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TMI Blog2023 (6) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ge fluctuation on capital goods - as noted that in the remand report, AO has not given any adverse finding on the submissions made by assessee. Find force in the conclusion of CIT(A) that since assessee has not claimed any expenses the disallowance by AO was not sustainable, Before us, Revenue has not pointed to any fallacy in the findings of CIT(A) and thus the ground of Revenue is dismissed. Disallowance of Guest House Expenses - Addition partly deleted by CIT(A) - HELD THAT:- As per CIT-A disallowance made at 50% by AO to be on higher side and restricted the disallowance to 20%, no fallacy in the findings of CIT(A) has been pointed out by Revenue nor is the assessee aggrieved by partial relief granted by CIT(A). No reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed. Disallowance of repair and maintenance expenses - AO noted that assessee has failed to produce the copies of the bills to substantiate its claim of expenses - As possibility of debiting expenses of capital nature cannot be ruled out considered 25% of Repair and maintenance not allowable - CIT-A allowed claim - HELD THAT:- CIT(A) while deleting the addition has given a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri S. K. Chaturvedi, C.A. For the Revenue : Shri Shyam Manohar Singh, Sr. D.R. ORDER PER ANIL CHATURVEDI, AM : This appeal filed by the Revenue is directed against the order dated 31.05.2019 passed by the Commissioner of Income Tax (Appeals) - 34, New Delhi for Assessment Year 2012-13. 2. Brief facts of the case as culled out from the material on record are as under :- 3. Assessee is a company stated to be engaged in the business of manufacturing of mobile components Accessories and related activities. Assessee filed its return of income for A.Y. 2012-13 declaring loss of Rs.9,48,55,207/-. The case of the assessee was selected for scrutiny and, thereafter assessment was framed u/s 143(3) of the Act vide order dated 21.03.2016 and the loss income was determined at Rs.189,41,162/-. 4. Aggrieved by the order of AO, assessee carried the matter before CIT(A). CIT(A) vide order dated 31.05.2019 in Appeal No.260/16-17 granted partial relief to the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before the Tribunal and has raised the following grounds: 1. Ld. Dy. Commissioner of Income Tax (AO) has erred on facts in law in m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved by the order of AO, assessee carried the matter before CIT(A). 8. CIT(A) after considering the submissions of the assessee, the remand report from AO, assessee s submissions to the remand report deleted the addition made by AO by observing as under: 5.5 I have considered the facts of the case, finding of the AO, remand report and submissions of the appellant. AO has made the addition of Rs.5,68,22,267/- by invoking provision of sect 145(3) as assessee company has failed to furnish documentary evidence in support of trading results and consumption of raw material. The appellant has furnished the complete details of CENVAT register, CENVAT return, excise reconciliation which was examined by the AO. Appellant has also furnished month wise raw material consumption against sale and during the year under consideration raw material consumption to sales is 77.12%, whereas in the previous year 2011-12 and 2010-11 it was 78.04% and 77.67% respectively. The appellant has also provided the list of trade payables and confirmation of overseas creditors, all the evidences have been examined by the AO during the remand proceedings and no adverse comments was offered by the AO. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situation, we find no reason to interfere with the order of CIT(A) on this issue and thus the ground of Revenue is dismissed. 13. Ground No.2 is with respect to the addition of Rs.94,28,002/- on account of foreign exchange fluctuation. 14. During the course of assessment proceedings, AO noticed that assessee has claimed loss on foreign exchange to the extent of Rs.5,43,03,735/-. The assessee was asked to furnish the details and justify the foreign exchange losses. Assessee furnished the details. On perusing the details, AO noticed that in respect of foreign exchange loss of Rs.30,17,279.10, the date of transaction was 31.03.2011, which was beyond the financial year 2011-12, relevant to the assessment year under consideration and in respect of loss of Rs.64,10,723.37, no narration was given for claiming of loss. AO therefore concluded that the aggregate foreign exchange loss of Rs.94,28,002/- to be without any basis and accordingly, disallowed the same. 15. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who deleted the addition by observing as under: 6.5 I have considered the facts of the case, finding of the AO, remand report and submissions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round No.3 is with respect to the addition of Rs.18,11,088/- on account of disallowance of Guest House Expenses. 21. During the course of assessment proceedings and on perusing the details of expenses filed by assessee, AO noticed that assessee had debited Rs.36,22,176/- on account of guest house expenses . Assessee was asked to justify the expenses. Assessee inter alia submitted that the expenses were incurred in respect of foreign technicians visiting India for whom only the boarding, lodging and stay expenses were incurred and rest expenses were borne by respective technicians. The submissions of the assessee was not found acceptable to AO. AO noted that majority of the expense were incurred in cash and assessee had not controverted the fact that the guest house expenses was not used for the stay and residence of the Directors. He therefore disallowed 50% of the guest house expenses amounting to Rs.18,11,088/-. 22. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who granted partial relief to the assessee by observing as under: 7.4 I have considered the facts of the case, finding of the AO, remand report and submission of the appellant. The app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by Revenue nor is the assessee aggrieved by partial relief granted by CIT(A). In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed. 26. Ground No.4 is with respect to the disallowance of repair and maintenance expenses which was deleted by CIT(A). 27. AO noticed that during the year under consideration, assessee has debited Rs.1,72,93,277/- on account of repair and maintenance expenses . Assessee was asked to justify the expenses to which assessee made the submissions which was not found acceptable to AO. AO noted that assessee has failed to produce the copies of the bills to substantiate its claim of expenses. He was of the view that possibility of debiting expenses of capital nature cannot be ruled out. He therefore considered 25% of Repair and maintenance amounting to Rs.43,23,320/- to be not allowable and accordingly disallowed the same. 28. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who deleted the addition by observing as under: 8.4 I have considered the facts of the case, finding of the AO, remand report and submissions of the appellant. The appellant has filed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 34. Aggrieved by the order of AO, assessee carried the matter before CIT(A). CIT(A) deleted the addition by observing as under: 9.4 I have considered the facts of the case, finding of the AO, remand report and submissions of the appellant. The appellant has made the payment of royalty to Ripe Korea its holding company at Rs.2,32,93,678/-- The appellant has paid the royalty as per the technical support agreement dated 01.08.2006. The AO has allowed the royalty expenses to the extent of 90% and disallow the 10% of expenses as royalty agreement was not made on stamp papers and appellant has failed to justify the quantification of royalty expenses. During the appellate proceedings, remand report is called for from the AO and in which AO after examining the technical support agreements signed between Ripe Component Technologies Pvt. Ltd. and Ripe Korea Pvt. Ltd. found the contention of the appellant acceptable. Since AO has found the royalty payment genuine and appellant has also furnished necessary evidences in support of royalty payments, addition made by the AO at Rs.23,29,368/- is sustainable and it is hereby deleted. 35. Aggrieved by the order of CIT(A), Revenue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d report and after verifying the detail of expense along with bills and vouchers he found the expenses acceptable. It is stated by him that appellant has deducted TDS on contractual payments. Considering the above facts and remand report of the AO, addition made by the AO at Rs. 12 lacs is not sustainable and it is hereby deleted. 41. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 42. Before us, Learned DR supported the order of AO. Learned AR on the other hand reiterated the submissions made before AO and CIT(A) and supported the order of CIT(A). 43. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the disallowance of Jobwork charges made on adhoc basis by AO but deleted by CIT(A). We find that CIT(A) after considering the details and remand report furnished by assessee has given a finding that during the course of remand proceedings, AO had verified the details of expenses that were filed by assessee and he has accepted the payments made and had also given a finding that assessee had deducted TDS on contractual payment. Considering the totality of the facts, CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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