9911796707
TMI Blog2024 (4) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to as 'the Act') relating to the Assessment Year (A.Y) 2015-16. 2. The brief facts of the case is that the assessee is Private Limited Company engaged in the manufacture of Bulk Drugs and Pharma ceuticals products. For the Asst. Year 2015-16, the assessee filed its Return of Income on 22.10.2015 declaring total income of Rs. 64,38,250/-. The return was taken up for scrutiny assessment and made various disallowances. We are concerned only with three disallowances confirmed by the Ld. CIT(A) which are as follows: (i) Disallowance of Rs. 44,89,985/- on job work charges paid to Chevron Pharma Pvt. Ltd. (ii) Disallowance of Rs. 33,420/- on adhoc basis on the job work charges. (iii) Addition of duty drawback incentive of Rs. 98,558/- wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod only. The assessee explained the bills raised against the sister concern for job work to produce three products are detailed as under: Sr. No. Date Bill No Quantity Rate Gross Amount TDS Net Amount Amino 5 methyl Thaizol 1 01-07-2014 JW-01/14-15 474 150 71100 1422 69678 5 01-09-2014 JW-05/14-15. 1652 150 247800 4956 242844 11 24-01-2015 JW-12/14-15 2700 450 1215000 24300 1190700 13 31-01-2015 JW-13/14-15 900 450 405000 8100 396900 15 10-02-2015 JW- 16/14-15 300 450 135000 2700 132300 Bisphenol 7 02-12-2014 JW- 07/14-15 1478 450 665100 13302 651798 Methyl Benzothiazinc Isopropyl Ester-(IE-II) 3 10-07-2014 JW- 03/14-15 3003 150 450450 9009 441441 4 27-07-2014 JW- 04/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.5. On further verification of the profit & loss account, the assessee shown export incentives of Duty Drawback of Rs. 1,64,890/= whereas as per the information available from export import summary data from CBEC, the assessee was sanctioned Duty Drawback of Rs. 2,63,448/- thereby the difference of Rs. 98,558/= was not shown as export incentive. Therefore the A.O. added the same to total income of the assessee. 3. Aggrieved against the assessment order, the assessee filed an appeal before the Commissioner of Income Tax [Appeals] who confirmed the additions made by the Assessing Officer. 4. Aggrieved against the same, the assessee is in appeal before us raising the following Ground of Appeal: 1. Ld. CIT(A) erred in law and on facts con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als available on record including Paper Book and Case Laws compilation filed by the assessee. 5. Regarding Ground Nos. 1 to 4 disallowance of Rs. 44,89,985/- out of total job work charges of Rs. 92,67,600/- paid to sister concern. The Ld. CIT(A) confirmed the above addition on the ground that the above increase was almost 300% of the rate charged during the earlier period, which is to reduce the tax liability by inflating expenses by the assessee. Both the Lower Authorities have not made any verification about the comparable job work rates of similar nature in the trade for the past or in the future period. Thus the Authorities failed to prove the onus of unreasonableness claimed by the assessee. In a similar circumstances the Hon'ble Juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBDT Circular No. 6-P, dated 06.07.1968 which states that no disallowance is to be made under section 40A(2) of the Act in respect of payments made to relatives and sister concerns where there is no attempt to evade tax. 5.2. Similarly the Jurisdictional High Court in the case of PCIT Vs. Gujarat Gas Financial Services Ltd. reported in [2015] 60 taxmann.com 483 held that when the Revenue could not establish assessee evaded payment of tax, then invocation of section 40A(2) was not valid as follows: "Section 40A(2) of the Income-tax Act, 1961 - Business disallowance - Excessive or unreasonable payments (Service charges) -a 100 per cent subsidiary company of 'G Ltd.', a Government company - 'G Ltd,' was in distributing throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the nature of job work and why different rates were charged by M/s. Microtech, but on adhoc basis simply noticed different arithmetical figures and made an adhoc disallowance at Rs. 2 per Kg. Further the A.O. failed to note that the Goods and Service Tax (GST) came into effect from 01.04.2017 only and the job work is done by M/s. Microtech is not assessable to Value Added Tax (VAT) and Central Sales Tax (CST). Thus the Assessing Officer misconstrued the handwritten bills as not genuine having not charged with GST, VAT, CST, taxes. However the A.O. not doubted about the job works carried out by M/s. Microtech, therefore the addition is liable to be deleted. 8. We have perused the order passed by the Lower Authorities. The Ld. CIT(A) confi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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