Dy. CIT Circle-8,Akurdi,, Pune v. M/s. Ador Powertron Ltd., Pune

ITA 1353/PUN/2010 | 2006-2007
Pronouncement Date: 30-04-2014 | Result: Dismissed

Appeal Details

RSA Number 135324514 RSA 2010
Assessee PAN AABCA5150B
Bench Pune
Appeal Number ITA 1353/PUN/2010
Duration Of Justice 3 year(s) 5 month(s) 12 day(s)
Appellant Dy. CIT Circle-8,Akurdi,, Pune
Respondent M/s. Ador Powertron Ltd., Pune
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 30-04-2014
Date Of Final Hearing 16-09-2013
Next Hearing Date 16-09-2013
Assessment Year 2006-2007
Appeal Filed On 18-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO.1353/PN/2010 (ASSESSMENT YEAR : 2006-07) DY. COMMISSIONER OF INCOME TAX CIRCLE-8 AKURDI PUNE. . APPELLANT VS. M/S ADOR POWERTRON LTD. PLOT NO.51 D-11 BLOCK MIDC RAMNAGAR CHINCHWAD PUNE 411 019. PAN : AABCA5150B . RESPONDENT ITA NO.1354/PN/2010 (ASSESSMENT YEARS : 2006-07) M/S ADOR POWERTRON LTD. C/O SHAH KHANDELWAL JAIN & ASSOCIATES CHARTERED ACCOUNTANTS LEVEL 3 BUSINESS BAY PLOT NO.84 WELLESLEY ROAD NEAR RTO PUNE 411 001. PAN : AABCA5150B . APPELLANT VS. ADDL. COMMISSIONER OF INCOME TAX RANGE- 9 PUNE. . RESPONDENT DEPARTMENT BY : MR. S. P. WALIMBE ASSESSEE BY : MR. NILESH KHANDELWAL DATE OF HEARING : 07-03-2014 DATE OF PRONOUNCEMENT : 30-04-2014 ORDER PER G. S. PANNU AM THE CAPTIONED CROSS-APPEALS EACH BY THE REVENUE AND THE ASSESSEE PERTAINING TO THE ASSESSMENT YEAR 2006-07 WERE HEAR D TOGETHER AND ARE BEING DISPOSED-OFF BY WAY OF A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. BOTH THE CAPTIONED CROSS-APPEALS ARE DIRE CTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V PUNE DATED 30.08.2010 WHICH IN ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 TURN HAS ARISEN FROM AN ORDER DATED 15.12.2008 PAS SED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). 2. BEFORE WE PROCEED TO ADJUDICATE THE RIVAL DISPUT ES IT WOULD BE APPROPRIATE TO BRIEFLY TOUCH-UPON THE BACKGROUND OF THE DISPUTE. IN THIS CASE THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE PR OVISIONS OF THE COMPANIES ACT 1956 AND IS INTER-ALIA ENGAGED IN THE BUSINESS OF MANUFACTURE OF HIGH VOLTAGE RECTIFIER HIGH CURRENT RECTIFIER AND OTHER PRODUCTS LIKE UPS AND SMPS ETC.. FOR THE ASSESSME NT YEAR 2006-07 IT FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.7 99 22521/-. SUCH RETURN WAS SUBJECT TO SCRUTINY ASSESSMENT U/S 143(3) OF THE AC T WHEREBY THE ASSESSING OFFICER DETERMINED THE TOTAL INCOME AT RS.9 99 53 7 32/- AFTER MAKING VARIOUS DISALLOWANCES/ ADDITIONS AMOUNTING TO RS.2 00 31 21 1/-. THE ADDITIONS/ DISALLOWANCES MADE UNDER VARIOUS HEADS OF EXPENSES WERE CHALLENGED BY THE ASSESSEE IN APPEAL BEFORE THE CIT(A). ONE OF THE P ERTINENT REASONS ADVANCED BY THE ASSESSING OFFICER FOR VARIOUS DISALLOWANCES/ ADDITIONS WAS THAT THE ASSESSEE DID NOT DISCHARGE ITS ONUS OF SUBSTANTIATI NG THE CLAIMED EXPENDITURE. IN APPEAL BEFORE THE CIT(A) ASSESSEE VEHEMENTLY AR GUED THAT COMPLETE DETAILS OF THE EXPENDITURES ALONG WITH THE NECESSAR Y SUPPORTING VOUCHERS ETC. WERE INDEED FURNISHED BEFORE THE ASSESSING OFFICER. SINCE THE AFORESAID PLEA OF THE ASSESSEE WAS FOUND BY THE CIT(A) TO BE AT VA RIANCE WITH WHAT WAS STATED IN THE ASSESSMENT ORDER HE DEEMED IT FIT AN D PROPER TO INVOKE SECTION 250(4) OF THE ACT AND DIRECTED THE ASSESSING OFFICE R TO VERIFY THE FACTUAL AND OTHER CONTENTIONS RAISED BY THE ASSESSEE IN APPEAL. THE CIT(A) ALSO REQUIRED THE ASSESSING OFFICER TO CALL-FOR FOR SUCH MATERIAL AS HE MAY CONSIDER FIT FOR CONDUCTING NECESSARY ENQUIRIES AND REQUIRED THE ASS ESSING OFFICER TO REPORT THE RESULT OF HIS ENQUIRIES BEFORE HE COULD DECIDED THE DISPUTE IN APPEAL. A COPY OF THE ORDER PASSED BY THE CIT(A) U/S 250(4) O F THE ACT DIRECTING THE ASSESSING OFFICER TO MAKE ENQUIRIES AND REPORT TO H IM THEREAFTER THE RESULT OF THE SAME HAVE BEEN ANNEXED IN THE PAPER BOOK AT PA GES 124 & 125. THE ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 CIT(A) HAS REFERRED TO THE REPORT OF THE ASSESSING OFFICER IN THIS REGARD DATED 25.03.2010 A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 204 TO 207. AFTER CONSIDERING THE SUBMISSIONS OF THE A SSESSEE AND THE RESPONSE OF THE ASSESSEE TO THE REMAND REPORT OF THE ASSESSI NG OFFICER THE CIT(A) HAS PROCEEDED TO DISPOSE OF THE APPEAL. THOUGH THE CIT (A) ALLOWED THE ASSESSING OFFICER AN OPPORTUNITY TO CONDUCT ENQUIRI ES WITH REGARD TO THE MATERIAL AND SUBMISSIONS PUT-FORTH BY THE ASSESSEE AND GIVE HIS REPORT THEREUPON HOWEVER THE CIT(A) FOUND THAT IN HIS RE MAND REPORT THE ASSESSING OFFICER MERELY REPEATED THE FACTS MENTIONED IN THE ASSESSMENT ORDER AND NO ENQUIRIES WERE MADE. IN THIS BACKGROUND THE CIT(A ) EVALUATED THE MATERIAL AND OTHER EVIDENCES PUT-FORTH BY THE ASSESSEE BEFOR E HIM AND HE PROCEEDED TO ADJUDICATE THE VARIOUS GROUNDS RAISED BEFORE HIM . 3. IN THIS BACKGROUND NOW WE MAY PROCEED TO ADJUDI CATE THE RESPECTIVE GROUNDS OF APPEAL RAISED IN THE CROSS-APPEALS. FIR ST WE SHALL TAKE-UP THE APPEAL OF THE REVENUE WHEREIN THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DIS ALLOWANCE OF RS. 35 59 717/- MADE BY THE AO OUT OF EXPENSES INCURRED BY ASSESSEE ON ACCOUNT OF EMPLOYMENT COST DEVELOPMENT PURCHASES TRAINING CO ST (FC) & DEVELOPMENT PURCHASES (FC).' 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DIS ALLOWANCE OF RS. 35 59 717/- WHEN THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS AND TO SUBSTANTIATE ITS CLAIM THAT THE SAID EXPENDITURE WERE REVENUE IN NAT URE AND NOT CAPITAL AS WERE HELD BY THE AO.' 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DIS ALLOWANCE OF RS.2 30 000/- MADE BY THE AO ON ACCOUNT OF RENT PAID BY THE ASSES SEE AND FAILED TO PRODUCE THE DETAILS OF THE PERSONS TO WHOM IT WAS P AID.' 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DIS ALLOWANCE OF RS.2 30 000/- WHEN THE ASSESSEE HAS FAILED TO SUBMIT THE CONFIRMA TION LETTER IN RESPECT OF THE SAID EXPENDITURE AND SUMMONS ISSUED U/S 131(1) OF THE I.T. ACT TO THE PERSON TO WHOM RENT WAS PAID DID NOT RESPOND AT ALL .' 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DIS ALLOWANCE OF RS.2 37 748/- MADE BY THE AO ON ACCOUNT OF BAD DEBTS AS THE ASSES SEE HAS FAILED TO ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 ESTABLISH THAT THE SAID BAD DEBTS WERE WRITTEN OFF IN THE BOOKS OF ACCOUNTS AS IS MANDATED BY THE DECISION OF HON'BLE SUPREME COUR T IN THE CASE OF TRF LTD. REPORTED IN 323 ITR 397.' 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DIS ALLOWANCE OF RS. 44 13 342/- MADE BY THE AO OUT OF EXPENSES INCURRED BY ASSESSEE ON ACCOUNT OF OTHER REPAIRS.' 7. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DIS ALLOWANCE OF RS. 44 13 342/- WHEN THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS AND TO SUBSTANTIATE ITS CLAIM THAT THE SAID EXPENDITURE WERE REVENUE IN NAT URE AND NOT CAPITAL AS WERE HELD BY THE AO.' 8. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DIS ALLOWANCE OF RS. 34 26 668/- MADE BY THE AO OUT OF EXPENSES INCURRED BY ASSESSEE ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES.' 9. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DIS ALLOWANCE OF RS. 34 26 668/- WHEN THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS AND TO SUBSTANTIATE ITS CLAIM THAT THE SAID EXPENDITURE WERE REVENUE IN NAT URE AND NOT CAPITAL AS WERE HELD BY THE AO.' 10. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE AO BE RESTORED. 11. THE APPELLANT CRAVES LEAVE TO ADD AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 4. IN SO FAR AS THE GROUNDS OF APPEAL NO.1 AND 2 AR E CONCERNED THE SAME RELATE TO A DISALLOWANCE OF RS.35 59 717/- MADE BY THE ASSESSING OFFICER OUT OF EXPENSES INCURRED BY THE ASSESSEE ON ACCOUNT OF EMPLOYMENT COST DEVELOPMENT PURCHASES DEVELOPMENT PURCHASES (FC) TRAINING COST (FC) ETC.. IN BRIEF THE FACTS ARE THAT THE ASSESSING OFFICER NOTICED FROM THE AUDIT REPORT OF THE ASSESSEE THAT CERTAIN EXPENSES WERE CLAIMED AS ADMISSIBLE UNDER SECTIONS 33AB - 35E OF THE ACT AND THE AMOUNT DEBI TED TO PROFIT & LOSS ACCOUNT WAS TO THE EXTENT OF RS.33 54 081/- AND NOT DEBITED TO PROFIT & LOSS ACCOUNT WAS RS.15 252/-. ON PERUSAL OF THE DETAILS FURNISHED BY THE ASSESSEE THE ASSESSING OFFICER NOTICED THAT AN AMO UNT OF RS.2 94 364/- WAS CAPITALIZED AS PAYMENTS RELATING TO APPLICATION SOF TWARE AND THE REMAINING RS.35 59 717/- WAS SHOWN AS REVENUE EXPENDITURE A ND DEBITED UNDER HEAD MISCELLANEOUS EXPENSES TO THE PROFIT & LOSS ACCOU NT WHICH INCLUDED EXPENDITURES DEBITED AS EMPLOYMENT COST DEVELOPME NT PURCHASES DEVELOPMENT PURCHASES (FC) TRAINING COST (FC). TH E ASSESSING OFFICER ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 CALLED FOR CERTAIN DETAILS AND IN RESPONSE ASSESSEE FURNISHED A COMMUNICATION DATED 12.11.2008. UPON PERUSAL THEREOF THE ASSESS ING OFFICER WAS OF THE VIEW THAT THE COMPLETE DETAILS CALLED FOR BY HIM WE RE NOT PRODUCED AND ACCORDINGLY HE DREW AN ADVERSE INFERENCE TO THE EFF ECT THAT THE SO-CALLED REVENUE EXPENDITURES ARE EITHER CAPITAL IN NATURE O R EVEN IT IS PRESUMED THAT THEY ARE REVENUE IN NATURE THE SAME IT COULD NOT B E PROVED BY PRODUCTION OF DOCUMENTS AND HENCE HE DISALLOWED A SUM OF RS.35 59 717/- AS CAPITAL EXPENDITURE. IN APPEAL THE CIT(A) AFTER CONSIDERI NG THE MATERIAL FURNISHED BY THE ASSESSEE AS ALSO THE REMAND REPORT OF THE ASSES SING OFFICER CAME TO CONCLUDE THAT THERE WAS NO JUSTIFICATION FOR TREATI NG THE IMPUGNED EXPENDITURE AS A CAPITAL EXPENDITURE. THE FOLLOWING FINDINGS OF THE CIT(A) ARE RELEVANT IN THIS REGARD :- 11. AS REGARDS THE SUBSTANTIVE ISSUE INVOLVED I D O NOT FIND ANY REASON FOR HOLDING THAT EXPENDITURE IN THE NATURE O F EMPLOYMENT COST DEVELOPMENT PURCHASES DEVELOPMENT PURCHASE (FC) AND TRAINING COST (FC) SHOULD BE REGARDED TO BE OF THE NATURE OF CAP ITAL EXPENDITURE. BESIDES IN THE ASSESSMENT ORDER THE AO HAS NOT TAKEN A DEF INITE STAND. HE PRESUMES THAT THE EXPENDITURE WERE OF CAPITAL NATURE BUT IM MEDIATELY DILUTES HIS STAND BY STATING THAT EVEN IF THEY WERE REVENUE IN NATURE THEY HAD NOT BEEN PROVED BY PRODUCTION OF EVIDENCE. AS ALREADY STATED NO F RESH LIGHT HAS BEEN THROWN BY THE AO IN REMAND PROCEEDINGS. AS SUCH CONSIDER ING THE DETAILS SUBMITTED BY THE APPELLANT DURING THE COURSE OF APPELLATE PRO CEEDINGS I HEREBY DELETE THE ADDITION MADE IN PARA-6. ACCORDINGLY DISALLOW ANCE OF RS.35 59 717/- IS HEREBY DELETED. 5. BEFORE US APART FROM REITERATING THE GROUNDS OF APPEAL RAISED THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT POINTED OUT ANY PARTICULAR INFIRMITY OR FALLACY IN THE FINDINGS OF THE CIT(A). 6. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT IT WAS BROUGHT TO THE NOTICE OF THE CIT(A) THAT THE DETAILS FURNISHED TO THE ASSESSING OFFICER CONTAINED THE PAYMENT VOUCHERS B ILLS BANK ADVICES FOR PAYMENTS WITH VOUCHERS WORKINGS OF EMPLOYEES COST FOR RESEARCH AND DEVELOPMENT ETC.. ACCORDING TO THE LEARNED COUNSE L ALL THIS MATERIAL WAS FURNISHED DURING THE ASSESSMENT PROCEEDINGS ITSELF AND THE CIT(A) HAS ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 APPROPRIATELY APPRECIATED THE SAME AND CORRECTLY HE LD THAT THERE WAS NO JUSTIFICATION FOR THE TREATMENT OF SUCH EXPENDITURE AS CAPITAL EXPENDITURE. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ON THIS ISSUE. THE EXPENDITURE IN QUESTION WAS CLAIMED AS RESEARCH AN D DEVELOPMENT EXPENDITURE UNDER VARIOUS HEADS ENUMERATED ABOVE. THE ASSESSING OFFICER DISALLOWED THE CLAIM AND INSTEAD HELD THE EXPENDITU RE TO BE CAPITAL IN NATURE. THE REASON WEIGHING WITH THE ASSESSING OFFICER WAS THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THAT THE SAID EXPENDITURE WA S REVENUE IN NATURE. ON THE CONTRARY THE FINDING OF THE CIT(A) IS THAT THE COM PLETE DETAILS OF THE EXPENDITURE WERE AVAILABLE ON RECORD AND THAT THERE WAS NO REASON TO TREAT THE SAME AS A CAPITAL EXPENDITURE. IN OUR CONSIDERED OPINION THERE IS NO IOTA OF REASONING ADVANCED BY THE ASSESSING OFFICER TO SAY AS TO HOW THE IMPUGNED EXPENDITURE WAS CAPITAL IN NATURE AND THEREFORE WE FIND NO ERROR ON THE PART OF THE CIT(A) IN DELETING THE IMPUGNED ADDITION. AS A MATTER OF FACT IT IS ALSO EVIDENT THAT THE CIT(A) HAD REMANDED THE MATTER TO THE ASSESSING OFFICER TO MAKE ENQUIRIES WITH RESPECT TO THE SUBMISSIONS AND OTHER MATERIAL PUT-FORTH BY THE ASSESSEE AND IN RESPONSE THE ASSESSING OFFICER MADE NO EFFORT TO MAKE ANY ENQUIRY AND IN HIS REMAND REPORT TO THE CIT(A) HE HAS REPEATED THE FACTS AS MENTIONED IN THE ASSESSMENT ORDER WHICH WERE CL EARLY DEVOID OF ANY REASONING TO HOLD THE EXPENDITURE AS CAPITAL IN NAT URE. THUS WE HEREBY AFFIRM THE ORDER OF THE CIT(A) ON THIS ASPECT AND ACCORDIN GLY THE GROUNDS OF APPEAL NOS.1 AND 2 RAISED BY THE REVENUE ARE DISMISSED. 8. THE DISPUTE RAISED BY THE REVENUE IN GROUNDS OF APPEAL NO.3 AND 4 RELATES TO A DISALLOWANCE OF RS.2 30 300/- MADE BY THE ASSESSING OFFICER OUT OF RENT PAID BY THE ASSESSEE. IN THE COURSE OF ASS ESSMENT PROCEEDINGS ASSESSEE WAS REQUIRED TO SUBMIT THE DETAILS OF PERS ONS TO WHOM RENT WAS PAID AND THE ASSESSING OFFICER HAS OBSERVED THAT ASSESSE E DID NOT FURNISH FULL ADDRESSES OF THE PERSONS EXCEPT IN ONE CASE NAMELY MRS. SANGITA GONSALVIS. ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 IN THE CASE OF THE SAID PERSON ASSESSING OFFICER I SSUED SUMMONS U/S 131(1) OF THE ACT AND HAS OBSERVED THAT THE SAID PERSON DI D NOT CONFIRM THE PAYMENTS MADE TO HER. ACCORDINGLY THE ENTIRE AMOUNT OF RS. 2 30 300/- CLAIMED AS RENT PAYMENT WAS DISALLOWED. 9. THE PLEA OF THE ASSESSEE BEFORE THE CIT(A) WAS T HAT THE ASSESSING OFFICER WAS WRONG IN STATING THAT THE COMPLETE DETA ILS WERE NOT FURNISHED AND RATHER IT WAS ASSERTED THAT THE SUBMISSIONS OF THE ASSESSEE DATED 24.10.2008 ADDRESSED TO THE ASSESSING OFFICER CONTAINED COMPLE TE DETAILS OF THE PERSONS TO WHOM RENT WAS PAID. THE CIT(A) HAS CONSIDERED T HE SUBMISSIONS OF THE ASSESSEE AS WELL AS THE REMAND REPORT OF THE ASSESS ING OFFICER AND HAS THEREAFTER DELETED THE ADDITION BY MAKING THE FOLLO WING DISCUSSION :- 18. THIS MATTER TOO WAS REMANDED TO THE AO FOR A F ACTUAL REPORT VIDE MY ORDER UNDER SECTION 250(4) MENTIONED SUPRA. IN RESPONSE TO THIS THE AO HAS MERELY REITERATED THE FACTS MENTIONED IN THE ASSESSMENT ORDER. HE HAS NEITHER COMMENTED ON THE APPELLANTS SUBMISSION THAT THE COMPLETE DETAILS HAD BEEN SUPPLIED VIDE THEIR LETTER DATED 2 4.10.2008 NOR MENTIONED WHETHER ANY ENQUIRY AT ALL WAS CONDUCTED BY HIM DUR ING THE REMAND PROCEEDINGS. THE APPELLANTS CONTENTION AS ALREAD Y MENTIONED IS THAT THE AO NEVER EXTENDED ANY OPPORTUNITY TO THE APPELLANT TO EXPLAIN THE MATTERS IN CONTENTION DURING THE REMAND PROCEEDINGS. DURING S UBSEQUENT APPELLATE PROCEEDINGS THE ASSESSEE ALSO SUBMITTED A COPY OF THEIR SUBMISSIONS BEFORE THE AO GIVING FULL ADDRESSES OF PERSONS TO WHOM RE NT IS CLAIMED TO HAVE BEEN PAID. UNDER THE CIRCUMSTANCES I AM CONSTRAINED TO RELY ON THE EXPLANATION PROVIDED BY THE APPELLANT AND DELETE THE ADDITION M ADE ON ACCOUNT OF DISALLOWANCE OF RENT. THIS ISSUE IS THEREFORE DE CIDED IN THE APPELLANTS FAVOUR. 10. AT THE TIME OF HEARING THE LEARNED DEPARTMENTA L REPRESENTATIVE HAS NOT POINTED OUT AS TO IN WHAT MANNER THE CIT(A) ERR ED IN DELETING THE ADDITION INASMUCH AS THE CIT(A) HAS RELIED ON THE CONTENTION S RAISED BY THE ASSESSEE BEFORE HIM WHICH HAVE REMAINED UNREBUTTED BY THE A SSESSING OFFICER IN THE REMAND PROCEEDINGS ALLOWED BY THE CIT(A). ACCORDIN GLY WE AFFIRM THE AFORESAID ORDER OF THE CIT(A) AND AS A RESULT THE G ROUNDS OF APPEAL NO.3 AND 4 RAISED BY THE REVENUE ARE DISMISSED. ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 11. THE GROUND OF APPEAL NO.5 RAISED BY THE REVENUE IS WITH REGARD TO AN AMOUNT OF RS.2 37 748/- WHICH HAS BEEN ALLOWED BY T HE CIT(A) AS BAD DEBTS WRITTEN-OFF. IN THIS REGARD IT IS NOTED THAT THE ASSESSING OFFICER DISALLOWED THE CLAIM PRIMARILY FOR THE REASON THAT THE ASSESSEE HA D NOT FURNISHED THE DETAILS OF SUCH BAD DEBTS AND ALSO NO EXPLANATION WAS FURNI SHED BY THE ASSESSEE AS TO WHY THE SAME WERE NOT CLAIMED IN THE APPROPRIATE COLUMN IN THE RETURN OF INCOME BUT WERE CLAIMED UNDER THE HEAD MISCELLANE OUS EXPENSES. BEFORE THE CIT(A) ASSESSEE POINTED OUT THAT NO QUERY ABOU T THE BAD DEBTS WRITTEN-OFF WAS RAISED BY THE ASSESSING OFFICER DURING THE ASSE SSMENT PROCEEDINGS; AND IN ANY CASE IT COULD NOT BE DISALLOWED MERELY BECAU SE THE SAME WAS NOT MENTIONED IN THE APPROPRIATE COLUMN IN THE RETURN O F INCOME. ASSESSEE ALSO POINTED OUT BEFORE THE CIT(A) THAT THE DETAIL OF BA D DEBTS OF RS.2 37 748/- WERE CONTAINED IN THE DETAILS OF MISCELLANEOUS EXP ENSES WHICH WERE FURNISHED DURING THE ASSESSMENT PROCEEDINGS. THE C IT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE BY RELYING ON THE JUDGEMENTS OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DIT (IT) VS. OMAN INTERNA TIONAL BANK (2009) 313 ITR 128 (BOM) AND THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD. VS. CIT (2010) 323 ITR 397 (SC). 12. BEFORE US THERE IS NO MATERIAL PUT-FORTH BY TH E REVENUE TO DEMONSTRATE AS TO HOW THE CIT(A) IS WRONG IN ALLOWING THE CLAIM FOLLOWING THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF TRD LTD. ( SUPRA). AS A RESULT WE AFFIRM THE ACTION OF THE CIT(A) IN ALLOWING THE CLA IM OF THE ASSESSEE AND REVENUES GROUND OF APPEAL NO.5 IS DISMISSED. 13. GROUNDS OF APPEAL NO.6 AND 7 RELATE TO THE ACTI ON OF THE CIT(A) IN DELETING THE ADDITION OF RS.44 13 342/- MADE BY THE ASSESSING OFFICER OUT OF EXPENSES INCURRED BY ASSESSEE ON ACCOUNT OF OTHER REPAIRS. IN THIS REGARD THE RELEVANT FACTS ARE THAT THE ASSESSING OFFICER E XAMINED THE DETAILS OF AMOUNTS DEBITED UNDER THE HEAD MISCELLANEOUS EXPEN SES AND NOTED THAT IT ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 CONTAINED EXPENDITURE OF RS.44 13 342/- TOWARDS RE PAIRS TO OTHERS. THE ASSESSING OFFICER NOTICED THAT NO DETAILS OR BILLS WERE FURNISHED BY THE ASSESSEE AND ACCORDINGLY HE TREATED AN AMOUNT OF RS .44 13 342/- DEBITED UNDER THE HEAD REPAIRS TO OTHERS AS A CAPITAL EX PENDITURE AND FURTHER OBSERVED THAT EVEN IF THE SAME WERE REVENUE IN NATU RE IT WAS STILL DISALLOWABLE BECAUSE ASSESSEE COULD NOT PROVE THE INCURRENCE OF THE SAME. ACCORDINGLY AN AMOUNT OF RS.44 13 342/- WAS ADDED BACK TO THE T OTAL INCOME OF THE ASSESSEE. 14. IN APPEAL ASSESSEE CONTENDED THAT NECESSARY DE TAILS WERE FURNISHED TO THE ASSESSING OFFICER IN RESPONSE TO HIS QUERY AND IT WAS FURTHER CONTENDED THAT THE NATURE OF THE EXPENSES WAS DULY EXPLAINED AS BEING IN NATURE OF REGULAR REPAIRS AND MAINTENANCE EXPENSES FOR PROPER MAINTENANCE OF BUILDING AND MACHINERY. IT WAS CLAIMED THAT NO ENDURING BEN EFIT WAS DERIVED BY THE ASSESSEE ON INCURRENCE OF SAID EXPENDITURE AND THE EXPENDITURE HAS NOT RESULTED IN ANY INCREASE IN CAPACITY OF PLANT AND M ACHINERY ETC.. THEREFORE THE EXPENDITURE WAS SOUGHT TO BE JUSTIFIED AS REVEN UE IN NATURE. THE CIT(A) RECORDS THAT ASSESSEE FURNISHED THE DETAILS IN THIS REGARD WHICH WERE CLAIMED TO HAVE BEEN SUBMITTED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THIS BACKGROUND THE CI T(A) HAS DELETED THE ADDITION BY MAKING THE FOLLOWING DISCUSSION :- 25. THIS MATTER TOO WAS REMANDED TO THE AO FOR AN ENQUIRY INTO THE APPELLANTS SUBMISSIONS AND REPORT THEREON. THE AO IN HIS REMAND REPORT HAS MERELY STATED SINCE NO DETAILS WERE SUBMITTED BEF ORE THE AO AND HENCE DISALLOWANCE MADE BY THE AO ARE LEGALLY CORRECT. CONSIDERING THE DETAILS SUBMITTED BY THE APPELLANT TO WHICH NO CONTRARY FI NDINGS HAVE BEEN MADE BY THE LEARNED AO DURING REMAND PROCEEDINGS AND ALSO C ONSIDERING THE WAVERING STAND TAKEN BY THE AO IN FIRST PRESUMING THAT THE E XPENDITURE WAS CAPITAL IN NATURE AND THE ADMITTING THAT IT COULD BE REVENUE I N NATURE I HEREBY DELETE THE ADDITION AND DECIDE THIS ISSUE TOO IN THE APPELLANT S FAVOUR. 15. IN OUR CONSIDERED OPINION THE CIT(A) MADE NO M ISTAKE IN DELETING THE IMPUGNED ADDITION HAVING REGARD TO THE AFORESAID DI SCUSSION. EVEN IN THE COURSE OF HEARING BEFORE US THERE IS NO COGENT MAT ERIAL OR ARGUMENT TAKEN BY ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 THE LEARNED DEPARTMENTAL REPRESENTATIVE TO ASSAIL T HE AFORESAID FINDINGS OF THE CIT(A) AND ACCORDINGLY THE SAME ARE HEREBY AFFIRMED . AS A RESULT THE GROUNDS OF APPEAL NO.6 AND 7 RAISED BY THE REVENUE ARE DISMISSED. 16. THE LAST ISSUE RAISED BY THE REVENUE IS BY WAY OF GROUNDS OF APPEAL NOS.8 AND 9 RELATING TO THE ACTION OF THE CIT(A) IN DELETING AN ADDITION OF RS.34 26 668/- MADE BY THE ASSESSING OFFICER OUT OF EXPENSES INCURRED ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES. IN BRIE F THE FACTS ARE THAT ASSESSEE INCURRED A SUM OF RS.34 26 668/- AS LEGAL AND PROFESSIONAL CHARGES. THE ASSESSING OFFICER DISALLOWED 50% OF THE SAME I. E. RS.17 13 200/- ON THE GROUND OF ABSENCE OF REQUISITE DETAILS. WE FIND TH AT THE CIT(A) HAS DELETED THE ADDITION AFTER CONSIDERING THE SUBMISSIONS AND DETA ILS PUT-FORTH BY THE ASSESSEE AND ALSO NOTICING THAT ASSESSING OFFICER H AS NOT POINTED OUT ANYTHING TO CONTRADICT THE ASSERTIONS OF THE ASSESS EE MADE DURING THE APPELLATE PROCEEDINGS. THE RELEVANT FINDING OF THE CIT(A) IS CONTAINED IN PARA 32 OF THE HIS ORDER WHICH IS AS UNDER :- 32. CONSIDERING THE APPELLANTS SUBMISSIONS THAT T HE AO HAD NEVER RAISED ANY QUERY ABOUT THE LEGAL AND PROFESSIONAL C HARGES THAT THE STATUTORY AUTHORS HAD NOT FOUND ANY ITEM OF CAPITAL NATURE A ND ALSO THE BREAK-UP OF SUCH EXPENSES HAD BEEN PROVIDED BY THE APPELLANT RU NNING INTO FIVE PAGES AND GIVING THE NAMES OF THE PAYEES THE MATTER WAS REMANDED BACK TO THE AO FOR AN ENQUIRY AND REPORT. IN HIS REMAND REPORT T HE AO HAS NOT POINTED ANY FACTS CONTRADICTING THE APPELLANTS CLAIM THAT THE EXPENDITURE WAS NOT OF CAPITAL NATURE AND WAS FULLY ALLOWABLE. ACCORDINGLY I ALL OW THIS ISSUE IN FAVOUR OF THE APPELLANT AND DELETE THE ADDITION MADE. 17. IN OUR CONSIDERED OPINION THERE IS NO JUSTIFIC ATION FOR THE REVENUE TO AGITATE THE ACTION OF THE CIT(A) INASMUCH AS COMPLE TE DETAILS WERE BEFORE THE ASSESSING OFFICER AND HE WAS ALSO ALLOWED AN OPPORT UNITY TO CONDUCT NECESSARY ENQUIRIES IN THE COURSE OF REMAND PROCEED INGS WHICH HE FAILED TO DO. IN THIS BACKGROUND THE CIT(A) ALLOWED THE CLA IM OF THE ASSESSEE AND EVEN BEFORE US THE REVENUE HAS NOT POINTED OUT ANY SPECIFIC REASON OR ERROR ON THE PART OF THE CIT(A) IN DELETING THE IMPUGNED DISALLOWANCE. APART THEREFROM WE MAY NOTICE THE CASUAL MANNER IN WHICH THE GROUNDS OF APPEAL ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 HAVE BEEN RAISED BY THE REVENUE. OSTENSIBLY THE T OTAL EXPENDITURE CLAIMED ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES WAS TO THE TUNE OF RS.34 26 668/- AND THE ASSESSING OFFICER DISALLOWED 50% OF THE SAME I.E. RS.17 13 200/- AS IS EVIDENT FROM PARA 14 OF THE AS SESSMENT ORDER. THE CIT(A) HAS ALSO DELETED THE DISALLOWANCE TO THAT EX TENT. CURIOUSLY REVENUE HAS AGITATED AGAINST THE PURPORTED DISALLOWANCE OF RS.34 26 668/- WHICH IS OBVIOUSLY WRONG AS THE DISALLOWANCE WAS CONFINED ON LY TO RS.17 13 200/-. BE THAT AS IT MAY IN VIEW OF THE FINDING OF THE CIT(A ) WE FIND NO REASONS TO INTERFERE IN HIS ORDER ON THIS POINT WHICH WE HEREB Y AFFIRM. THE GROUNDS OF APPEAL NO.8 AND 9 ARE HEREBY DISMISSED. 18. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. 19. IN THE CROSS-APPEAL OF THE ASSESSEE THE FOLLOW ING GROUNDS OF APPEAL HAVE BEEN RAISED :- 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CA SE AND AS PER PROVISIONS OF THE ACT IT BE HELD THAT AMOUNT OF EX PENDITURE IN AGGREGATE OF RS.61 77 192/- INCURRED BY THE APPELLANT ON CONSTRU CTION OF ROADS IN THE FACTORY PREMISES CONSTRUCTION OF BOUNDARY WALL AND FLOOR STAIRCASE ETC... IS DEDUCTIBLE AMOUNT. THE ENTIRE CLAIM IN THIS RESPECT BE ALLOWED. JUST AND PROPER RELIEF BE GRANTED TO THE APPELLANT IN THIS R ESPECT. 2. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CAS E AND AS PER PROVISIONS OF THE ACT IT BE HELD THAT AMOUNT OF E XPENSES OF RS.3 86 450/- CLAIMED BY THE APPELLANT IS ELIGIBLE FOR DEDUCTION. IT FURTHER BE HELD THAT THE DISALLOWANCE MADE BY THE AO AND THAT CONFIRMED BY T HE 1 ST APPELLATE AUTHORITY IS IMPROPER UNJUSTIFIED UNWARRANTED AND CONTRARY TO THE PROVISIONS AND SCHEME OF THE ACT. THE CLAIM BE ALLOWED TO THE APPE LLANT ON FACTS PREVAILING IN THE CASE AND AS PER PROVISIONS OF THE ACT. JUST AND PROPER RELIEF BE GRANTED TO THE APPELLANT IN THIS RESPECT. 3. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CAS E AND AS PER PROVISIONS OF THE ACT IT BE HELD THAT THE ADHOC D ISALLOWANCE / ADDITION OF RS.1 00 000/- MADE BY THE AO AND THAT CONFIRMED BY THE 1 ST APPELLATE AUTHORITY IS IMPROPER ARBITRARY & CONTRARY TO THE P ROVISIONS & SCHEME OF THE ACT. THE ADDITION SO MADE AND SUSTAINED BE DELETED. JUST AND PROPER RELIEF BE GRANTED TO THE APPELLANT IN THIS RESPECT. 4. WITHOUT PREJUDICE TO GROUND NO: 3 IN THE ALTERN ATIVE IF IT IS HELD FOR ANY REASON THAT ADDITION IS WARRANTED IN THIS R ESPECT THE AMOUNT OF ADDITION MADE BE REDUCED SUBSTANTIALLY. THE APPELLA NT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 5. THE APPELLANT PRAYS TO BE ALLOWED TO ADD AMEND MODIFY RECTIFY DELETE RAISE ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 20. THE FIRST ISSUE RAISED BY THE ASSESSEE IS WITH REGARD TO A SUM OF RS.61 77 192/- REPRESENTING EXPENDITURE UNDER THE H EAD REPAIRS TO MACHINERY AND BUILDING. THE ASSESSING OFFICER EXA MINED THE DETAILS OF THE EXPENDITURE AND FOUND THAT IT INCLUDED EXPENDITURE ON CONSTRUCTION OF ROAD IN FACTORY PREMISES CONSTRUCTION OF NEW BOUNDARY WALL NEW STAIRCASE ETC. AMOUNTING TO RS.61 77 192/-. ACCORDING TO THE ASSE SSING OFFICER SUCH EXPENDITURE WAS REQUIRED TO BE CAPITALIZED AND DEPR ECIATION @ 10% WAS TO BE ALLOWED. ACCORDINGLY HE DISALLOWED THE AFORESAID EXPENDITURE AND INSTEAD CAPITALIZED THE SAME AND ALLOWED 10% DEPRECIATION T HEREON WHICH RESULTED IN A NET ADDITION OF RS.55 59 472/- TO THE RETURNED IN COME. THE CIT(A) HAS AFFIRMED VIEW OF THE ASSESSING OFFICER THAT THE IMP UGNED EXPENDITURE WAS IN THE NATURE OF CAPITAL EXPENDITURE WHICH WAS REQUIRE D TO BE CAPITALIZED AND ALLOWED DEPRECIATION THEREON. NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A) ASSESSEE IS IN FURTHER APPEAL BEFORE US. 21. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO JUSTIFICATION TO TREAT THE IMPUGNED EXPENDIT URE AS CAPITAL IN NATURE. THE EXPENDITURE ON STAIRCASE WAS STATED TO BE ON RE PLACEMENT OF OLD EXISTING STAIRCASE IN THE FACTORY PREMISES; AND NO NEW STAI RCASE WAS BUILT. FURTHER IT WAS EXPLAINED THAT NO NEW ROAD WAS CONSTRUCTED IN T HE FACTORY PREMISES; AND RATHER OLD ROAD WAS RE-LAID. UNDER THESE CIRCUMSTA NCES IN WAS CONTENDED THAT THERE WERE NO JUSTIFICATION TO TREAT THE IMPUG NED COST OF REPAIRS AS RESULTING IN CREATION OF ANY NEW ASSET. SIMILAR AR GUMENT HAS ALSO BEEN ADVANCED WITH REGARD TO THE EXPENDITURE ON REPAIR O F BOUNDARY WALL AND IT WAS POINTED OUT THAT THERE WAS NO NEW BOUNDARY WALL ERE CTED; BUT IT WAS A CASE OF REPAIR TO OLD BOUNDARY WALL. IN THIS CONTEXT REFE RENCE HAS BEEN MADE TO THE DETAILS OF SUCH EXPENDITURE PLACED AT PAGE 3 OF THE PAPER BOOK. ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 22. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE HAS RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES IN SUPPORT OF THE CASE OF THE REVENUE AND CONTENDED THAT THE EXPENDITURE IN QUESTION WAS IN THE NATURE OF CAPITAL EXPENDITURE. 23. FACTUALLY SPEAKING IT IS NOT IN DISPUTE THAT THE EXPENDITURE ON STAIRCASE IS NOT FOR CONSTRUCTION OF A NEW STAIRCASE BUT REPL ACEMENT OF AN OLD STAIRCASE. SIMILARLY THE EXPENDITURE ON A BOUNDARY WALL IS NO T TOWARDS THE CONSTRUCTION OF NEW BOUNDARY WALL BUT REPLACING THE OLD STRUCTURE. SIMILAR IS THE POSITION WITH REGARD TO THE COST OF REPAIR OF ROAD IN THE FACTORY PREMISES. IN SUM AND SUBSTANCE THE PLEA OF THE ASSESSEE IS THAT THE AFO RESAID EXPENSES HAVE BEEN INCURRED PURELY AS REPAIR AND MAINTENANCE OF THE EX ISTING ASSETS AND THERE IS NO CREATION OF NEW ASSETS. IN THE WRITTEN SUBMISSI ONS FURNISHED TO THE CIT(A) THE RELEVANT PORTION OF WHICH IS PLACED IN THE PAPE R BOOK IT IS CONTENDED THAT THE SAID EXPENDITURE HAS NOT INCREASED ANY PRODUCTI ON CAPACITY OF THE UNIT BUT IT HAS ONLY ENABLED THE ASSESSEE TO ENJOY ADMINISTR ATIVE CONVENIENCE BY MAINTAINING THE ASSETS IN PROPER CONDITION. IN OUR CONSIDERED OPINION THE AFORESAID EXPENSES MAY HAVE RESULTED IN AN ENDURING BENEFIT SO HOWEVER SUCH ENDURING BENEFIT IS NOT IN THE CAPITAL FIELD BUT IS IN THE REVENUE FIELD INASMUCH AS IT HAS ONLY ENABLED THE ASSESSEE TO CAR RY ON ITS ACTIVITIES MORE EFFICIENTLY AND AT THE SAME TIME MAINTAINING THE AS SETS IN THEIR PROPER CONDITION. THEREFORE IN OUR CONSIDERED OPINION T HE IMPUGNED EXPENDITURE WAS RIGHTLY CLAIMED BY THE ASSESSEE TO BE REVENUE I N NATURE. AS A RESULT WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AS SESSING OFFICER TO ALLOW THE IMPUGNED EXPENDITURE AS REVENUE EXPENDITURE IN TOTO . THUS THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS ALLOWED. 24. THE NEXT GROUND OF APPEAL RAISED BY THE ASSESSE E IS WITH REGARD TO A DISALLOWANCE OF RS.3 86 450/- SUSTAINED BY THE CIT( A) ON ACCOUNT OF NON- VERIFIABLE PAYMENT MADE TO A PARTY M/S ABHILASHA PA INTER. THE ASSESSING ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 OFFICER AS WELL AS THE CIT(A) HAS DISALLOWED THE AM OUNT ON THE GROUND THAT THE ASSESSEE HAD NOT FURNISHED ANY CONCLUSIVE PROOF. T HE CIT(A) HAS SPECIFICALLY NOTED THAT ASSESSEE WAS NEITHER ABLE TO FURNISH THE REQUISITE CONFIRMATION FROM THE SAID PARTY AND NOR ANY OTHER CONCLUSIVE PROOF I N THIS REGARD. IN THIS BACKGROUND THE ASSESSEE IS IN APPEAL BEFORE US. 25. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IMPUGNED SUM WAS PAID TOWARDS PAINTING OF THE FACTO RY BUILDING AND THE RELEVANT RECIPIENT COULD NOT BE CONTACTED TO OBTAIN THE REQUISITE CONFIRMATION. HOWEVER IT WAS POINTED OUT THAT THE TRANSACTION HA S BEEN DONE THROUGH BANKING CHANNELS AND THEREFORE THE DISALLOWANCE HAS BEEN INCORRECTLY MADE. 26. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE HAS DEFENDED THE ORDER OF THE CIT(A) BY RELYING ON THE SAME. 27. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. ON THIS ASPECT A FINDING OF FACT RECORDED BY THE CIT(A) IS THAT THER E WAS NO CONCLUSIVE PROOF LEAD BY THE ASSESSEE TO JUSTIFY THE NATURE OF PAYME NT OF RS.3 86 450/- TO M/S ABHILASHA PAINTER. WE FIND NO REASONS TO INTERFERE WITH THE AFORESAID FINDING OF THE CIT(A) AS THERE IS NO COGENT MATERIAL ON RECORD AGAINST THE SAME. THUS ON THIS ASPECT ASSESSEE FAILS AND THE ADDITION OF R S.3 86 450/- SUSTAINED BY THE CIT(A) IS HEREBY AFFIRMED. THUS GROUND OF APP EAL NO.2 IS DISMISSED. 28. THE LAST GROUND IN THE APPEAL OF THE ASSESSEE I S WITH REGARD TO THE ACTION OF THE CIT(A) IN SUSTAINING AN AD-HOC DISALL OWANCE OF RS.1 00 000/- MADE BY THE ASSESSING OFFICER. THE RELEVANT FACTS ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER CALLE D FOR INFORMATION FROM PARTIES THROUGH WHOM ASSESSEE HAD PURCHASED RAW MAT ERIALS AND FOUND DIFFERENCES IN THE CASE OF THREE PARTIES. HE THER EFORE OBSERVED THAT POSSIBILITY OF SIMILAR DIFFERENCES COULD NOT BE RUL ED OUT IN OTHER CASES ALSO; AND ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 HE MADE A DISALLOWANCE OF RS.1 00 000/- ON AN AD-HO C BASIS. THE PLEA OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT ASSESSEE HAD DU LY FURNISHED THE REQUISITE RE-CONCILIATION WITH THE PARTIES AND THE DIFFERENCE REMAINED OF RS.15 861/- RS.79.73 AND RS.49 RESPECTIVELY ONLY I N THREE CASES. IT WAS POINTED OUT THAT THE AFORESAID DIFFERENCE WAS QUITE INSIGNIFICANT CONSIDERING THAT THE NET FIGURE OF PURCHASES OF THE ASSESSEE WA S VERY HIGH. THE CIT(A) HOWEVER DID NOT INTERFERE WITH THE ADDITION MADE B Y THE ASSESSING OFFICER AND HAS SUSTAINED THE SAME. NOT BEING SATISFIED WITH T HE ORDER OF THE CIT(A) ASSESSEE IS IN APPEAL BEFORE US. 29. IN OUR CONSIDERED OPINION THERE IS NO JUSTIFIC ATION FOR THE AD-HOC DISALLOWANCE OF RS.1 00 000/- MADE BY THE ASSESSING OFFICER BECAUSE DIFFERENCE IN RE-CONCILIATION IN ACCOUNT WITH THE P ARTIES NEED NOT IPSO FACTO RESULT IN AN ESCAPEMENT OF INCOME. BE THAT AS IT MAY THE ADDITION IF AT ALL WHICH IS REQUIRED TO BE MADE SHALL BE LIMITED TO TH E DIFFERENCE ACTUALLY NOTICED BY THE ASSESSING OFFICER BUT CERTAINLY NO AD-HOC DI SALLOWANCE IS JUSTIFIABLE. THEREFORE WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO RETAIN THE ADDITION ONLY TO THE EXTENT O F THE ACTUAL DIFFERENCES FOUND ON VERIFICATION IN RELATION TO THE THREE PARTIES IN QUESTION AND DELETE THE BALANCE. THUS ON GROUND OF APPEAL NO.3 ASSESSEE PARTLY SUCCEEDS. 30. IN THE RESULT THE CROSS-APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 31. RESULTANTLY WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED THAT OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE DATED : 30 TH APRIL 2014 SUJEET ITA NO.1353/PN/2010 ITA NO.1354/PN/2010 COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-V PUNE; 4) THE CIT-V PUNE; 5) THE DR B BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T. PUNE