The ACIT, Panchmahal Circle, Godhra. V. Panchmahal Steel Ltd., Godhra.

ITA 1344/AHD/2004

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6514 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-04-2010
• Assessment Year: 1997-1998
• Appeal Filed On: 26-04-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHHAVI ANUPAM
• Keywords: Gross profit estimation; Depreciation; Cost of acquisition
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI A.N.PHAUJA, ACCOUNTANT MEMBER ITA NO.1344/AHD/2004 ASSESSMENT YEAR:1997-98 DATE OF HEARING:13.4.10 DRAFTED:15.4.10 ASSISTANT COMMISSIONER OF INCOME-TAX, PANCHMAHAL CIRCLE, GODHRA V/S. PANCHMAHAL STEEL LTD., 7 TH FLOOR LAND MARK, RACE COURSE CIRCLE, BARODA PAN NO.AABCP2643Q (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI CHHAVI ANUPAM, CIT-DR RESPONDENT BY:- SHRI MILIN MEHTA, AR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-V, BARODA IN APPEAL NO.CAB/V-9 9/03-04 DATED 25-02-2004. THE ASSESSMENT WAS FRAMED BY THE JT. COMMISSIONER O F INCOME-TAX (ASSTT.) SPL. RANGE-2, BARODA U/S.143(3) OF THE INCOME-TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 13-03-2000 FOR THE ASSESSMENT YEAR 1997-98. 2. THE FIRST ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOW GROSS PROFIT (GP) AND LOW YIELD RATIO. FOR THIS, REVENUE HAS RA ISED THE FOLLOWING GROUND NO.1 OF I) :- I) IN DELETING THE ADDITION OF RS.3,44,64,333/- ON ACCOUNT OF LOW G.P. / LOW YIELD RATIO, IGNORING THE FACTS NARRATED IN PARA-3, 3.1, 3.2 & 3.3 OF THE ASSESSMENT ORDER. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE PERUSED THE CASE RECORDS INCLUDING THE ASSESSMENT ORDER AND THE ORDER OF CIT(A). THE BRIE F FACTS LEADING TO THE ABOVE ISSUE ITA NO.1344/AHD/2004 A.Y.1997 -98 ACIT PANCHMAHAL CIRCLE GODHRA V. PANCHMAHAL STEEL LTD. PAGE 2 ARE THAT THE ASSESSEE IS A LIMITED COMPANY DEALING IN MANUFACTURING OF STAINLESS STEEL BILLETS AND ROLLINGS AND THE SAME ARE PRODUCE D AT STEEL MELTING SHOP AND FOR THE MANUFACTURING OF THE SAME MAJOR RAW MATERIALS U SED BY THE ASSESSEE CONSISTS OF STEEL SCRAP, SPONGE IRON AND ALLOYING ELEMENTS NAME LY FERRO CHROME, FERO NICKEL, FERRO MANGANESE ETC. WHEREAS ROLLING PROCESS INVOLV ES HEATING OF BILLETS IN FURNACE AND THEREAFTER PASSING OF HOT BILLETS THROUGH ROUGH ING STANDS AND SUBSEQUENT FINISHING STANDS AND COOLING THE ROLLED SECTION. T HE ASSESSING OFFICER FURTHER NOTED THAT THE GROSS TURNOVER HAS INCREASED FROM RS.184.0 1 CRORES IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR TO RS.120.91 CRORES IN TH E CURRENT ASSESSMENT YEAR. FURTHER PERUSAL OF THE SAME, IT IS NOTED THAT THE G P RATIO HAS SHARPLY DECLINED TO 0.15% IN THE CURRENT ASSESSMENT YEAR, AS AGAINST 9. 05% IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR THE GP RATE WAS 11.8% IN THE ASSESSMENT YEAR 1995-96. BEFORE THE ASSESSING OFFICER, IT WAS CONTENDED BY T HE ASSESSEE THAT THE GP WAS REDUCED DURING THE CURRENT ASSESSMENT YEAR DUE TO R ECESSION IN DOMESTIC AND INTERNATIONAL STAINLESS STEEL INDUSTRY AND FURTHER DUE TO INTENSE COMPETITION IN UTENSIL GRADE STAINLESS STEEL SEGMENT, WHICH EFFECTED THE S ALES AND PRODUCTION ADVERSELY RESULTING INTO LOSSES FOR THE YEAR UNDER CONSIDERAT ION. HE NOTED THAT THERE IS SHARP FALL IN THE YIELD OF FINISHED PRODUCTS VIS--VIS TH E CONSUMPTION OF RAW MATERIAL IN THE CURRENT YEAR AS COMPARED TO IMMEDIATELY PRECEDING A SSESSMENT YEAR AND ON THE BASIS OF DETAILED YIELD CHART ON MONTH-TO-MONTH BAS IS, IT IS NOTED THAT OVERALL YIELD IN THE CURRENT YEAR IS 87.87% AS AGAINST 88.10% SHOWN IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR IS WITHOUT TAKING INTO CONSIDERATIO N THE END-CUTTING AND SKULL. IF THE END-CUTTING AND SKULL IS TAKEN INTO CONSIDERATION, THE OVERALL YIELD FOR THE YEAR UNDER CONSIDERATION WORKS OUT TO 80.01% AS AGAINST 82.76% IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. FURTHER THE NET YIELD AFTER TAKING INTO CONSIDERATION THE END-CUTTING AND SKULL AS WELL AS FURTHER TAKING INTO CONSIDERAT ION THE VARIOUS ADDITIVES USED IN THE MANUFACTURING PROCESS UNDER CONSIDERATION WORKS OUT TO 71.2% AS AGAINST 73.20% SHOWN IN THE IMMEDIATELY RECEDING ASSESSMENT YEAR. THE DETAILED ANALYSIS OF THE SAME IS WORKED OUT AS PER THE CHART BELOW:- PARTICULARS A.Y. 1996-97 A.Y. 199 7-98 YIELD WITHOUT END-CUTTING AND SKULL 88.10% 87.87% YIELD WITH END-CUTTING 82.74% 80.01% YIELD WITH END-CUTTING SKULL ADDITIVES 73.20% 71.22% ITA NO.1344/AHD/2004 A.Y.1997 -98 ACIT PANCHMAHAL CIRCLE GODHRA V. PANCHMAHAL STEEL LTD. PAGE 3 HE FURTHER NOTED THAT THE ASSESSEE HAS NOT ACCOUNTE D FOR THE VALUE OF EXCISE DUTY AS PART OF CLOSING STOCK OF FINISHED GOODS AS ON 31-03 -1997 AND THE TOTAL VALUE OF FINISHED GOODS IS FOR RS.18,11,68,922/- AND THE ELE MENT OF EXCISE DUTY ON THE SAME WORKS OUT TO RS.2,71,75,238/-. ACCORDING TO THE AS SESSING OFFICER, AS PER THE ACCOUNTING POLICY OF THE COMPANY, IT IS NOTED THAT EXCISE DUTY PAYABLE ON INVENTORIES LYING AT THE FACTORY IS ACCOUNTED FOR ONLY WHEN IT IS PAID SINCE AS PER THE ASSESSEE, IT BECOMES PAYABLE ON SUBSEQUENT CLEARANCE THEREOF. O N BEING ASKED, THE ASSESSEE HAS CONTENDED THAT THE SAME SHALL NOT HAVE ANY IMPA CT ON THE PROFITS AS IF THE VALUE OF EXCISE DUTY IS TO BE INCREASED NECESSARY DEDUCTI ON MAY ALSO BE ALLOWED IN THE OPENING STOCK. IT HAS FURTHER CONTENDED THAT EVEN O THERWISE THE ENTIRE FINISHED GOODS AVAILABLE AS ON 31-03-1997, HAS BEEN SOLD OUT SUBSE QUENTLY WITHIN THE TIME PRESCRIBED U/S. 43B OF THE ACT, THEREFORE, THE SAME IS AN ALLOWABLE DEDUCTION ON PAYMENT BASIS U/S. 43B OF THE ACT. THE ASSESSING OF FICER IN VIEW OF THE ABOVE DEFECTS, NOT SATISFACTORILY EXPLAINED, REJECTED THE BOOK RESULTS BY APPLYING THE PROVISION OF SEC.145(2) OF THE ACT AND THEREFORE ON THE FACTS AVAILABLE ON RECORD THE NET GP RATIO IS APPLIED TO THE TOTAL TURNOVER AS AG AINST THE GP RATIO AS DECLARED BY THE ASSESSEE AT 0.15% AND MADE ADDITION OF RS.3,44, 64,333/- WHICH WORKED OUT AS UNDER:- GP BY APPLYING GP RATE OF 3% ON TOTAL TURNOVER OF RS.1,20,91,29,205/- RS.3,62,73,876/- GP SHOWN BY THE ASSESSEE RS. 18,09,543/- DIFFERENCE RS.3,44,64,333 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A). THE CIT(A) AFTER TAKING REMAND REPORT FROM THE ASSESSING OFFICER ON THE SUB MISSION OF THE ASSESSEE HELD THAT THE ABOVE THREE REASONS NARRATED ARE NO REASON S FOR REJECTING THE BOOK RESULTS BY GIVING FOLLOWING FINDING IN PARA-3.14 TO 3.18 OF HIS APPELLATE ORDER:- 3.14 I HAVE CONSIDERED THE SUBMISSIONS MADE AS WEL L AS ARGUMENTS PUT-FORTH BY THE LEARNED COUNSEL FOR THE APPELLANT. THE ARGUM ENTS PUT-FORTH BY THE ADDL. CIT/AO AND REPORT DATED 5.11.03 & 16.12.03 ARE ALSO CONSIDERED. THE CONTENTION OF THE APPELLANT THAT IT HAS MAINTAINED REGULAR BOOKS OF ACCOUNT WHICH ARE AUDITED ARE FOUND TO BE CORRECT. THE APPE LLANT HAS EXPLAINED THE REASONS FOR SHORTFALL IN GP WHICH CAN BE SUMMARIZED AS UNDER:- (I) THERE WAS DECREASE OF ABOUT 7% IN AVERAGE SALE PRICE IN ROLLED PRODUCT AND OVER ALL AVERAGE SALE PRICE HAD BEEN RE DUCED BY 3% DURING THE YEAR. THE AVERAGE SALE PRICE OF BRIGH T BAR HAS GONE DOWN BY ABOUT 11%. ITA NO.1344/AHD/2004 A.Y.1997 -98 ACIT PANCHMAHAL CIRCLE GODHRA V. PANCHMAHAL STEEL LTD. PAGE 4 (II) THE APPELLANT HAS RECEIVED EXPORT INCENTIVES O F RS.1,18,80,595 DURING THE YEAR WHICH WERE NOT BEEN CONSIDERED BY T HE AO WHILE WORKING OUT THE GROSS PROFIT. CONSIDERING THE SAME, THE CGP WORKS OUT TO 1.27% AS AGAINST 0.5%. (III) THERE WAS INCREASE IN SALARY & WAGES BY 1.53% AND POWER AND FUEL CHARGES HAVE ALSO GONE UP BY 5.40% SINCE THERE WAS RISE IN PER UNIT CHARGES BY THE GUJARAT ELECTRICITY BOARD. THE AVERAGE PER UNIT CONSUMPTION COST OF LSH IS RS.7.02 AS AGAI NST RS.5.81 DURING LAST YEAR. (IV) THE APPELLANT ALSO SUBMITTED A MONTHWISE CHART OF SPARES AND STORES WHICH HAS INCREASED BY 4.18% DURING THE YEAR . (V) THERE IS INCREASE IN AVERAGE PUCHASE PRICE OF I MPORTED SHREDDED SCRAP WHICH HAS GONE UP TO RS.6,728 PER MT AS AGAINST RS.5,861 PER MT OF LAST YEAR. SIMILARLY, TH E AVERAGE PURCHASE COST OF NICKLE OXIDE HAS ALSO GONE UP BY 3 3% DURING THE YEAR. 3.15 THE CONTENTION OF THE AUTHORIZED REPRESENTATIV E IS FOUND TO BE CONVINCING THAT OVERALL MANUFACTURING COST HAS BEEN INCREASED DUE TO ABOVE REASONS WHICH RESULTED INTO HUGE LOSS FOR THE YEAR. THE COU NSEL ALSO ARGUED THAT THE ADDL CIT IN THE REPORT DATED 16.12.03 HAS ACCEPTED THE ABOVE FACTS AND CONCLUDED THAT IF INCREASE IN CONSUMPTION OF STORES /SPARES, POWER & FUEL, SALARY & WAGES IS CONSIDERED, THE GP RATE WILL COME TO LEVEL IT WAS CLAIMED. IN VIEW OF THE ABOVE FACTS, I HOLD THAT THE APPELLANT HAS EXPLAINED THE REASONS FOR SHORTFALL IN GP DURING THE YEAR AND THEREFORE IT WO ULD BE INCORRECT TO MAKE GP ADDITION CONSIDERING THE FACTS OF THE CASE. 3.16 REGARDING INVOKING PROVISIONS OF SECTION 145(2 ), THE CONTENTION OF THE APPELLANT THAT APPELLANT HAS MAINTAINED QUANTITATIV E RECORDS AND THE REGULAR BOOKS OF ACCOUNT WHICH ARE DULY AUDITED AND NO ADVE RSE COMMENT IS OBSERVED FROM SUCH REPORT. THE AO HAS FAILED TO POI NT OUT ANY SPECIFIC DEFECTS SO AS TO MAKE IT A CASE OF REJECTION OF BOOK RESULT S. CONSIDERING THE FACTS OF THE APPELLANTS CASE, THE AO WAS NOT JUSTIFIED IN INFERRING THAT CORRECT PROFIT HAS NOT BEEN ADDUCED AND IN TURN INVOKING THE PROVI SIONS OF SECTION 145(2) OF THE ACT. 3.17 REGARDING THE LOW YIELD, THE CONTENTION OF THE AUTHORIZED REPRESENTATIVE IS ALSO FOUND TO BE CONVINCING THAT THE APPELLANT H AS MAINTAINED ALL QUANTITATIVE RECORDS AND THE AO HAS FAILED TO BRING ON RECORD ANY MATERIAL EVIDENCE SO AS TO JUSTIFY THE ADDITION. THE APPELLA NT HAS ALSO STATED THAT IT HAD STOPPED PRODUCTION OF STEEL BILLET SINCE THE SALE P RICE WAS DECLINED TO LESS THAN PRODUCTION COST AS OBSERVED BY THE ADDL CIT IN THE REPORT DTD. 116.12.03. IT IS ALSO CORRECT THAT DUE O HUGE LOSSES, THE COMP ANY HAS NO TAX LIABILITY EITHER IN THE YEAR OR IN THE SUBSEQUENT YEAR AND THEREFORE QUESTION OF SHOWING LOW PROFIT WOULD NOT ARISE. ITA NO.1344/AHD/2004 A.Y.1997 -98 ACIT PANCHMAHAL CIRCLE GODHRA V. PANCHMAHAL STEEL LTD. PAGE 5 3.18 IT IS NOTICED THAT WHILE MAKING GP ADDITION, T HE AO HAS FAILED TO POINT OUT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNT. IT I S ALSO OBSERVED THAT THE BOOKS OF ACCOUNT OF THE APPELLANT COMPANY HAVE BEEN SUBJECTED TO COMPULSORY AUDIT UNDER S. 44AB OF THE IT ACT AS WEL L AS UNDER THE COMPANIES ACT. UNDER BOTH THE ACTS, AUDITORS HAVE TO CERTIFY WHETHER BOOKS OF ACCOUNT WHICH HAVE BEEN AUDITED REVEAL TRUE AND FAIR PICTUR E OR NOT. ACCORDINGLY CIT(A) DELETED THE ADDITION OF NET GP M ADE BY ASSESSING OFFICER. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US ON THIS ISSUE. 5. WE FIND THAT THE LOW GP, LOW YIELD AND THE ELEME NT OF SCRAP NOT ACCOUNTED FOR IN CLOSING STOCK OF FINISHED GOODS CANNOT BE REASON S FOR REJECTING THE BOOK RESULTS AS THE ASSESSING OFFICER COULD NOT POINT OUT ANY DEFEC T IN THE BOOKS OF ACCOUNT. AFTER GOING THROUGH THE ENTIRE CASE RECORDS, WE FIND THAT THE ASSESSING OFFICERS ENTIRE PREMISE FOR MAKING ADDITION WAS LOW GP AND LOW YIEL D. WE FURTHER FIND THAT THE ASSESSEE HAS EXPLAINED THE REASONS FOR LOW GP WHICH ARE AS UNDER:- (1) THERE WAS DECREASE OF ABOUT 7% IN AVERAGE SALE PRICE IN ROLLED PRODUCT AND OVER ALL AVERAGE SALE PRICE HAD BEEN RE DUCED BY 3% DURING THE YEAR. THE AVERAGE SALE PRICE OF BRIGHT B AR HAS GONE DOWN BY ABOUT 11%. (2) THE APPELLANT HAS RECEIVED EXPORT INCENTIVES OF RS.1,18,80,595 DURING THE YEAR WHICH WERE NOT BEEN CONSIDERED BY T HE AO WHILE WORKING OUT THE GROSS PROFIT. CONSIDERING THE SAME, THE CGP WORKS OUT TO 1.27% AS AGAINST 0.5%. (3) THERE WAS INCREASE IN SALARY & WAGES BY 1 .53% AND POWER AND FUEL CHARGES HAVE ALSO GONE UP BY 5.40% SINCE THERE WAS RISE IN PER UNIT CHARGES BY THE GUJARAT ELECTRICITY BOARD. THE AVERAGE PER UNIT CONSUMPTION COST OF LSH IS RS.7.02 AS AGAINST RS.5.81 DURING LAST YEAR. (4) THE APPELLANT ALSO SUBMITTED A MONTHWISE CHART OF SPARES AND STORES WHICH HAS INCREASED BY 4.18% DURING THE YEAR . (5) THERE IS INCREASE IN AVERAGE PUCHASE PRI CE OF IMPORTED SHREDDED SCRAP WHICH HAS GONE UP TO RS.6,728 PER MT AS AGAINST RS.5,861 PER MT OF LAST YEAR. SIMILARLY, THE AVERAG E PURCHASE COST OF NICKLE OXIDE HAS ALSO GONE UP BY 33% DURING THE YEAR. WE FURTHER FIND THAT THE OBSERVATION OF THE AUDITOR RELATING TO THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, FROM THE AUDIT REPORT AS REPRODUCED BY CIT(A), AND ALSO THE DIRECTORS REPORT AS REPROD UCED, IT IS NOTED THAT THE ASSESSEE ITA NO.1344/AHD/2004 A.Y.1997 -98 ACIT PANCHMAHAL CIRCLE GODHRA V. PANCHMAHAL STEEL LTD. PAGE 6 HAS EXPLAINED THE REASONS FOR LOW GP AND INCREASING IN MANUFACTURING EXPENSES. WE FIND NO JUSTIFICATION FOR REJECTING THE BOOK RES ULTS AND THERE IS NO MATERIAL ON RECORD WHICH JUSTIFIED THE CONCLUSION REACHED BY TH E ASSESSING OFFICER FOR REJECTING THE BOOKS OF ACCOUNT. WE FIND THAT THE ASSESSEE HAS MAINTAINED COMPLETE AND PROPER BOOKS OF ACCOUNT IN ACCORDANCE WITH THE PROV ISION OF COMPANIES ACT AS WELL AS PROVISION OF THIS ACT. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) ACCEPTING THE BOOK RESULTS AND THIS ISSUE OF THE RE VENUES APPEAL IS DISMISSED. 6. THE NEXT ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) IS REDUCING THE DISALLOWANCE OF RS.2,50,120/- TO RS.1, 13,620/- ON ACCOUNT OF STAFF WELFARE EXPENSE BY TREATING THE SAME AS ENTERTAINME NT EXPENSES. 7. AFTER HEARING THE RIVAL CONTENTIONS AND GOING TH ROUGH THE CASE RECORDS, WE FIND THAT THE ASSESSEE-COMPANY HAS INCURRED THE EX PENSES WHICH INCLUDE STAFF WELFARE EXPENSES, CANTEEN EXPENSES, CANTEEN SUBSIDY , TEA, COFFEE, SWEET ETC. DISTRIBUTED ON THE OCCASION OF FESTIVALS TO ITS WOR KERS AND STAFF AND THESE EXPENSES INCURRED ARE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. WE FIND THAT THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO CONSID ER 25% OF SUCH EXPENSES IN THE NATURE OF ENTERTAINMENT EXPENSES AND ACCORDINGLY AL LOW THE CLAIM OF THE ASSESSEE BY GIVING FOLLOWING FINDING IN PARA-5.5 OF HIS APPELLATE ORDER:- 5.5 I HAVE CONSIDERED THE SUBMISSIONS MADE AS WELL AS THE ARGUMENTS PUT- FORTH BY THE LEARNED COUNSEL FOR THE APPELLANT. THE ARGUMENTS PUTFORTH BY THE AO ARE ALSO CONSIDERED. THE CONTENTION OF THE APPEL LANT IS FOUND TO BE CONVINCING THAT MOST OF THE EXPENSES INCURRED ARE F OR THE PURPOSE OF ITS BUSINESS AND MAINLY FOR STAFF WELFARE INCURRED DURI NG THE OFFICE HOURS. HOWEVER, THE PERSONAL ELEMENT ALSO CANNOT BE DENIED AND THEREFORE I AGREE TO SOME EXTENT WITH THE INFERENCE OF THE AO. TO MEE T THE ENDS OF JUSTICE, I DIRECT THE AO TO CONSIDER 25% OF SUCH EXPENSES IN T HE NATURE OF ENTERTAINMENT EXPENSES AND RECALCULATE THE DEDUCTIO N U/S.37(2A) OF THE ACT ACCORDINGLY. IN THE APPEAL DECISION FOR ASSESSMENT YEAR 96-97, A SIMILAR VIEW HAS BEEN TAKEN AND IS APPLIED IN THIS YEAR. IN VIEW OF THE ABOVE REASONING ADDUCED BY CIT(A), W E FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND ACCORDINGLY WE UPHOLD THE SAME AND THIS ISSUE OF REVENUES APPEAL IS DISMISSED. ITA NO.1344/AHD/2004 A.Y.1997 -98 ACIT PANCHMAHAL CIRCLE GODHRA V. PANCHMAHAL STEEL LTD. PAGE 7 8. THE NEXT ISSUE IN THIS APPEAL OF THE REVENUE IS AS REGARDING TO THE DISALLOWANCE OF RS.2,39,140/- ON ACCOUNT OF VEHICLE EXPENSE AND DEPRECIATION. 9. WE FIND THAT THE CIT(A) HAS DELETED THE ADDITION ON THE DECISION OF JURISDICTIONAL OF HIGH COURT IN THE CASE OF SAYAJI IRON AND ENGG. CO. V. CIT (2002) 253 ITR 749 (GUJ) VIDE PARA-6.3 OF HIS APPELLATE ORDER AS UNDER:- 6.3 I HAVE CONSIDERED THE SUBMISSION MADE BY THE A PPELLANT. THE APPELLANT BEING AN ARTIFICIAL JURIDICAL PERSON, THE DISALLOWA NCE MADE OUT OF VEHICLE REPAIRS/DEPRECIATION ON VEHICLES AND OUT OF TELEPHO NES FOR PERSONAL USE ARE NOT JUSTIFIED IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SAYAJI IRON & ENG. CO 172 CTR 339 AND I TAT DELHI IN THE CASE OF DCIT VS HARYANA OXYGEN LTD 73 TTJ 575 (DELHI). THE AO IS DIRECTED TO DELETE THE DISALLOWANCES MADE ON THIS ACCOUNT. WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT( A) AND ACCORDINGLY WE UPHOLD THE SAME. 10. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 30/04/2010 SD/- SD/- (A.N.PHAUJA) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 30/04/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-V, BARODA 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD