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TMI Blog2023 (9) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... was error on the part of learned AO in rejecting the books of a/c without stating as to how and in what manner provisions of Section 145(3) were applicable. Thus, the application of gross profit rate of Guwahati unit to Baddi unit was rightly deleted by CIT(A) and the same requires no interference. The ground is decided against the Revenue. Disallowance u/s 40A(2)(a) - HELD THAT:- CIT(A) has duly examined the facts which establish that there was no payments of excessive nature calling for disallowance u/s 40A(2)(a) - Apparently in the absence of any concrete evidences and evaluating the fair marketing value of the goods and services by learned AO, the ad hoc additions were made which have been deleted by the CIT(A) and the same require no interference. The ground is decided against the Revenue. Disallowance of various expenses - HELD THAT:- CIT(A) has duly examined the facts which establish that there was no payments of excessive nature calling for disallowance u/s 40A(2)(a) - Apparently in the absence of any concrete evidences and evaluating the fair marketing value of the goods and services by AO, the ad hoc additions were made which have been deleted by the CIT(A) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) requires no interference. Disallowance being the balances outstanding of sundry creditors - HELD THAT:- AO has questioned the existence and genuineness of the parties on the basis that there were no transactions during the year. The Bench is of the considered view that merely because creditors are stable for three years is no reason to make the addition, as the question of remission of liability has not been examined. The fact that there were opening balances itself justifies the existence and genuineness of the parties. Without any evidence that these parties are not business creditors or that parties had denied the transactions, the ground raised by the Revenue has no substance. Addition by disallowing 50% of the depreciation claimed by the assessee on the motor vehicles - HELD THAT:- AO has observed that use of vehicles wholly and exclusively for the purpose of business has not been established to deny the depreciation, without being thoughtful, that the same may be a ground to deny the expenses for maintenance or petrol expenditure but as long the asset stands in the name of company depreciation, has to be allowed. Even if there was doubt with regard to use of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,45,51,530/- as against the Returned Income of Rs 4,21,940/. During the course of assessment proceedings relevant to A Y 2003-04, the books of accounts of the assessee were rejected u/s 142 (2A) and trading results were redrawn. Also, as the assessee has not fulfilled the conditions laid down under Section 80 IB, the deduction claimed in respect of Guwahati Unit u/s 80 IB to the tune of Rs 10,18,64,708/- was also disallowed. Due to numerous discrepancies noticed in the books of accounts, other disallowances have also been made. Penalty proceedings u/s 271 (1)( c) have also been initiated. Also, due to large amount of discrepancies as detailed in the assessment order for A Y 2004-05, deduction u/s 80 IB to the tune of Rs 1,21,84,143/- was not allowed. As each year is a separate year, the submissions made by the assessee in respect to the provisions of I T Act, were examined in detail during the course of assessment proceedings. The conditions prescribed u/s 80 IB in respect of assessee s business has also been examined in detail. 3. Thereafter in the relevant assessment years the learned AO had made additions following previous years and learned CIT(A) has deleted the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that the business of Baddi unit was carried out from the Guwahati unit. 7.1 On behalf of the assessee comparative details of A.Y. 2005-06 with A.Y. 2004-05 have been placed in the paper book which show that turnover of Baddi and Guwahati units are increasing and there is no transfer of old machinery of Guwahati unit. Both the units are manufacturing different products and, therefore, their growth profits are not comparable. The cost of production of Guwahati unit is lower as compared to Baddi unit for certain verifiable reasons. Learned AO had observed that books of account were not produced. However, material on record shows that books of account were produced before the learned AO and without any justification books of a/c were rejected. Thus, there is no error in the findings of learned CIT(A). Ground is decided against the Revenue. 7.2. As ground no. 1(a) to (e) for A.Y. 2007-08 and ground no. 1 for A.Y. 2008- 09 are also common, except for figures and amount for the relevant assessment years and no distinction of facts was pointed out by learned DR, these grounds for A.Y. 2007-08 and 2008-09 are also decided against the Revenue. 8. Ground no. 2 ; The AO has take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erse in the present assessment year. Thus, the ground of Revenue is dismissed. 10.1 The ground is similar to ground no. 6 in A.Y. 2007-08 and ground no. 2 in A.Y. 2008-09, except for figures and amount for the relevant assessment years and no distinction of facts was pointed out by learned DR so these grounds for A.Y. 2007-08 and 2008-09 are also decided against the Revenue. 11. Ground no. 5; Learned CIT(A) has considered the issue on page nos. 42 to 45 (para no. 7 with sub-paras). The learned CIT(Appeals) has duly appreciated the fact that learned AO has not brought on record any specific instance of spending the money by the appellant in connection with M/s Ozone U.K. Limited and the issue has been earlier considered in A.Y. 2003-04, 2004-05 and 2006-07. Learned CIT(Appeals) has also appreciated the fact that even otherwise income of the assessee is claimed to be exempt u/s 80-IB and there was no justification to make the addition. Accordingly the Bench is inclined to decide the ground against the Revenue. 12. Ground no. 6: The issue has been considered by learned CIT(Appeals) on page nos. 50 to 53 (para 9 with its sub-paras) and has observed that nature of business of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT(A) to make the deletion and the same requires no interference. The ground is decided against the Revenue. 13.1 Ground is common to ground no. 7 in A.Y. 2007-08 and ground no. 3 in A.Y. 2008-09, except for figures and amount for the relevant assessment years and no distinction of facts was pointed out by learned DR, these grounds for A.Y. 2007-08 and 2008-09 are also decided against the Revenue. 14. Ground no. 8: The issue has been discussed by learned CIT(A) on page nos. 58 to 62 (para 11 with its sub-paras) and has observed that all the relevant confirmations were available before learned CIT(A) and during the relevant assessment year no new loan was raised and loans are brought forward balances and the findings of learned CIT(A) thus are on facts which remained uncontroverted. In assessee s own case for AY 2004-05 vide ITA No. 325/Del/2012 order dated 6/4/23, the Coordinate bench dealing with similar controversy has declined to interfere in the order of Ld. CIT with following relevant findings; 8.28 We concur with the finding of the Ld. CIT(A) that addition cannot be made for the unsecured credit balances brought forward. For the new unsecured loan obtained by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aragraphs has dealt with the issue of disallowance of Rs. 1,80,000/- on account of rent paid to sister concern and primarily relying on his own findings for A.Y. 2006-07 deleted the addition. Learned AR has pointed out that Revenue has not preferred any appeal upon this deletion. 17.1 After perusing the reasons for deletion examined by learned CIT(A) in paragraph 7.2, the Bench is of the considered view that the finding requires no interference and even otherwise the issue is settled in favor of assessee as findings in AY 2006-07 are not challenged. Ground is decided against the Revenue. 18. Ground no. 5: Learned CIT(A) has dealt with the issue of disallowance of Rs. 10,00,000/- on account of purchase transactions with M/s Seagull Drugs (P) Ltd. In paragraph 8 with its sub-paragraphs, Learned CIT(A) observed that in assessee s own case for A.Y. 2006-07 similar addition was made by the AO on the basis of additions in A.Y. 2003-04, which were deleted by CIT(A). Learned CIT(A) observed that the department s appeal against the findings of learned CIT(A) for A.Y. 2003-04 also stands dismissed by the Tribunal vide order dated 27.02.2009. 18.1 It can be observed that the question of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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