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TMI Blog2022 (5) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is entitled for claim of deduction under Section 10A of the Act. There is no need to interfere with the findings of the CIT(A). Hence, ground no.1 of Revenue s appeal is dismissed. Disallowance of interest under Section 36(1)(iii) - when the assessee failed to discharge its onus that the advances to its subsidiaries were made for the purpose of business - HELD THAT:- The said issue is covered in favour of the assessee by the Tribunal which is confirmed by the Hon ble High Court of Gujarat for A.Y. 2007-08 [ 2018 (2) TMI 442 - GUJARAT HIGH COURT] - Decided against revenue. Addition on account of miscellaneous expenses - HELD THAT:- From the perusal of the assessment order, it can be seen that the basis of making this addition was not demonstrated by the Assessing Officer in the assessment order. In fact, books were also now rejected by the Assessing Officer. Thus, merely on conjectures and surmises the Assessing Officer cannot make adhoc disallowance. There is no need to interfere with the findings of the CIT(A). Hence, ground no.3 of Revenue s appeal is dismissed. Addition on account of licence fees - D.R. submitted that the payments were made on monthly basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue s appeal is dismissed. Disallowance made under Section 14A - HELD THAT:- It is admitted fact that no exempt income was earned by the assessee during the year. All the investments in shares as notified in the Profit Loss Account as well as in the books of the assessee Company. In fact, interest-free funds were in excess of investments in shares and, therefore, the CIT(A) has rightly deleted this disallowance. Hence, ground no.9 is dismissed. Disallowance on account of rent expenses - HELD THAT:- A.R. demonstrated before us as well as before the CIT(A) that the TDS was deducted from the rent and the income was shown in return of income of receiver i.e. Lavjibhai P. Patel. Thus, the CIT(A) has rightly deleted this disallowance. Ground no.10 is thus dismissed. Disallowance on account of Sundry Balance written off - CIT-A deleted the addition - D.R. submitted that the deletion is not just and proper on behalf of the CIT(A) as such amount did not satisfy the precondition laid down under Section 36(2) - HELD THAT:- It is pertinent to note that the advance to employees and credit note received for inferior quality of goods sold were neither received in current A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act when Assessee failed to discharge its onus that the advances to its subsidiaries were made for the purpose of its own business. 3) The Ld. Commissioner of income-tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addition of Rs.1,00,000/- made on account of misc. expenses. 4) The Ld. Commissioner of income-tax (Appeals)-XIV, Ahmedabad Ms erred in law and on facts in deleting the addition of Rs.1,23,890/- made on account of license fees 5) The Ld. Commissioner of income-tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the additions of Rs.1,77,861/- Rs.2,32,065/- made on account of vehicle expenses travelling expenses, respectively. 6) The Ld. Commissioner of income-tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the additions of Rs.1,61,602/- Rs.4,53,356/- Rs.2,96,2207- made on account of bonus leave encashment provisions of Excise Duty, respectively. 7) The Ld. Commissioner of income-tax(Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the disallowance of Rs.2,39,630/- made on account of prepaid insurance expenses. 8) The Ld. Commissioner of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, therefore, held that the assessee is not eligible for any deduction under Section 10A of the Act. The Assessing Officer further made following disallowances: - Total income as per return of income 1,27,99,512/- Add: Additions/Disallowables as discussed above 1 Disallowance u/s.10A 1,33,37,787 2 Interest Disallowance u/s.36(1)(iii) 3,19,556 3 Miscellaneous Expenses 1,00,000 4 License Fee 1,23,890 5 Disallowance out of vehicle expenses 1,77,861 6 Disallowance out of Travelling expenses 2,32,065 7 Provision of warranty 8,50,876 8 Disallowance of Donation 2,417 9 Disallowance of interest on TDS 34,146 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he conditions given under Section 10A of the Act. The Ld. D.R. further summated that admission of additional evidences has clearly set out that the assessee has not filed Form No.56A for computation of deduction of allowable profit under Section 10A of the Act. The Ld. D.R. further submitted that the Assessing Officer s bifurcation is properly done and, therefore, submitted that the disallowance made be sustained. 9. The Ld. Authorised Representative relied upon the order of the CIT(A) and further submitted that the CIT(A) has categorically mentioned in the order that the assessee furnished revised Form No.56F to justify the claim of deduction under Section 10A of the Act. The assessee has also produced copies of Bank realisation certificates in respect of the amounts received in convertible foreign exchange and Bank realization Certificates submitted by the assessee were verified on test check basis by the Assessing Officer at the remand stage. It is clearly stated in the letter dated 05.09.2013 by the assessee that the assessee received the amount of Rs.1,71,73,667/- and hence no deduction under Section 10A of the Act was claimed in the revised Form No.56F. Thus, the details w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of miscellaneous expenses, the Ld. D.R. submitted that the CIT(A) has wrongly deleted this addition and in fact there is no inconsistency in the finding of the CIT(A). The Ld. D.R. relied upon the assessment order. 15. The Ld. A.R. submitted that books were at no point of time rejected by the Assessing Officer and these miscellaneous expenses were disallowed on adhoc basis without giving any justification to that extent. The Ld. A.R. relied upon the decision of Pr. CIT vs. R.G. Buildwell Engineers Limited, 99 Taxmann.com 284 (SC). 16. We have heard both the parties and perused all the relevant materials available on record. From the perusal of the assessment order, it can be seen that the basis of making this addition was not demonstrated by the Assessing Officer in the assessment order. In fact, books were also now rejected by the Assessing Officer. Thus, merely on conjectures and surmises the Assessing Officer cannot make adhoc disallowance. There is no need to interfere with the findings of the CIT(A). Hence, ground no.3 of Revenue s appeal is dismissed. 17. As regards ground no.4 relating to addition of Rs.1,23,890/- made on account of licence fees, the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. Ld. A.R. relied upon the order of CIT(A) and submitted that the Excise Duty was filed prior to filing of return of income. The Ld. A.R. further submitted that the bonus/leave encashment relates to A.Y. 2008-09 and the same was not debited in the current year and so no disallowance should be made in the current year. 26. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that it is admitted fact related to bonus/leave encashment which are of A.Y. 2008-09 and the same were not debited in current year. The CIT(A) has rightly deleted this addition and there is no need to interfere with the findings of the CIT(A). The Ld. D.R. s contention that Excise Duty was paid after filing of return of income was not correct. Hence, ground no.6 of Revenue s appeal is dismissed. 27. As regards to ground no.7 relating to disallowance of Rs.2,39,630/- made on account of pre-paid insurance expenses, the Ld. D.R. relied upon the assessment order. 28. The Ld. A.R relied upon the order of CIT(A) and submitted that the assessee was consistently claiming insurance on payment basis and, therefore, the CIT(A) has rightly deleted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares as notified in the Profit Loss Account as well as in the books of the assessee Company. In fact, interest-free funds were in excess of investments in shares and, therefore, the CIT(A) has rightly deleted this disallowance. Hence, ground no.9 is dismissed. 37. As regards ground no.10 in respect of disallowance of Rs.2,25,000/- made on account of rent expenses, the Ld. D.R. relied upon the assessment order. 38. The Ld. A.R. relied upon the order of CIT(A). 39. We have heard both the parties and perused all the relevant materials available on record. The Ld. A.R. demonstrated before us as well as before the CIT(A) that the TDS was deducted from the rent and the income was shown in return of income of receiver i.e. Lavjibhai P. Patel. Thus, the CIT(A) has rightly deleted this disallowance. Ground no.10 is thus dismissed. 40. As regards ground no.11 in respect of disallowance of Rs.26,29,122/- made on account of Sundry Balance written off, the Ld. D.R. submitted that the deletion is not just and proper on behalf of the CIT(A) as such amount did not satisfy the precondition laid down under Section 36(2) of the Act. The Ld. D.R. relied upon the assessment order. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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