S.P.Mani & Mohan Diary, Erode V. ACIT, Erode

CO 175/CHNY/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3053 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 25-05-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 01-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N C RAVIKRISHNAN
• Assessee Lawyers: S MOHAMEED MUSTAFA
• Keywords: Unexplained investment; Capital asset; Depreciation; Agreed addition; Retraction; Revised return; Revenue expenditure
• Section: 133A; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI , ! ' ! # . $ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER I.T.A.NO.3053/MDS./2016 ASSESSMENT YEAR : 2013-14 & C.O. NO.175/MDS./2016 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, 15, GANDHI ROAD, ERODE 638 001. VS. M /S.S.P.MANI AND MOHAN DAIRY , 84,JEEVANATHAM STREET, KOLLAMPALAYAM, ERODE 638 002. [PAN AAKFS 5133 J] ( () / APPELLANT) ( *+() /RESPONDENT / CROSS OBJECTOR) / APPELLANT BY : MR.S.MOHAMEED MUSTAFA, JCIT, DR /RESPONDENT BY : MR.N.C.RAVIKRISHNAN,ADVOCATE / DATE OF HEARING : 25 - 0 5 - 20 17 / DATE OF PRONOUNCEMENT : 26 - 07 - 2017 , / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE AND THE CROSS OBJEC TIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COM MISSIONER OF INCOME-TAX (APPEALS)-3, COIMBATORE DATED 30.08.201 6 PERTAINING TO ASSESSMENT YEAR 2013-14. ITA NO.3053/MDS./2016 CO NO.175/MDS./2016 :- 2 -: 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS FO R OUR ADJUDICATION. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.506,56,1971- M ADE UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE FACTS OF THE DECISION DELIVERED IN THE CASE OF CIT VS. S. KHADER KHAN SON ARE DIFFERENT FROM THAT OF THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A), WHILE DELETING THE ADDITION MADE UNDER SECTION 68, FAILED TO APPRECIATE THE FACT THAT ASSESSEE HAS NOT CLARIFIED AS TO HOW THE REPLIES GIVEN IN THE STATEMENT WERE INCORRECT, AND ALSO IGNORED THE FINDINGS MENTIONED IN THE ASSESSMENT ORDER WITH REGARD TO THE NON-GENU INE SUNDRY CREDITORS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF U NEXPLAINED INVESTMENT IN CHILLING PLANTS WITHOUT APPRECIATING THE FACT THAT THE PARTNER OF THE FIRM HAD ADMITTED THE AMOUNT OF UNAC COUNTED INVESTMENT IN THE PLANTS AND NO REASONS FOR THE RET RACTION WAS EITHER GIVEN POST THE SURVEY PROCEEDINGS OR DURING THE ASS ESSMENT PROCEEDINGS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF T REATING THE EXPENSES INCURRED ON CRATES AND CANS AS CAPITAL EXP ENSE WITHOUT APPRECIATING THE FACT THAT INCOME TAX RULES PRESCRI BES THE RATE OF DEPRECIATION AT 50% FOR THESE ARTICLES, IMPLYING TH AT THESE ARE CAPITAL ASSETS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.5,00,000I- MAD E ON ACCOUNT OF ITA NO.3053/MDS./2016 CO NO.175/MDS./2016 :- 3 -: DISALLOWANCE OUT OF FIREWOOD EXPENSE IGNORING THE F ACT THAT ASSESSEE HAD AGREED FOR THE ADDITION DUE TO LACK OF PROPER DOCUMENTS/EVIDENCES. 6. THE HONBLE ITAT IS REQUESTED TO CANCEL THE ORD ER OF THE LEARNED CIT(A) AND UPHOLD THE ORDER OF THE ASSESSING OFFICE R ON THE ABOVE POINTS. 2.1 IN CROSS OBJECTION, THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS. 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS VERY MUCH APPRECIABLE IN AS MUCH AS IN HOLDING THAT THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.5,06,5 6,197/- U/S.68 IS AGAINST THE LEGALITY OF THE DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS. KHADAR THAN AND SON AND AFFIRMED BY THE SUPREME COURT. THE APPELLANT HAS NOT EXPLAINED HEW THE CASE IS DIF FERENT TO THAT OF THE RESPONDENTS CASE AND HENCE NOT APPLICABLE. MOR EOVER, THE SAME JUDGMENTS HAVE BEEN APPLIED IN THE SIMILAR MAT TER WHICH HAS BEEN HELD IN FAVOUR OF THE RESPONDENT IN THEIR OWN CASE HELD BY THE VERY OWN CHENNAI TRIBUNAL FOR THE PREVIOUS ASSESSME NT YEAR. HENCE, THE GROUND RAISED BY THE DEPARTMENT IN ITS APPEAL I S IN ERROR. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS CORRECTLY OBSERVED IN HIS ORDER BY STATING THAT THE INVESTMEN TS IN THE CHILLING PLANTS ADDED BY THE DEPARTMENT UNDER SECTION 68 IS NOT APPLICABLE, EVEN THOUGH ADMITTED BY THE RESPONDENT DURING THE T IME OF SURVEY, BASED ON THE JUDGMENT OF THE MADRAS HIGH COURT WHIC H HAS BEEN AFFIRMED BY THE SUPREME COURT, ALSO HOW THE CASE RE LIED ON THE DEPARTMENT CANNOT ECLIPSE THE JUDGMENT OF THE JURIS DICTIONAL HIGH COURT HENCE, THE GROUND RAISED BY THE DEPARTMENT IN ITS APPEAL IS IN ERROR. ITA NO.3053/MDS./2016 CO NO.175/MDS./2016 :- 4 -: 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS CORRECTLY OBSERVED THAT THE APPELLANT IS IN THE BUSINESS OF M ILK DAIRY AND FOR THE SAME, THE EXPENSES INCURRED TOWARDS THE PURCHAS E OF MILK CANES WERE OF REVENUE NATURE AND NO ENDURING BENEFIT IS A RRIVED OUT OF IT AND MOSTLY ITS SHELF LIFE COMES AROUND 4 TO 6 MONTH S. IT IS ALSO SUBMITTED THAT THE EXPENSES RELATING TO PURCHASE OF MILK CANES WERE OF REVENUE NATURE AND IS TO BE ALLOWABLE IN FULL, A S HELD BY VISAKHAPATNAM BENCH, OF THE INCOME TAX APPELLATE TR IBUNAL IN THE CASE OF ACIT, CIR-2(1) GUNTUR VS. M/S TIRUMALA MILK PRODUCTS PRIVATE LTD. THE COPY OF WHICH IS ENCLOSED HERE FOR YOUR RE FERENCE. HENCE, THE GROUND RAISED BY THE DEPARTMENT IN ITS APPEAL I S IN ERROR. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS CORRECTLY ALLOWED THE CLAIM OF THE FIREWOOD EXPENSES ARE COVE RED UNDER RULE 6DD IN AS MUCH AS THE ASSESSING OFFICER DISALLOWED THE SAME ON THE BASIS OF AGREED ADDITION AND NON PRODUCTION OF ANY EVIDENCE REGARDING THE EXPENSES. 5. OVER ALL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS CORRECTLY OBSERVED THAT ALL THE ADDITIONS MADE BY T HE ASSESSING OFFICER, EVEN THOUGH BASED ON THE ADMISSIONS AT THE TIME OF SURVEY, ARE NOT SUSTAINABLE CONSIDERING THE RATIO OF DECISI ON OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS KHADAR KHAN AND SO N, WHICH IS AFFIRMED BY THE SUPREME COURT. HENCE, THE GROUNDS O F THE DEPARTMENT AS APPELLANT IN THIS APPEAL NEED TO BE D ISMISSED. FIRST WE TAKE UP REVENUES APPEAL: 3. THE FACTS OF THE CASE ARE THAT SURVEY WAS CARRI ED OUT IN THE PREMISES OF ASSESSEE ON 06.11.2013. DURING THE COUR SE OF SURVEY IT WAS NOTICED THAT THE FIGURE OF SUNDRY CREDITORS - M ILK SUPPLIERS AS ON 31/3/13 WAS MENTIONED AS ` 12,21,81,032/- IN THE DATA MAINTAINED IN ITA NO.3053/MDS./2016 CO NO.175/MDS./2016 :- 5 -: THE HARD DISC OF THE COMPUTER. HOWEVER, IN THE SAME DISC, THE OPENING BALANCES AS ON 01/04/13 WAS TAKEN AS ` 5,67,09,835/- I.E. THE BALANCE OF SUNDRY CREDITORS WAS TAKEN LESS BY ` 6,54,71,197. IN THE STATEMENT RECORDED ON 24/1/14 UNDER SECTION 131(1A), THE PART NER OF THE FIRM HAS ADMITTED THIS FACT. IN REPLY TO QUESTION NO. 32 OF THE STATEMENT DATED 06/11/13, IT WAS ADMITTED BY THE PARTNERS THA T THE FIRM HAS BOOSTED THE FIGURE OF CREDITORS TO ADJUST THE BALAN CE SHEET. IT WAS FURTHER STATED THAT TO HIS KNOWLEDGE AND BELIEF THE SUNDRY CREDITORS TO THE EXTENT OF ` 2,00,00,000/- MAY BE BOOSTED. 4. THE FIRST ISSUE IN REVENUES APPEAL IS WITH REG ARD TO DELETION OF ADDITION IN RESPECT OF NON-GENUINE CREDITORS AS NOT PROVED. 4.1 FOR THE YEAR UNDER CONSIDERATION, DURING THE C OURSE OF SURVEY PROCEEDINGS, ASSESSEE HAD DECLARED ` 1,48,15,000/- ON ACCOUNT OF NON- GENUINE SUNDRY CREDITORS. ASSESSEE HAS ,HOWEVER, NE ITHER DURING THE COURSE OF SURVEY PROCEEDINGS NOR DURING THE ASSESSM ENT PROCEEDINGS SUBSTANTIATED AS TO HOW THE SAID AMOUNT OF ` 1,48,15,000/- WAS JUSTIFIED WHEN IN FACT RECORDS INDICATE THAT THE NO N-GENUINE SUNDRY CREDITORS ARE SUBSTANTIALLY HIGHER. IN THE ASSESSM ENT ORDER SAMPLE OF 21, SUNDRY CREDITOR-MILK SUPPLIERS ACCOUNTS FOR THE MONTH OF MARCH 13 WERE REPRODUCED TO SUBSTANTIATE THAT THE AMOUNT OF DECLARATION MADE BY ASSESSEE ON ACCOUNT OF NON-GENUINE CREDITORS WAS WITHOUT ANY BASIS. ACCOUNTS OF 9 OTHER SUNDRY CREDITORS WERE AL SO REPRODUCED TO ITA NO.3053/MDS./2016 CO NO.175/MDS./2016 :- 6 -: SHOW THAT DESPITE THERE BEING SUBSTANTIAL AMOUNTS O UTSTANDING IN THESE ACCOUNTS FOR LONG PERIOD, ASSESSEE HAD NOT DE CLARED THEM AS NON-GENUINE SUNDRY CREDITORS. THUS, THE DIFFERENCE IN THE CARRY FORWARD FIGURE OF SUNDRY CREDITORS, AS ON 31/3/13, NOTICED DURING THE COURSE OF SURVEY WAS ADDED TO THE TOTAL INCOME U/S.68 AFTER G IVING ASSESSEE SET- OFF FOR THE AMOUNT OF ` 1,48,15,000/- VOLUNTARY CONSIDERED IN THE REVISED RETURN OF INCOME. AGGRIEVED BY THE ORDER O F LD. ASSESSING OFFICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). 4.2 ON APPEAL,THE LD.CIT(A) PLACING RELIANCE IN TH E ORDER OF TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2012-13 VIDE ORDER DATED 05.08.2016 IN ITA NO.1810/MDS./2016 AND ALSO IN THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. S. KHADER KHAN SON WHICH HAS BEEN AFFIRMED BY THE APEX COURT IN IN 35 2 ITR 480(MAD.), DELETED THE ADDITION. AGAINST THE ORDER OF LD.CIT( A), NOW THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, SIMILAR ISSUE CAME FOR CONSIDER ATION BEFORE THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2012-13(SUPRA) WHEREIN THE TRIBUNAL AFTER CONSIDERING THE ENTIRE FACTS OF THE CASE OBSERVED HEREIN-UNDER:- ITA NO.3053/MDS./2016 CO NO.175/MDS./2016 :- 7 -: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, SURVEY U/S 13 3A OF THE ACT WAS CARRIED OUT BY THE DEPARTMENT ON 6.11.2013. TH E PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR WAS ENDED ON 3 1.3.2012. IN OTHER WORDS, THE RELEVANT FINANCIAL YEAR FOR THIS A SSESSMENT YEAR IS 2011-7. THE SURVEY CONDUCTED U/S 133A WAS NOT RES ULTED IN UNEARTHING ANY EVIDENCE RELATING TO INFLATION OF PU RCHASE COST OF MILK FOR THE RELEVANT ASSESSMENT YEAR. FURTHER, TH E ASSESSING OFFICER MADE ESTIMATION OF INFLATED PURCHASE ON THE REASON THAT THE ASSESSEE HAS NOT FURNISHED THE CONFIRMATION LE TTERS FROM THE CREDITORS. THE ASSESSEE PLEADED BEFORE THE ASSESS ING OFFICER THAT THERE ARE LARGE NUMBER OF MILK VENDORS WHO WERE FOR M VILLAGES AND THEY EXACTLY NOT MAINTAINED ANY BOOKS OF ACCOUN T TO SHOW THAT WHAT EXACT AMOUNT WAS OUTSTANDING TO THEM FOR THE SUPPLY OF MILK. THE ASSESSEE HAS CATEGORICALLY STATED THAT I T IS MAINTAINING COLLECTION CENTRES AND PAYMENTS ARE MADE TO THE FAR MERS FROM THERE. THERE IS NO THIRD PARTY EVIDENCE TOWARDS PU RCHASE COST OF MILK LEGALLY. PAYMENTS WERE MADE ON THE BASIS OF O WN VOUCHERS WHICH ARE MAINTAINED BY THE ASSESSEE. THOUGH THE ASSESSING OFFICER ESTIMATED THE INFLATION OF PURCHASE, HE WAS NOT ABLE TO CO- RELATE THOSE INFLATION OF PURCHASES DURING THE ASSE SSMENT YEAR UNDER CONSIDERATION. THUS, THE ESTIMATED INFLATION OF PURCHASES IS BASED ON THE SUBSEQUENT YEARS FIGURES. IN OUR OPI NION, THE INFORMATION GATHERED SUBSEQUENT TO THE ASSESSMENT Y EAR UNDER CONSIDERATION CANNOT BE BASIS FOR ESTIMATION OF INF LATION OF PURCHASES FOR THE EARLIER ASSESSMENT YEAR. DE HORS E, WITHOUT PREJUDICE TO THE FACT THAT EVEN THE STATEMENT RECOR DED DURING THE COURSE OF SURVEY HAVE NO EVIDENTIARY VALUE. ANY AD MISSION DURING SUCH STATEMENT CANNOT BY ITSELF BE BASIS FOR ADDITI ON. BEING SO, IN OUR OPINION, THE ADDITION ON THE BASIS OF STATEMENT COLLECTED DURING SURVEY CANNOT BE BASIS FOR ADDITION. ITA NO.3053/MDS./2016 CO NO.175/MDS./2016 :- 8 -: 7. BEFORE US, THE ASSESSEE PRODUCED DETAILS OF SA LES, PURCHASE, GROSS PROFIT FOR THESE ASSESSMENT YEARS AS UNDER: A.Y 2010 - 11 2011 - 12 2012 - 13 2013 - 14 G.P. RATIO 15.42 14.95 14.03 17.14 8. AS SEEN FROM THE ABOVE, THERE IS A DECLINE IN GR OSS PROFIT RATE AS COMPARED TO ASSESSMENT YEAR 2010-11, 2011-12. THE ASSESSEE IS NOT ABLE TO EXPLAIN DECLINE ON THE GROSS PROFIT AT 14.03% AS COMPARED TO EARLIER ASSESSMENT YEARS. IN OUR OPINI ON, TO SETTLE THE DISPUTE, IT IS APPROPRIATE TO TAKE AVERAGE GROS S PROFIT RATE OF ASSESSMENT YEARS 2010-11, 2011-12 AND 2012-13 AND TO ESTIMATE THE INCOME OF THE ASSESSEE ON THE BASIS OF AVERAGE GROSS PROFIT RATE OF LAST TWO ASSESSMENT YEARS SINCE THE PAST HI STORY IS THE BEST YARDSTICK TO ESTIMATE THE INCOME. ACCORDINGLY , WE DIRECT THE ASSESSING OFFICER TO RE-COMPUTE THE INCOME OF THE ASSESSEE BY APPLYING THE AVERAGE GROSS PROFIT RATE OF IMMEDIATE EARLIER TWO ASSESSMENT YEARS ALONGWITH PRESENT ASSESSMENT YEAR AND DECIDE THE ISSUE AFRESH. THE ASSESSEE SHALL PROVIDE DETA ILS OF GROSS PROFIT RATE OF ALL THE TWO IMMEDIATE EARLIER ASSESSMENT Y EARS TO THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL CON SIDER THE SAME AND DECIDE THE ISSUE IN ACCORDANCE WITH OUR FINDING S AS ABOVE. 5.1 ADMITTEDLY, FOR ASSESSMENT YEAR 2012-13 IN ASS ESSEE'S OWN CASE CITED SUPRA, THE TRIBUNAL OBSERVED THAT THE BOOKS O F ACCOUNTS OF ASSESSEE WAS NOT RELIABLE AND INCOME OF ASSESSEE TO BE ESTIMATED AFTER CONSIDERING THE AVERAGE RATE OF PROFIT OF A .Y 2010-11, 2011-12 & 2012-13 AS DECLARED BY THE ASSESSEE. ACCORDINGLY , IN THIS ASSESSMENT YEAR UNDER CONSIDERATION ALSO, WE DIRECT THE AO TO ITA NO.3053/MDS./2016 CO NO.175/MDS./2016 :- 9 -: ESTIMATE THE INCOME OF ASSESSEE BY CONSIDERING THE AVERAGE G.P RATE OF ASSESSMENT YEARS 2011-12, 2012-13 & 2013-14 AS D ECLARED BY THE ASSESSEE AND DECIDED ACCORDINGLY. THIS ISSUE OF REV ENUE RAISED IN ITS GROUND NO2. 1 & 2 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6. THE SECOND ISSUE IN REVENUES APPEAL IS WITH RE GARD TO DELETION OF ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTME NT IN CHILLING PLANTS. 6.1 THE FACTS OF THE ISSUE ARE THAT AT THE TIME OF SURVEY IN REPLY TO QUESTION NO 33 OF THE STATEMENT RECORDED ON 06/11/2 013 SHRI. S. P. LOGANATHAN, MANAGING PARTNER OF THE ASSESSEE FIRM, HAD STATED THAT UPTO 31/3/13 INVESTMENT IN THE NEWLY UNDER CONSTRUC TION CHILLING PLANT UNITS AT KARUR AND NAMAKKAL WAS AROUND RS.3,60,00,0 00/-. DURING THE COURSE OF SURVEY HE HAD DECLARED ADDITIONAL INCOME OF ` 1,17,66,347/- ON ACCOUNT OF UNACCOUNTED INVESTMENT IN THE CHILLIN G PLANTS. THIS DECLARATION WAS HOWEVER NOT CONSIDERED WHILE FILING THE REVISED RETURN. DESPITE BEING GIVEN OPPORTUNITY DURING THE COURSE O F ASSESSMENT NO EXPLANATION WAS FILED AS TO WHY THE SAID DECLARATIO N HAS BEEN RETRACTED. THEREFORE, THE AO ADDED AN AMOUNT OF ` 1,17,66,347/- TO THE TOTAL INCOME ON THE BASIS OF THE INFORMATION GI VEN IN THE STATEMENT. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER, THE ITA NO.3053/MDS./2016 CO NO.175/MDS./2016 :- 10 - : ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, THE LD.CIT(A) DELETED THE ADDITION MADE ON ACCOUNT OF U NEXPLAINED INVESTMENT IN CHILLING PLANTS WITH THE FOLLOWING OBSERVATION:- HERE ALSO THE PRINCIPLE LAID DOWN IN THE JURISDICTI ONAL HIGH COURT DECISION UPHELD BY THE APEX COURT SQUARELY APPLIES. ADDITION FOR UNEXPLAINED INVESTMENTS LIKE NEW CHILLING PLANTS HA VE TO BE BASED ON CONCRETE EVIDENCE AVAILABLE OR BY MAKING REFERENCE TO A DEPARTMENTAL VALUATION OFFICER FOR EXPERT OPINION, WHICH THE ASS ESSING OFFICER SHOULD HAVE DONE IN THE NORMAL COURSE, HAD THERE BEEN A GR OUND THAT THERE IS UNACCOUNTED INVESTMENT IN THE CHILLING PLANT. THIS NOT BEEN DONE. THE CASE LAW CITED BY THE ASSESSING OFFICER SURJIT CHHA BRA VS, UOL DEALS WITH RETRACTION OF A STATEMENT MADE BEFORE CUSTOMS AUTHORITY AND DOES NOT IN ANY MANNER ECLIPSE THE DECISION OF THE JURIS DICTIONAL HIGHCOURT IN S.KHADER KHAN SONS, WHICH HAS BEEN AFFIRMED BY THE APEX COURT. THE ADDITION MADE IS WITHOUT ANY POSITIVE EVIDENCE AND IS DELETED. AGAINST THE ORDER OF LD.CIT(A), NOW THE REVENUE/ASS ESSEE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE A.R HAS RIGHTLY POINTED OUT BY THE LD. A.R THAT THERE IS NO EVIDENCE TO SUGGEST THAT THIS INVESTMENT IS BASED O NLY ON UN- SUBSTANTIATED STATEMENT MADE BY ITS PARTNER SHRI S. P.LOGANATHAN, MANAGING PARTNER OF THE ASSESSEE FIRM DURING THE CO URSE OF SURVEY ON 06.11.2013. AS HELD BY THE SUPREME COURT IN THE CA SE OF S.KHADER KHAN SONS (SUPRA), STATEMENT UNDER SECTION 133A ARE NOT CONCLUSIVE PIECE OF EVIDENCE BY ITSELF AND IT CANNOT BE RELIED UPON FOR THE PRUPOSE ITA NO.3053/MDS./2016 CO NO.175/MDS./2016 :- 11 - : OF ASSESSMENT . BEING SO, WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF THE CIT(APPEALS) FOR DELETING THE ADDITION MADE BY THE AO. HENCE, THIS ISSUE RAISED BY THE REVENUE IS REJECTED. 8. THE THIRD ISSUE IN REVENUES APPEAL IS WITH RE GARD TO DELETION OF DISALLOWANCE OF MILK CANS AND CRATES TO THE EXTENT OF ` 16,03,461/-. 8.1 THE FACTS OF THE ISSUE ARE THAT THE EXPENSE INC URRED ON PURCHASE OF CRATES AND CANS, THE ASSESSEE HAD CLAIMED AS REV ENUE EXPENSE DISALLOWED, BUT AO HOLDING THEM TO BE CAPITAL EXPEN SE. THE INCOME- TAX RULES PRESCRIBES DEPRECIATION AT THE RATE OF 50 % FOR PLASTIC AND GLASS CONTAINERS WHICH ARE RE-USABLE. IN VIEW OF TH IS FACT THE EXPENSE CLAIMED ON ACCOUNT OF CRATES AND CRATES WERE HELD A S CAPITAL ASSET BY THE AO AND DISALLOWANCE MADE AFTER ALLOWING DEPRECI ATION. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, THE LD.CIT(A) OB SERVED THAT NO ENDURING BENEFIT IS CONFERRED WARRANTING TO TREAT E XPENDITURE ON MILK CANS AS CAPITAL IN NATURE, FOLLOWING THE DECISION O F TRIBUNAL IN ACIT VS. M/S.TIRUMALA MILK PRODUCTS P LTD., NARASAROPET IN I TA NO.242/VIZAG./2009 FOR ASSESSMENT YEAR 2005-06 AND DELETED THE ADDITION MADE BY THE LD. ASSESSING OFFICER. AGAINST THE ORDER OF LD.CIT(A), NOW THE REVENUE IS IN APPEAL BEFORE US. ITA NO.3053/MDS./2016 CO NO.175/MDS./2016 :- 12 - : 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE DECISION OF THE LD.CIT(A) IS BASED ON T HE ORDER OF TRIBUNAL IN THE CASE OF M/S.TIRUMALA MILK PRODUCTS P LTD., (SUPRA). BEING THE EXPENDITURE TOWARDS PLASTIC CANE AND CRATE, WHICH I S NOT AN ENDURING NATURE, 100% DEPRECIATION TO BE GRANTED AS REVENUE EXPENDITURE. HENCE, THIS ISSUE IN REVENUES APPEAL IS DISMISSED. 10. THE LAST ISSUE IN REVENUES APPEAL IS WITH REGARD TO DELETION OF DISALLOWANCE OF FIREWOOD PURCHASE EXPENSES. 10.1 THE FACTS OF THE ISSUE ARE THAT DURING VERIFI CATION IT WAS NOTICED BY THE AO THAT ASSESSEE HAD INCURRED EXPENSE FOR P URCHASE OF FIREWOOD IN CASH AS WELL AS BY CHEQUE. THE CASH VOU CHERS WERE SELF MADE. AS IT WAS NOT POSSIBLE TO ASCERTAIN WHETHER W HOLE OF THE EXPENDITURE BOOKED ARE GENUINE AND REASONABLE, A LU MPSUM DISALLOWANCE OF ` 5,00,000.- WAS MADE BY THE LD. ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER, TH E ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, LD.CIT (A) OBSERVED THAT THIS IS A CASE WHICH IS A FOREST PRODUCED AND COVER ED UNDER RULE 6DD WHICH PROVIDES FOR EXCEPTION TO THE APPLICABILITY O F SEC.2A(3) OF THE ACT. HENCE, THE LD.CIT(A) ALLOWED THE CLAIM OF ASS ESSEE. AGAINST THE ORDER OF LD.CIT(A), NOW THE REVENUE IS IN APPEAL BE FORE US. ITA NO.3053/MDS./2016 CO NO.175/MDS./2016 :- 13 - : 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS RIGHTLY POINTED OUT BY THE LD.A.R THAT PAYMENTS TOWARDS PURCHASE OF FIRE WOOD, WHICH IS BEING A FOREST PROD UCTS EXCEPTION PROVIDES UNDER RULE-6DD IS APPLICABLE. ACCORDINGLY , DELETION IS JUSTIFIED. 12. SINCE THE CROSS OBJECTIONS FILED BY THE ASSESS EE IS IN SUPPORT OF THE ORDER OF LD.CIT(A), THE OBJECTIONS RAISED IN C. O DOES NOT REQUIRE ANY FURTHER ADJUDICATION AS WE HAVE DISCUSSED ALL T HESE GROUNDS IN REVENUES APPEAL. 13. IN THE RESULT, THE APPEAL OF THE REVENUE AND T HE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 26 TH JULY, 2017, AT CHENNAI. SD/ - SD/ - . ! '# $ ( DUVVURU RL REDDY ) ) % / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER %& / CHENNAI '() / DATED: 26 TH JULY, 2017. K S SUNDARAM (*++,-.+/. / COPY TO: + 1 . / APPELLANT 3. + 0+$ / CIT(A) 5. .12+,,3 / DR 2. / RESPONDENT 4. + 0 / CIT 6. 2#4+5 / GF