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TMI Blog2022 (10) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... ame was not produced and in the remand report the AO had categorically admitted that the seized document was not available. This being so, in absence of corroborating evidence being the seized material, we are of the view that the ld. CIT(A) was right in deleting the addition made by the AO in respect of crushing activity. Disallowance of 10% of the export expenses less custom duty - HELD THAT:- A perusal of the order of the ld. CIT(A), it is noticed that the ld. CIT(A) when disallowing 10% out of the administrative and other expenses, has directed to reduce the director s remuneration. In fact, this is a right method insofar as the director s remuneration has already been taxed in the hands of the directors. So further taxing the same in the hands of the assessee would actually be a miscarriage of justice. Further in the interest of justice, we are of the view that the disallowance at 10% as made by the ld. CIT(A) is excessive and the same is reduced to 5%. Export expenses - HELD THAT:- We are of the view that the ld. CIT(A) is right in directing the exclusion of the export duty insofar as the same is a payment made to the Government. However, it is noticed that the ld.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; remuneration recorded in the books of account and claimed in the audited profit and loss account without appreciating the fact that no such estimated disallowance can be made merely on assumption and presumption and hence, the disallowance made out of administrative expenses on estimation basis @10% amounting to RS.10,20,293/- is without any justification and liable to be deleted. 8. in failing to appreciate that not a single defect or discrepancy is pointed out in the claim made of administrative expenses are incurred not for business or otherwise and hence, having not pointed out any such defects/discrepancy, the ad hoc disallowance out of administrative expenses is unjustified and liable to be deleted. 9. in making disallowance on estimation basis @10% of the export expenses minus Custom duty recorded in the books of account and claimed in the audited profit and loss account without appreciating the fact that no such estimated disallowance can be made merely on assumption and presumption basis particularly so when the amount was paid through bank after deducting income tax at source and hence, the disallowance made out of export expenses on estimation basis @10% amounti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive expenses minus Directors' remuneration recorded in the books of account and claimed in the audited profit and loss account without appreciating the fact that no such estimated disallowance can be made merely on assumption and presumption and hence, the disallowance made out of administrative expenses on estimation basis @10% amounting to Rs.11,97,831/- is without any justification and liable to be deleted. 8. in failing to appreciate that not a single defect or discrepancy is pointed out in the claim made of administrative expenses are incurred not for business or otherwise and hence, having not pointed out any such defects/discrepancy, the ad hoc disallowance out of administrative expenses is unjustified and liable to be deleted. 9. in making disallowance on estimation basis @10% of the export expenses minus Custom duty recorded in the books of account and claimed in the audited profit and loss account without appreciating the fact that no such estimated disallowance can be made merely on assumption and presumption basis particularly so when the amount was paid through bank after deducting income tax at source and hence, the disallowance made out of export expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the total income assessed by the AO at Rs.10,06,97,423/-. 7. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in directing to allow depreciation to the assessee. 8. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in accepting the contentions of the assessee and not accepting the findings of the AO in violation of Rule 46A of the IT Rules. 9. The appellant craves to alter, amend or add any other ground that may be considered necessary in course of the appeal proceeding. 6. The revenue is its appeal i.e. IT(SS)A No.74/CTK/2013 (AY: 2009-2010) has raised the following grounds :- 1. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in directing to compute the income on the basis of P L AIc in the audit report when the assessee did not produce the details before the AO during assessment. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified in allowing 90% of administrative and other expenses 90% of export expenses claimed by the assessee. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) is not justified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the AO mentions that the additional income assessed by the AO over and above the reported income in the audit report is based on materials/documents/piece of evidence seized during the search operation. Such additional income is not recorded in the audited books of account and the additions thus made and the enhanced income arrived at may be sustained. When this is compared with the assessment order, it is noticed that there is no additional income assessed in the assessment order on the basis of any materials/documents/piece of evidence seized during the search operation. The additional income is determined by recasting the profit and loss account on the basis of turnover informed by the Asst. Commissioner, Custom House. Rs. 70,03,32,624/- is arrived at by taking Rs.61,59,92,274/- as intimated by the Asst. Commissioner, Custom House in respect of export sale and an amount of Rs.8,43,40,350/- intimated by the Commercial Tax Authorities, Barbil. A perusal of the remand report dated 23.11.2012 shows that in para 3, the information provided by the Custom House, Paradeep and the details provided by the assessee was compared and it was found that the total export sales of FOB value fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee was able to stock iron ore and iron fines at the Paradeep Port and this is liable to be treated as a capital expenditure as rightly been done by the AO. It was the submission that the order of the ld. CIT(A) deserves to be reversed and that of the AO to be restored. 9. In reply, ld. AR submitted that the lease was only for a period of 8 months and the lease was also cancelled by the Paradeep Port for nonperformance. The ld. AR drew our attention to the order of the ld. CIT(A) at page 12 para 5. It was the submission that the order of the ld.CIT(A) is liable to be upheld. 10. We have considered the rival submissions. A perusal of the order of ld. CIT(A) clearly shows that the ld. CIT(A) has recorded the facts that the lease was only for a period of eight months and further renewal of 11 months subject to satisfactory performance. It is noticed that the ld. CIT(A) has taken on record that the lease was for the period from 20.07.2007 to 31.03.2008 and further renewal of 11 months subject to satisfactory performance and that the lease was cancelled on 09.08.2011 and the assessee was in Writ before the Hon ble Jurisdictional High Court. This being so, we are of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trative expenses and the customs duty from the export expenses. 15. In reply, ld. AR vehemently supported the order of the CIT(A) and submitted that the disallowance made itself is very high and it should be reduced in line with the decision of the coordinate bench of the Tribunal in the case of M/s Serajuddin Co. in IT(SS)A Nos.30 31/CTK/2013, order dated 10.10.2022. 16. We have considered the rival submissions. A perusal of the order of the ld. CIT(A), it is noticed that the ld. CIT(A) when disallowing 10% out of the administrative and other expenses, has directed to reduce the director s remuneration. In fact, this is a right method insofar as the director s remuneration has already been taxed in the hands of the directors. So further taxing the same in the hands of the assessee would actually be a miscarriage of justice. Further in the interest of justice, we are of the view that the disallowance at 10% as made by the ld. CIT(A) is excessive and the same is reduced to 5%. 17. Coming to the issue of export expenses, we are of the view that the ld. CIT(A) is right in directing the exclusion of the export duty insofar as the same is a payment made to the Government. How ..... X X X X Extracts X X X X X X X X Extracts X X X X
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