JCIT, (OSD), CIR-1(1), KOLKATA, Kolkata V. M/s Associated Toolings India Pvt. Ltd., Howrah

ITA 1105/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1529 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA ACIT
• Keywords: Depreciation; Principle of natural justice; Capital expenditure
• Section: 143(3); 133(6)

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1105 / KOL / 2016 ASSESSMENT YEAR :2009-10 JCIT(OSD), CIRCLE- 1(1), P-, CHOWRINGHEE SQUARE, ROOM NO.20, 7 TH FLOOR, KOLKATA-69 V/S . M/S ASSOCIATED TOOLINGS INDIA PVT. LTD. BALTIKURI, KALITALA, HOWRRAH-711 113 [ PAN NO.AAECA 7887 N ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI S. DASGUPTA, ACIT, DR /BY RESPONDENT SHRI PAWAN KUMAR AGARWAL, FCA /DATE OF HEARING 23-01-2018 /DATE OF PRONOUNCEMENT 14-02-2018 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-9, KOLKATA DAT ED 24.02.2016. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-1, KOLKATA U/ S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDER DATED 15.12.2011 FOR ASSESSMENT YEAR 2009-10. SHRI S. DASGUPTA, LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE AND SHRI PAWAN KUMAR AGARWAL, LD. DEPARTMEN TAL REPRESENTATIVE APPEARED ON BEHALF OF ASSESSEE. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) ERRED IN ALLOWING AN UNSUBSTANTIATED AMOUNT OF COMMISSION OF ITA NO. 1105/KOL/2016 A.Y. 2009-10 JCIT(OSD), CIR-1(1), KOL. VS. M/S ASSO CIATED TOOLINGS INDIA PVT. LTD. PAGE 2 RS.37,66,311/- WHICH DESPITE ALL ATTEMPTS MADE BY T HE AO COULD NOT BE VERIFIED DURING THE ASSESSMENT, NOR DURING REMAND P ROCEEDING. 2. WHETHER ON THE ACTS AND N THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) ERRED IN ALLOWING AN AMOUNT OF RS.21,16,819/ - CALLING IT LATE DELIVERY CHARGE AND WHICH HAD FAILED TO PASS THE VE RIFICATION MADE BY THE AO. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN HOLDING THE LOS CLAIMED UPON THE DI SPOSAL OF FIXED ASSETS AS REVENUE LOSS ESPECIALLY WHERE THERE WAS NO OPTIO N AVAILABLE TO THE ASSESSEE COMPANY NOT TO CLAIM NO DEPRECIATION ON T HE ASSET. 4. THE REVENUE SHALL ALWAYS CRAVE FOR ADDING OR ALT ERING ANY GROUND ON OR BEFORE THE DATE OF HEARING. 3. FIRST ISSUE RAISED BY REVENUE IN GROUND NO. 1 IS THAT LD. CIT ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER FOR 37,66,311/- UNDER THE HEAD COMMISSION ON ACCOUNT OF NON-CONFIRMATION F ROM THE PARTIES. 4. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PRIV ATE LIMITED COMPANY AND IN THE YEAR UNDER CONSIDERATION HAS INCURRED AN EXP ENDITURE OF 78,37,313/- UNDER THE HEAD COMMISSION WHICH WAS PAID TO SIX PARTIES AS DETAILED UNDER:- SL.NO. NAME OF THE PARTY PAN NO. COMMIS SION AMOUNT 1. ALLIANCE ENGINEERING & MARKETING SERVICE ABJPC19 80B 3766311 2. MONABINA ENTERPRISE PVT. LTD. -- 741515 3. MOUZSUMI DEB -- 11 5860 4. PARAMOUNT ENGINEERS -- 176470 0 5. R.K. TECHNO ENGG. & CONSULTANCY AVBVPR 2157 F 1026371 6. SOBENDU DEV -- 422556 7837313 THE ASSESSING OFFICER, DURING THE ASSESSMENT PROCEE DINGS ISSUED NOTICE U/S. 133(6) OF THE ACT TO THREE PARTIES NAMELY, ALLIANCE ENGINEERING & MARKETING SERVICE, (AEMS FOR SHORT), R.K. TECHNO ENGINEERING & CONSULTANCY & PARAMOUNT TO VERIFY THE GENUINENESS OF THE COMMISSI ON EXPENSE CLAIMED BY ASSESSEE. HOWEVER, THERE WAS NO REPLY RECEIVED BY A O FROM AEMS. THUS, THE AO DISALLOWED THE SAME ON THE GROUND THAT THE AMOUN T OF COMMISSION WAS NOT VERIFIED AND ADDED TO THE TOTAL INCOME OF ASSES SEE. ITA NO. 1105/KOL/2016 A.Y. 2009-10 JCIT(OSD), CIR-1(1), KOL. VS. M/S ASSO CIATED TOOLINGS INDIA PVT. LTD. PAGE 3 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT NECESSARY DETAILS OF THE COMMISSION EXPENSES TO ALL THE PARTIES WERE FILED A T THE TIME OF ASSESSMENT PROCEEDINGS. THE SERVICES RENDERED BY THE COMMISSIO N AGENTS WERE ALSO EXPLAINED TO THE AO. THE AO DID NOT PROVIDE SUFFICI ENT OPPORTUNITY TO ASSESSEE FOR HIS CONFRONTATION IN THE EVENT OF NO REPLY RECE IVED FROM THE COMMISSION AGENT, NAMELY, AEMS. THE ASSESSEE WAS INFORMED BY A EMS THAT A REPLY OF THE NOTICE ISSUED U/S 133(6) OF THE ACT BY AO WAS F URNISHED TO AO VIDE LETTER DATED 06.12.2011 THROUGH REGISTERED POST. THE COPY OF THE REGISTERED POST WAS ACCORDINGLY FILED BEFORE THE LD. CIT(A). THE AS SESSEE ALSO FILED COPY OF AGREEMENT WITH AEMS EXPLAINING THE SERVICES RENDERE D BY IT. COPY OF THE BILLS RAISED BY AEMS WERE ALSO FILED BEFORE LD. CIT(A) FO R HIS KIND CONSIDERATION AND REFERENCE. LD. CIT(A) CALLED FOR REMAND REPORT FROM THE AO WHICH WAS FILED VIDE LETTER DATED 20.01.2014 WHEREIN IT WAS A LLEGED THAT THE REPLY OF AEMS DOES NOT SPECIFY THE AMOUNT OF TOTAL COMMISSIO N INCOME EARNED BY IT AND OUT OF THE TOTAL COMMISSION INCOME HOW MUCH WAS RECEIVED FROM THE ASSESSEE. THE AO IN ITS REMAND REPORT ALSO ALLEGED THAT COPIES OF ACCOUNT, PROFIT AND LOSS ACCOUNT AND BALANCE-SHEET OF AEMS W ERE NOT FILED DURING REMAND PROCEEDINGS. HOWEVER, ASSESSEE AGAINST THE R EMAND REPORT SUBMITTED THAT THE RECONCILED STATEMENT SHOWING THE TOTAL AMOUNT OF COMMISSION PAYABLE VIS--VIS THE COMMISSION ACCOUNT ED BY AEMS WAS DULY FILED. THE RECONCILIATION WAS PREPARED IN VIEW OF T HE FACT THAT AEMS WAS MAINTAINING ITS ACCOUNTS ON CASH BASIS. AT THE STAG E OF REMAND PROCEEDINGS, AO DID NOT PROVIDE OPPORTUNITY TO ASSESSEE TO FILE THE COPIES OF ACCOUNTS, COPY OF RETURN, PROFIT AND LOSS ACCOUNT AND BALANCE-SHEE T OF AEMS. LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE AND REMAND R EPORT DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- 4.1 WITH REGARD TO DISALLOWANCE OF RS.37,66,311 PA ID TO M/S ALLIANCE ENGINEERING & MARKETING SERVICES, PROPRIETOR SATISH CHAWLA, IT IS SEEN THAT PART OF THE COMMISSION PAD IS REFLECTED IN THE RETURN OF INCOME OF SRI SATISH CHAWLA AND BALANCE IS RECONCILED AS BEING DI FFERENCE DUE TO SYSTEM OF ACCOUNTING FOLLOWED BY APE AND RECIPIENT. THE FACT OF NO RESPONSE ON LATE RESPONSE IN COMPLIANCE OF NOTICE U /S. 133(6) CANNOT ITA NO. 1105/KOL/2016 A.Y. 2009-10 JCIT(OSD), CIR-1(1), KOL. VS. M/S ASSO CIATED TOOLINGS INDIA PVT. LTD. PAGE 4 BE THE BASIS OF DISALLOWANCE WHEN THE RECEIPT IS RE FLECTED IN RETURN OF INCOME OF RECIPIENT. THE PAYMENT OF COMMISSION IS M ADE AFTER DEDUCTION OF INCOME TAX AND CHARGING OF SERVICE TAX . THE COMMISSION WAS PAID FOR SALES PROMOTION AND IS LINKED TO SALES EFFECTED BY COMMISSION AGENT. THE AO IS DIRECTED TO DELETE THIS ADDITION. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 6. LD. DR BEFORE US SUBMITTED THAT THE AO IN HIS RE MAND REPORT HAS CLEARLY POINTED OUT THAT QUANTUM OF COMMISSION AMOUNT WAS N OT SPECIFIED BY ASSESSEE. SIMILARLY, THE BALANCE-SHEET PROFIT AND L OSS ACCOUNT AND COPIES OF INCOME TAX RETURN OF AEMS WERE NOT FILED BY THE ASS ESSEE DURING REMAND PROCEEDINGS. HE VEHEMENTLY RELIED ON THE ORDER OF A O. ON THE OTHER HAND, LD. AR BEFORE US FILED PAPER BOO K WHICH IS RUNNING FROM PAGES 1 TO 128 AND STATED THAT ALL THE DETAILS OF T HE COMMISSION EXPENSE WAS DULY FILED BEFORE THE AO. HE DREW OUR ATTENTION ON PAGES 25 TO 31 OF THE PAPER BOOK WHERE THE DETAILS OF THE COMMISSION PAID DURIN G THE YEAR TO ALL THE PARTIES WERE PLACED. AEMS DULY RESPONDED TO THE NOT ICE ISSUED U/S 133(6) WHICH IS PLACED ON PAGES 32 AND 33 OF THE PAPER BOO K ALONG WITH RECEIPT ISSUED BY THE POSTAL OFFICE. LD. AR FURTHER SUBMITT ED THAT THESE FACTS WERE NOT DISPUTED BY AO DURING REMAND PROCEEDINGS. LD. AR AL SO DREW OUR ATTENTION ON THE AGREEMENT BETWEEN ASSESSEE AND AEMS WHICH IS PL ACED ON PAGES 34 TO 38 OF THE PAPER BOOK. THE INVOICES ISSUED BY THE AE MS TO THE ASSESSEE ON ACCOUNT OF COMMISSION WAS PLACED ON PAGES 39 TO 76 OF THE PAPER BOOK AND ALL THE INVOICES ISSUED BY AEMS CONTAINS THE NECESS ARY DETAILS SUCH AS PURCHASE ORDER, NO. OF INVOICE, NO. OF QUANTITY OF MATERIALS, VALUE OF MATERIALS AND THE AMOUNT OF COMMISSION FOR WHICH THE COMMISSI ON WAS PAID BY ASSESSEE. LD. AR RELIED ON THE ORDER OF LD. CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, ASSESSEE HAS INCURRED COMMISSION EXPENSE IN THE NAME OF SIX PARTIES OUT O F WHICH ONE PARTY DURING THE COURSE OF ASSESSMENT PROCEEDINGS FAILED TO FILE ITS REPLY U/S. 133(6) OF THE ACT. THEREFORE, THE AMOUNT OF COMMISSION PAID TO SU CH PARTY AEMS WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF ASSESSE E. HOWEVER, WE FIND THAT ITA NO. 1105/KOL/2016 A.Y. 2009-10 JCIT(OSD), CIR-1(1), KOL. VS. M/S ASSO CIATED TOOLINGS INDIA PVT. LTD. PAGE 5 THE CONFIRMATION OF THE REPLY MADE BY AEMS IN RESPO NSE TO THE NOTICE U/S. 133(6) OF THE ACT WAS DULY FILED BEFORE LD. CIT(A) AT THE TIME OF APPELLATE STAGE. IT WAS ALSO OBSERVED THAT THE REMAND REPORT WAS DULY CALLED FOR BY LD. CIT(A) FROM AO ON THE SUBMISSION FILED BY THE ASSES SEE. THE AO HAS NOT POINTED OUT ANY DEFECT IN THE SUBMISSION FILED BY T HE ASSESSEE BUT ALLEGED THAT THE QUANTUM OF COMMISSION WAS NOT FURNISHED BY AEMS . HOWEVER, ON PERUSAL OF RECORD BEFORE US, WE FURTHER FIND THAT RECONCILI ATION STATEMENT WAS DULY FILED BETWEEN THE AMOUNT OF COMMISSION EXPENSE INCURRED B Y ASSESSEE VIS--VIS COMMISSION INCOME BOOKED BY AEMS WHICH IS PLACED ON PAGE 119 OF THE PAPER BOOK. IT WAS ALSO EXPLAINED THAT AEMS IS MAIN TAINING ITS ACCOUNTS ON THE BASIS OF CASH SYSTEM OF ACCOUNTING AND RECONCIL IATION STATEMENT FURNISHED BY ASSESSEE, WHICH READS AS UNDER:- ASSOCIATED TOOLINGS INDIA PVT. LTD. RECONCILIATION OF PAID / PAYABLE BETWEEN ASSOCAITED TOOLINGS & ALLAIANE ENGS. 7 MARKETING SERVIES FOR THE YEAER ENDING 31 ST MARCH 2009 TOTAL IINVOICE VALUE 3766311.00 LESS: OUTSTANING INV.AMOUNT AS ON 31/03/09 1386 300.00 2380011.00 ADD: PAYMENT MADE DURING THE YEAR BILLS OF A/Y 07-08 449260. 00 INVOICE AMT. PAID DURING THE YEAR 2829271.00 LESS: CHEQUE ISSUED DATED 17/03/09 ACCOUNTED BY PAYEE DURING THE F /Y 09-10 202542.00 2 626729.00 ADD: EXCESS PAID DURING THE YEAR 702.00 AMOUNT AS PER PAYEES ACCOUNT 2627431.00 AFTER CONSIDERING THE TOTALITY OF THE FACTS, WE OBS ERVE THAT ALL THE NECESSARY DETAILS AS DISCUSSED ABOVE WERE FILED BY ASSESSEE I N THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS REMAND PROCEEDING S BUT NO DEFECT OF WHATSOEVER HAS BEEN POINTED OUT BY AO. IT WAS ALSO PERTINENT TO NOTE THAT PAN OF AEMS WAS AVAILABLE BEFORE AO BUT NO VERIFICA TION WAS DONE WITH THE AO HAVING JURISDICTION OVER AEMS. INDEED, AT THE TI ME OF ASSESSMENT ITA NO. 1105/KOL/2016 A.Y. 2009-10 JCIT(OSD), CIR-1(1), KOL. VS. M/S ASSO CIATED TOOLINGS INDIA PVT. LTD. PAGE 6 PROCEEDINGS A NOTICE WAS ISSUED U/S. 133(6) OF THE ACT TO AEMS FOR VERIFICATION OF COMMISSION EXPENSE BUT NO RESPONSE WHATSOEVER RECEIVED BY THE AO TILL THE DATE OF COMPLETION OF ASSESSMENT. A CCORDINGLY, THE AO MADE THE ADDITION OF COMMISSION EXPENSE PAID TO AEMS WIT HOUT CONFRONTING FROM ASSESSEE THAT NO REPLY WAS RECEIVED BY HIM IN RESPO NSE TO THE NOTICE ISSUED U/S 133(6) OF THE ACT TO AEMS. IN OUR CONSIDERED VI EW ONCE AO HAS NOT RECEIVED ANY REPLY FROM AEMS THEN THIS FACT SHOULD HAVE BEEN BROUGHT TO THE NOTICE OF ASSESSEE BEFORE TAKING ANY ACTION AGAINST THE ASSESSEE. THUS WE NOTE THAT THE PRINCIPLE OF NATURAL JUSTICE WAS NOT COMPLIED BY AO. 7.1 ON BEING CONFRONTED TO LD. DR FOR THE DETAILS F ILED BY ASSESSEE, HE HAS NOT BROUGHT ANYTHING ON RECORD SUGGESTING ANY DEFEC T IN THE SUBMISSION FILED BY ASSESSEE. IN THIS VIEW OF THE MATTER, WE HAVE NO ALTERNATE EXCEPT TO CONFIRM THE VIEW TAKEN BY LD. CIT(A). WE HOLD ACCORDINGLY. HENCE, THIS GROUND OF REVENUE IS DISMISSED. 8. NEXT ISSUE RAISED BY REVENUE IN GROUND NO. 2 IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FOR 21,16,819/- ON ACCOUNT OF LATE DELIVERY CHARGES. 9. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT ASSESSEE HAS MADE THE PAYMENT TO DIFFERENT PARTIES ON ACCOUNT OF LATE DELIVERY CHARGES AMOUNTING TO 21,16,819/- ONLY. ON QUESTION FOR THE REASONS OF MAKING THE PAYMENT OF LATE DELIVERY CHARGES, ASS ESSEE COULD NOT FURNISH ANY EXPLANATION AS WELL AS FAILED TO FURNISH SUPPOR TING DOCUMENTS SUCH AS BILLS, VOUCHERS, ETC EVIDENCING THE PAYMENT OF LATE DELIVERY CHARGES. ACCORDINGLY, AO WAS OF THE VIEW THAT LATE DELIVERY CHARGES HAVE NOT BEEN INCURRED BY ASSESSEE DURING THE NORMAL COURSE OF BU SINESS. THUS, HE MADE THE DISALLOWANCE OF LATE DELIVERY CHARGES AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 10. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT NECESSARY EXPLANATION FOR INCURRING THE LATE DELIVERY CHARGES WERE FURNISHED BEFORE AO DURING ASSESSMENT ITA NO. 1105/KOL/2016 A.Y. 2009-10 JCIT(OSD), CIR-1(1), KOL. VS. M/S ASSO CIATED TOOLINGS INDIA PVT. LTD. PAGE 7 PROCEEDINGS VIDE LETTER DATED 14.11.2011 WHICH IS P LACED ON PAGES 77 OF THE PAPER BOOK. IN FACT, ASSESSEE WAS UNDER THE OBLIGAT ION TO DELIVER THE GOODS TO THE PARTIES ON THE SPECIFIC DATES BUT HE FILED TO D O SO ON MANY OCCASION. THEREFORE, THE PARTIES RELEASED THE PAYMENTS TO ASS ESSEE AFTER DEDUCTING THE LATE DELIVERY CHARGES. AS SUCH, NO PAYMENT OF WHATS OEVER WAS MADE ON ACCOUNT OF LATE DELIVERY CHARGES AS CLAIMED BY AO I N HIS ASSESSMENT ORDER. IN FACT ASSESSEE FAILED TO DELIVER THE GOODS ON TIME T O THE PARTIES DUE TO NON- AVAILABILITY OF RAW MATERIALS. THUS, THE DELAY OCCU RRED WHICH RESULTED LOSSES TO THE ASSESSEE IN THE FORM OF LATE DELIVERY CHARGES D EDUCTED BY THE CONCERNED PARTIES. 10.1 THE ASSESSEE IN SUPPORT OF ITS CLAIM ALSO PROD UCED THE COPIES OF THE PURCHASE ORDERS ON SAMPLE BASIS WHEREIN THE DATE OF DELIVERY OF THE GOODS WAS SPECIFIED WHICH IS PLACED ON PAGES 80 TO 91 OF THE PAPER BOOK. SIMILARLY, THE ASSESSEE ALSO PRODUCED THE DETAILS OF THE PAYME NT MADE BY THE PARTIES, WHEREIN THE AMOUNT OF LATE DELIVERY CHARGES WAS DED UCTED. THE COPY OF SALES MADE BY THE ASSESSEE AND THE AMOUNT OF LATE DELIVER Y CHARGES DEDUCTED BY THE PARTIES ARE PLACED ON PAGES 93 TO 102 OF THE PA PER BOOK. THE AO DURING THE COURSE OF REMAND PROCEEDINGS DID NOT ASK FOR TH E PARTY-WISE DETAILS WHO HAVE DEDUCTED LATE DELIVERY CHARGES FROM SUCH PAYME NTS. THEREFORE, THE OBSERVATION OF AO IN THE REMAND REPORT THAT PARTY-W ISE DETAILS WERE NOT SUBMITTED IS NOT TENABLE. LD. CIT(A) AFTER CONSIDER ING THE SUBMISSIONS OF ASSESSEE DELETED THE ADDITION MADE BY THE AO BY OBS ERVING AS UNDER:- 4.2 REGARDING LATE DELIVERY CHARGES OF RS.21,16,81 9/-, IT WAS SUBMITTED THAT THE SAME HAS TO BE DEBITED IN P & L ACCOUNT IN STEAD OF REDUCING THE SALES BECAUSE OF SALES TAX/VAT IMPLICATIONS. IF THE APPELLANT HAD NOT DEBITED P & L ACCOUNT BUT REDUCED FROM SALES, T HE SAME WOULD NOT HAVE BEEN NOTICEABLE. BUT SINCE THE SALES HAD BEEN CONSIDERED FOR SALES TAX/VAT PURPOSES, THE SAME CANNOT BE REDUCED AND LATE DELIVERY CHARGES HAVE BEEN DEBITED. THE AO IS DIRECTED TO DE LETE THIS ADDITION. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 11. LD. DR BEFORE US SUBMITTED THAT THE PARTY-WISE DETAILS WERE NOT FURNISHED BY THE ASSESSEE REPRESENTING THE DEDUCTIO N OF LATE DELIVERY CHARGES. ITA NO. 1105/KOL/2016 A.Y. 2009-10 JCIT(OSD), CIR-1(1), KOL. VS. M/S ASSO CIATED TOOLINGS INDIA PVT. LTD. PAGE 8 THEREFORE, THE MATTER SHOULD BE RESTORED BACK TO TH E FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION. HE VEHEMENTLY RELIED ON THE ORDER OF AO. ON THE OTHER HAND, LD. AR FOR THE ASSESSEE SUBMITTE D THAT THE PARTY-WISE DETAILS WERE NOT CALLED FOR BY AO IN REMAND PROCEDU RE, THEREFORE SAME WAS NOT FURNISHED. LD. AR ALSO FURTHER SUBMITTED THAT I T HAS NEVER MADE ANY PAYMENT ON ACCOUNT OF LATE DELIVERY CHARGES RATHER THE PARTIES USED TO DEDUCT THE LATE DELIVERY CHARGES FROM THEIR PAYMENTS IN TH E EVENT OF DELAY IN DELIVERY OF GOODS. LD. AR ALSO SUBMITTED THAT IT WAS NEVER U NDER ANY OBLIGATION TO MAKE THE PAYMENT FOR LATE DELIVERY CHARGES TO THE P ARTIES. THUS, THE OBSERVATION OF THE AO THAT ASSESSEE FAILED TO FURNI SH THE DETAILS OF THE PAYMENT MADE FOR LATE DELIVERY CHARGE IS BASED ON W RONG ASSUMPTION OF FACTS. LD. AR DREW OUR ATTENTION ON THE DATES OF LATE DELI VERY CHARGES DEDUCTED BY THE PARTIES ABOVE 10,000/- WHICH IS PLACED ON PAGES 92 TO 102 OF THE PAPER BOOK. HE RELIED ON THE ORDER OF LD. CIT(A). 12. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, WE FIND THAT AO MADE THE ADDITION OF LATE DELIVERY CHARGES ON THE GROUND THA T NECESSARY DETAILS WERE NOT FURNISHED BY ASSESSEE DURING ASSESSMENT PROCEEDINGS . HOWEVER, FROM THE SUBMISSIONS OF ASSESSEE WHICH IS PLACED ON PAGE AT 78 OF THE PAPER BOOK. WE NOTE THAT THE EXPLANATION FOR LATE DELIVERY CHARGES WAS DULY FURNISHED BEFORE AO VIDE LETTER DATED 14.11.2011 BUT AO HAS NOT COMM ENTED ON SUCH SUBMISSION MADE BY ASSESSEE. WE ALSO FURTHER NOTE T HAT THE NECESSARY DETAILS IN CONNECTION WITH LATE DELIVERY CHARGES WA S DULY FURNISHED BEFORE AUTHORITIES BELOW AS DISCUSSED ABOVE. BUT AO IN REM AND PROCEEDINGS HAS NOT POINTED OUT ANY DEFECT IN THE SUBMISSION MADE BY AS SESSEE. THE AO IN REMAND PROCEEDINGS HAS TAKEN THE STAND THAT PARTY-W ISE DETAIL OF LATE DELIVERY CHARGES WAS NOT FILED BY ASSESSEE, WITHOUT POINT OU T ANY DEFECT ON THE SUBMISSIONS FILED BY ASSESSEE BEFORE HIM. AS THE AO HAS NOT POINTED OUT ANY DEFECT IN THE SUBMISSION MADE BY THE ASSESSEE AT TH E TIME OF ASSESSMENT PROCEEDINGS AS WELL AS REMAND PROCEEDINGS, WE FEEL THAT ADDITION HAS BEEN MADE BY AO ON HIS SURMISE AND CONJECTURE. FURTHER, WE ALSO FIND THAT ITA NO. 1105/KOL/2016 A.Y. 2009-10 JCIT(OSD), CIR-1(1), KOL. VS. M/S ASSO CIATED TOOLINGS INDIA PVT. LTD. PAGE 9 ASSESSEE HAS FURNISHED DETAILS OF INVOICE AGAINST W HICH LATE DELIVERY CHARGES WAS DEDUCTED AND WHICH ARE PLACED ON PAGES 92 TO 10 2 OF THE PAPER BOOK. IN THIS REGARD, LD. DR BEFORE US HAS NOT POINTED OUT A NY DEFECT IN THE FINDING OF LD. CIT(A). IN THIS VIEW OF THE MATTER, WE DO NOT F IND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT. WE HOLD ACCORDINGLY. THE GROU ND RAISED BY REVENUE IS DISMISSED. 13. NEXT ISSUE RAISE RAISED BY REVENUE IN GROUND NO .3 IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR 8,500/- ON ACCOUNT OF CAPITAL LOSS. 14. THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT HAS DEBITED A SUM OF 8,500/- UNDER THE HEAD LOSS OF ASSETS I.E. MOBILE WHICH WAS CLASSIFIED UNDER BLOCK OF FIXED ASSET. HOWEVER, AO WAS OF THE VIEW T HE LOSS OF ASSET IS ON ACCOUNT OF CAPITAL EXPENDITURE AND IT DOES NOT REPR ESENT THE REVENUE LOSS. THEREFORE, SAME WAS DISALLOWED AD ADDED TO THE TOTA L INCOME OF ASSESSEE. 15. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT MOBILE HA ND-SET VALUED AT 8,500/- WAS LOST BY THE DIRECTOR OF ASSESSEE-COMPANY. IN TH IS REGARD, A POLICE COMPLAINT HAS BEEN FILED, THEREFORE SUCH LOSS WAS C ONNECTED WITH THE BUSINESS OF ASSESSEE AND THEREFORE, IT WAS CLAIMED AS REVENU E EXPENDITURE. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSE E DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- 4.5 REGARDING LOSS OF ASSETS OF RS.8,500/-, IT IS SEEN THAT THE VALUE IS REDUCED FROM THE FIXED ASSETS AND NO DEPRECIATION I S CLAIMED ON IT. THE AO IS DIRECTED TO ALLOW THIS LOSS AS REVENUE LOSS. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 16. LD. DR BEFORE US SUBMITTED THAT LOSS OF ASSET I S CAPITAL LOSS, THEREFORE, SAME CANNOT BE ALLOWED AS DEDUCTION IN ITS PROFIT A ND LOSS ACCOUNT. HE VEHEMENTLY RELIED ON THE ORDER OF LD. AO. ON THE OTHER HAND, LD. AR SUBMITTED THAT THE IMPUGN ED LOSS IS REVENUE IN NATURE, THEREFORE THE DEDUCTION FOR THE SAME SHOULD BE ALLOWED. HE RELIED ON THE ORDER OF LD. CIT(A). ITA NO. 1105/KOL/2016 A.Y. 2009-10 JCIT(OSD), CIR-1(1), KOL. VS. M/S ASSO CIATED TOOLINGS INDIA PVT. LTD. PAGE 10 17. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO AMBIGUITY THAT MOBILE HAND SET WAS LOST BY THE DIRECTOR OF ASSESSEE-COMPANY AS EVIDENT FROM THE COPY OF PURCHASE BILL AS WELL AS POLICE COMPLAINT LODGED BY ASSESSEE WHICH ARE PLACED ON PAGES 103 AND 104 OF THE PAPER BOOK. THE ONLY IS SUE REQUIRES OUR ATTENTION IS WHETHER ASSET PERTAINING TO THE BLOCK OF ASSET CAN BE WRITTEN OFF IN THE PROFIT AND LOSS ACCOUNT IN THE EVENT IT IS LOST AS DISCUSSED ABOVE. AT THIS JUNCTURE, WE FIND IMPORTANCE TO REPRODUCE THE PROVI SION OF SEC. 32 OF THE ACT. SECTION 32(1) OF THE ACT READS AS FOLLOWS:- 32.(1) IN RESPECT OF DEPRECIATION OF- (I) BUILDING, MACHINERY, PLANT OR FURNITURE, BEING TANGIBLE ASSETS; (II) KNOWHOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICE NCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHT OF SIMILA R NATURE, BEING INTANGIBLE ASSETS ACQUIRED ON OR AFTER THE 1 ST DAY OF APRIL, 1998, OWNED WHOLLY OR PARTLY, BY THE ASSESSEE AND USED FO R THE PURPOSES OF THE BUSINESS OR PROFESSION, THE FOLLOW ING DEDUCTIONS SHALL BE ALLOWED (I) (II) IN THE CASE OF ANY BLOCK OF ASSETS, SUCH PERCE NTAGE ON THE WRITTEN DOWN VALUE THEREOF AS MAYBE PRESCRIBED. (III) IN THE CASE OF ANY BUILDING, MACHINERY, PLANT OR FURNITURE IN RESPECT OF WHICH DEPRECIATION IS CLAIMED AND ALLOWE D UNDER CLAUSE (I) AND WHICH IS SOLD, DISCARDED, DEMOLISHED OR DESTROYED IN THE PREVIOUS YEAR (OTHER THAT THE PREV IOUS YEAR IN WHICH IT IS FIRST BROUGHT INTO USE), THE AMOUNT BY WHICH THE MONEYS PAYABLE IN RESPECT OF SUCH BUILDING, MAC HINERY, PLANT OR FURNITURE, TOGETHER WITH THE AMOUNT OF SCR AP VALUE, IF ANY, FALL SHORT OF THE WRITTEN DOWN VALUE THEREOF FROM THE ABOVE PROVISION, WE FIND THAT A BLOCK OF A SSET CAN BE REDUCED ONLY IN THE EVENT OF SALE, DISCARDED DEMOLISHED OR DESTROY IN THE PREVIOUS YEAR. IN THE INSTANT CASE, THE DEDUCTION WAS CLAIMED ON ACCOUNT OF LOSS OF ASSET WHICH IS NOT APPEARING UNDER THE PROVISION OF SECTION 32(1)( III) OF THE ACT. THEREFORE, IN OUR CONSIDERED VIEW, NO DEDUCTION ON ACCOUNT OF SUC H LOSS OF ASSET CAN BE CLAIMED BY THE ASSESSEE. ONCE AN ASSET BECOMES PART OF BLOCK OF ASSET THEN SUCH BLOCK OF ASSET CAN BE REDUCED ONLY IN THE EVEN T AS PROVIDED UNDER ACT. THERE IS NO PROVISION UNDER THE ACT TO REDUCE THE B LOCK OF ASSET IN THE EVENT OF LOSS OF ASSET. THEREFORE, THE DEDUCTION CLAIM BY AS SESSEE ON ACCOUNT OF LOSS ITA NO. 1105/KOL/2016 A.Y. 2009-10 JCIT(OSD), CIR-1(1), KOL. VS. M/S ASSO CIATED TOOLINGS INDIA PVT. LTD. PAGE 11 OF ASSET IS NOT ALLOWABLE UNDER THE SCHEME OF ACT. THE ASSESSEE AT THE MOST CAN CLAIM DEDUCTION IN THE FORM OF DEPRECIATION ON THE ASSET LOST BY IT @ SPECIFIED UNDER THE ACT. THUS, WE DIRECT THE AO TO DISALLOW THE CLAIM OF ASSESSEE ON ACCOUNT OF LOSS OF ASSET BUT ALLOW DEPR ECIATION ON THE VALUE OF SUCH ASSET @ SPECIFIED UNDER THE ACT. HENCE, THIS G ROUND OF REVENUE IS PARTLY ALLOWED. AO IS DIRECTED ACCORDINGLY. 18. IN THE RESULT, REVENUES STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 14/ 02/2018 SD/- SD/- ($ &) ( &) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S (- 14 / 02 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-JCIT(OSD), CIRCLE-1(1), P-7, CHOWRINGHEE SQ. R.NO.20, 7 TH FL, KOL-69 2. /RESPONDENT-M/SASSOCIATEDTOOLINGSINDIA PVT. LTD.BAL TIKURI,KALITALA,HOWRAH-711113 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 $$3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,