reversal of CENVAT credit on scrap written off. Disallowance of withholding tax debited into rates taxes account - AO has disallowed withholding tax included in rates taxes account on the ground that any tax, duty or cess is not allowable deduction u/s.40(a)(ii) - HELD THAT:- In this case, as per terms of agreement with lenders, the assessee should make interest payment net of all applicable taxes in India. In other words, as per terms of agreement between the parties, the assessee shall borne all applicable taxes on interest payment to the lenders. As per terms of agreement, the assessee has grossed up interest payment towards TDS paid on said interest and remitted into Govt. account and also debited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not maintainable. 4. Having heard both sides and considered the petition filed by the assessee for condonation of delay, we are of the considered view that reasons given by the assessee for not filing the appeal within the time allowed under the Act comes under reasonable cause as provided under the Act for condonation of delay and hence, delay in filing of appeal is condoned and appeals filed by the assessee is admitted for adjudication. 5. The assessee has raised following grounds of appeal:- 1. The order of the CIT (Appeals) is erroneous on the facts and in the law. On the facts and in the circumstances of the case he ought to have considered the appellant case on merit. 2. The Learned CIT (Appeals) failed to consider the submission made by the appellant reason why the following expenses disallowed by the assessing officer: (a) Reversal of CENVAT credit on sale of scrap amounting to ₹ 2,06,98,060/-. (b) Disallowance of withholding tax interest paid on borrowings of ₹ 4,47,966/-. 3. The learned CIT (Appeals) in his order pointed out that appellant s failure to submit supporting documents for reversal of CENVAT credit of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of ₹ 62,76,80,047/-. The case was taken up for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed ₹ 2,06,98,060/- towards reversal of excise duty on scrap written off and debited under the head rent, rates taxes in the profit loss account. The assessee was called upon to explain reversal of CENVAT credit on scrap written off with necessary evidences. In response, the assessee submitted that as per CENVAT Credit Rules, CENVAT credit pertaining to scrap cannot be utilized and further, same needs to be reversed, therefore, the assessee has reversed CENVAT credit on scrap written off and debited into profit loss account. The Assessing Officer, however, was not convinced with the explanation furnished by the assessee and according to A.O., the assessee did not produce any supporting documents and also explained how they have arrived at figure of ₹ 2,06,98,060/-. Therefore, disallowed claim of the assessee and added back to the total income of the assessee. Similarly, the Assessing Officer has made addition towards withholding tax debited to rates taxes account u/s.40(a)(ii) of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CENVAT credit and their orders should be upheld. 10. We have heard both the parties, perused material available on record and gone through orders of the authorities below. There is no dispute with regard to legal position that when unutilized CENVAT credit is available with the assessee for any reason, including restriction if any, imposed under CENVAT Credit Rules, same can be reversed and debited into profit loss account, because CENVAT credit availed by the assessee on purchase of raw materials partakes nature of cost of materials purchased/consumed. Therefore, when the assessee has reversed CENVAT credit as per CENVAT Credit Rules, then it needs to be debited into expenses account. However, the assessee has to file necessary evidences to prove reversal of CENVAT credit and also to explain how such figure has been arrived. In this case, the Assessing Officer claims that the assessee did not furnish necessary evidence, whereas, the assessee claims that it has filed reconciliation explaining reversal of CENVAT credit. The fact needs to be verified. Hence, we set aside this issue to the file of the Assessing Officer and direct the Assessing Officer to reexamine claim of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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