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TMI Blog2025 (1) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... not to warrant interference. This issue as raised by the revenue, thus, is found to be frivolous and dismissed. Disallowance @ 10% of other expenses - CIT(A) deleted addition - HELD THAT:- Taking into consideration the remand report furnished by the AO where the invoices have been verified on test check basis and found in correct order, the said other expenses has been deleted by the Ld. CIT(A) which is found to be just and proper so as not to warrant interference. Hence this ground of appeal rejected. Disallowance of foreign exchange loss - Addition done for the reason that the said loss was on account of foreign exchange transaction related to import and export transactions and no hedging had been done whereas the assessee s case is this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 11(1), Delhi under Section 143(3) of the Income Tax Act, 1961 for Assessment Year 2017-18. 2. The revenue has come up in appeal mainly on the following grounds: 1st Ground relates to addition under Section 69C of the Act amounting to Rs. 6,80,46,732/- and disallowance of expenses amounting to Rs. 3,15,04,500/-: 3. Heard the parties, perused the records. 3. The brief facts leading to the case are that the assessee engaged in the business of manufacturing of automobile components filed its return of income on 27.11.2017 declaring income at Rs. 4,47,82,110/-. The case was selected for scrutiny through CASS for complete scrutiny and notice under Section 143(2) followed by notice under Section 142(1) along with questionnaire was issued and ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the possession of the assessee. As the assessee failed to show the expenses incurred wholly and exclusively for the purpose of running the business and failed to justify the allowability and the veracity of the expenses incurred under Section 37(1) of the Act as alleged 10% of other expenses as income of the assessee was disallowed by the Ld. AO. 6. Before the First Appellate Authority the assessee furnished the entire details of other expenses from the audited financial results and submitted the substantial invoices in support of the same whereupon the remand report was sought for. In the remand report dated 10.03.2023 the following observation was made by the Ld. AO: Disallowance of expenses u/s 37 : The AO has made the ad hoc addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to incur certain percentage of profit as CSR Expenses which have already been added back in the computation of total income. Loss on sales of Fixed Assets : Loss arises at the time of sale or disposal of fixed assets, being capital nature, has been added back in the computation of total income. Warranty Expenses : The Assessee company has submitted that it has made the provisions for warranty expenses amounting to Rs. 3,53,98,047/- during the year, and out of the said amount, a sum of Rs. 2,94,89,106/- has been added back while computing its total income. 7. Taking into consideration the remand report furnished by the AO where the invoices have been verified on test check basis and found in correct order, the said other expenses amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign exchange transaction related to import and export transactions and no hedging had been done whereas the assessee s case is this that hedging cost sometime work more than the exchange earning. Apart from that the AO has not raised any doubt on the calculation of such foreign exchange loss amount and in that view of the matter relying on the judgment passed by the Hon ble Supreme Court in the case SA Builders Ltd. VS. CIT, reported in 2007 (1) SCC 781 dated 14.12.2006 and the judgment passed by the Hon ble Delhi High Court in the case of CIT Vs. Dalmia Cement (Bharat) Ltd., reported in (2002) 254 ITR 77 holding that when it has been established that there was nexus between expenditure and the purpose of business, revenue is not justified ..... X X X X Extracts X X X X X X X X Extracts X X X X
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