Sterling Abrasives Ltd, Ahmedabad V. The Dy.CIT.,Circle-8, Ahmedabad

ITA 334/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8179 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 13-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N SOPARKAR
• Keywords: Unexplained cash credit; Depreciation; Additional evidence
• Section: 43B; 32; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD . . , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ ITA NOS. 704 & 705/AHD/2014 / ASSESSMENT YEAR : 2009-10 & 2010-11 DY. COMMISSIONER OF INCOME TAX, CIRCLE-8, AHMEDABAD VS STERLING ABRASIVES LTD. 45/46, GIDC, ODHAV ROAD, AHMEDABAD 382 415 ./ ITA NO. 334/AHD/2015 / ASSESSMENT YEAR : 2011-12 STERLING ABRASIVES LTD. 45/46, GIDC, ODHAV ROAD, AHMEDABAD 382 415 VS DY. COMMISSIONER OF INCOME TAX, CIRCLE-8, AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI K. MADHUSUDAN, SR.D.R. REVENUE BY : SHRI S. N. SOPARKAR, A.R. / DATE OF HEARING : 27/10/2017 / DATE OF PRONOUNCEMENT: 13/11/2017 / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER:- THESE THREE APPEALS, TWO BY THE REVENUE AND ONE BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE COMMISS IONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD DATED 04/12/2013 (REVENUE) & CIT(A)-10, AHMEDABAD DATED 19/12/2014 FOR ASSESSMENT YEAR 2009 -10, 2010-11 & 2011-12 RESPECTIVELY. 2. THE REVENUE HAS TAKEN FOLLOWING GROUNDS IN ITS A PPEAL VIDE ITA NO.704/AHD/2014 FOR ASST. YEAR 2009-10: ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 2 I. THE LD. CIT(A)-XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.2,41,077/- MADE ON ACCOUNT OF DE PRECIATION TO ASSESSEE AT HIGHER RATE ON VEHICLES NOT REGISTERED AS COMMERCIA L VEHICLES WITH RTO. II. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS)-XIV, AH MEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.22, 57,434/- MADE ON ACCOUNT OF FOREIGN TRAVEL EXPENSES NOT PROVED TO HAVE BEEN INC URRED FOR THE PURPOSE OF ASSESSEE'S BUSINESS. III. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, A HMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.80, 738/- MADE ON ACCOUNT OF UNSUBSTANTIATED COMMISSION EXPENSES NOT PROVED TO H AVE BEEN INCURRED FOR THE PURPOSE OF ASSESSEE'S BUSINESS. IV. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, A HMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.24, 54,519/- MADE U/S.68 OF THE ACT NOT PROVED TO BE AN ADVANCE FROM CUSTOMER EITHE R DURING ASSESSMENT OR REMAND PROCEEDINGS. V. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, A HMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.14, 07,613/- MADE ON ACCOUNT OF VALUATION OF CLOSING STOCK. VI. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD OUGHT TO HAVE U PHELD THE ORDER OF THE ASSESSING OFFICER. VII. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. C OMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD MAY BE SET-A-SIDE AND THAT OF THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A LIMITED COMPANY. THE ASSESSEE FILED ITS RETURN OF INCOME 18.09.2009 DISCLOSING THEREIN TOTAL INCOME AT RS. 5,91,24,180/-. THE ASSESSEE IS ENGAGE D IN THE BUSINESS OF MANUFACTURING OF GRINDING WHEELS AND BONDED ABRASIV E. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED U/S.143( 1) OF THE I.T. ACT. DISALLOWANCE OF DEPRECIATION: FROM THE RECORDS IT WAS OBSERVED THAT THE ASSESSEE HAD CLAIMED DEPRECIATION @ 50% ON CERTAIN VEHICLES BY IT. SINCE THE SAID VEH ICLE WAS NOT REGISTERED BY THE ROT AS COMMERCIAL VEHICLE SO VIDE LETTER OF T HIS OFFICE DATED 08/12/2011, THE ASSESSEE WAS REQUESTED TO EXPLAIN. ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 3 IN RESPONSE TO THE SAME ASSESSEE VIDE ITS LETTER D ATED 12/12/2011 HAS SUBMITTED AS UNDER: 'THE ASSESSEE COMPANY HAS CLAIMED DEPRECIATION @ 50 % ON CERTAIN VEHICLES ACQUIRED DURING THE YEAR. YOU HAVE FURTHER OBSERVED THAT SUCH VEHICLES, ARE NOT REGISTERED AS 'COMMERCIAL VEHICLES' WITH THE RTO. W E HAVE BEEN ASKED TO EXPLAIN AS TO WHY THE HIGHER RATE OF DEPRECIATION SHOULD NO T BE DISALLOWED. IN THIS REGARD, WE WOULD LIKE TO DRAW YOUR KIND ATT ENTION TO APPENDIX-I TO INCOME TAX RULES WHEREIN RATES OF DEPRECIATION ARE PRESCRI BED. YOUR ATTENTION IS DRAWN TO ITEM NO. 111(3) (VIA), WHICH IS REPRODUCED HEREUNDE R: 'NEW COMMERCIAL VEHICLE WHICH IS ACQUIRED ON OR AFT ER THE 1 ST DAY OF JANUARY 2009 BUT BEFORE THE 1 ST DAY OF OCTOBER, 2009 AND IS PUT TO USE BEFORE THE IST DAY OF OCTOBER, 2009 FOR THE PURPOSE OF BUSINESS OR PROFES SION [SEE PARAGRAPH 6 OF THE NOTES BELOW THE TABLE]' AS CAN BE SEEN, THERE IS A REFERENCE TO PARAGRAPH 6 OF THE NOTES, WHICH IS ALSO REPRODUCED HERE UNDER: 'COMMERCIAL VEHICLE' MEANS 'HEAVY GOODS VEHICLE', ' HEAVY PASSENGER MOTE VEHICLE', 'LIGHT MOTOR VEHICLE', 'MEDIUM GOODS VEHI CLE' AND 'MEDIUM PASSENGER MOTOR VEHICLE' BUT DOES NOT INCLUDE 'MAXI-CAB', 'MO TOR-CAB 'TRACTOR' AND 'ROAD- ROLLER'. THE EXPRESSIONS 'HEAVY GOODS VEHICLE', 'HE AVY PASSENGER MOTOR VEHICLE', 'LIGHT MOTOR VEHICLE, MEDIUM GOODS VEHICLE, MED IUM PASSENGER MOTOR VEHICLE, MAXI-CAB, MOTOR-CAB, TRACTOR AND R OAD-ROLLER, SHALL HAVE THE MEANING RESPECTIVELY ASSIGNED TO THEM IN SECTION 2 OF THE MOTOR VEHICLES ACT, 1988 (59 OF 1988) AS CAN BE SEEN, COMMERCIAL VEHICLE WOULD INCLUDE LI GHT MOTOR VEHICLE. FOR THIS PURPOSE, AS MENTIONED IN THE NOTES WE HAVE TO REFER TO THE DEFINITION OF LIGHT MOTOR VEHICLE IN SECTION 2 OF THE MOTOR VEHICLES ACT, 198 8. THE RELEVANT DEFINITION IS REPRODUCED HEREUNDER FOR YOUR READY REFERENCE. (21) LIGHT MOTOR VEHICLE MEANS A TRANSPORT VEHICL E OR OMNIBUS THE GROSS VEHICLE WEIGHT OF EITHER OF WHICH OR A MOTOR CAR OR TRACTOR OR ROAD-ROLLER THE UNLADEN WEIGHT OF ANY OF WHICH, DOES NOT EXCEED [7500] KILOGRAMS. AS CAN BE SEEN FROM THE DEFINITION, LIGHT MOTOR VEH ICLE INCLUDES, MOTOR CAR, THE UNLADEN WEIGHT OF WHICH DOES NOT EXCEED 7500 KGS. THUS, FROM THE ABOVE DISCUSSION IT CAN BE EASILY CO NCLUDED, THAT A MOTOR CAR HAVING UNLADEN WEIGHT BELOW 7500KGS. IS ELIGIBLE FOR HIGHE R RATE OF DEPRECIATION. THERE IS NO REQUIREMENT TO GET IT REGISTERED WITH RTO AUTHOR ITIES AS COMMERCIAL VEHICLE. ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 4 RELEVANT PORTION OF APPENDIX I TO INCOME TAX RULES WITH NOTES AND SECTION 2 OF MOTOR VEHICLES ACT, 1988 IS ENCLOSED HEREWITH FOR Y OUR READY REFERENCE. 4.3 THE ASSESSEE'S SUBMISSIONS HAVE BEEN CONSIDERED CAREFULLY AND FOUND ACCEPTABLE. FROM THE PROVISIONS OF SECTION 32 OF THE ACT READ W ITH THE APPENDIX-INCOME TAX RULES IT CAN BE SEEN THAT THE HIGHER RATE OF DEPREC IATION IS ALLOWABLE ON 'NEW COMMERCIAL VEHICLE'. THE WORD COMMERCIAL HAS TO BE CONSTRUED IN ITS NATU RAL MEANING. THERE IS DISTINCTION BETWEEN COMMERCIAL VE HICLE AND PRIVATE VEHICLE. EVEN THE RATE/FEES FOR REGISTRATION WITH THE RTO FOR COM MERCIAL VEHICLE ARE DIFFERENT AS COMPARED TO PRIVATE VEHICLE. THE REQUIREMENT FOR RE GISTRATION FOR COMMERCIAL VEHICLE IS DIFFERENT FROM PRIVATE VEHICLE. EVEN THE NUMBER PLATES WHICH ARE ISSUED TO COMMERCIAL VEHICLE ARE DIFFERENT AS COMPARED TO PRI VATE VEHICLE. THE PLATES FOR PRIVATE VEHICLE HAVE WHITE BACKGROUND WITH BLACK LE TTERING, WHEREAS IN THE CASE OF COMMERCIAL VEHICLE THE PLATES HAVE A YELLOW BACKGRO UND WITH BLACK LETTERING. 4.4 FROM THE ABOVE IT IS EVIDENT THAT THE COMMERCIA L VEHICLE IS DISTINCT AND DIFFERENT FROM PRIVATE VEHICLE. ONCE THE LEGISLATUR E HAS USED THE WORD/PHRASE 'COMMERCIAL VEHICLE' AND NOT 'ANY VEHICLE', THEN IT HAS TO BE GIVEN ITS NATURAL MEANING. IT ADMITTED FACT THAT IN THE CASE OF THE A SSESSEE THE VEHICLE ON WHICH HIGHER RATE DEPRECIATION HAS BEEN CLAIMED IS NOT REGISTERE D AS 'COMMERCIAL VEHICLE' WITH THE RTO AND HENCE THE BENEFIT OF HIGHER RATE OF DEP RECIATION CANNOT BE ALLOWED ON SUCH VEHICLE. ACCORDINGLY THE ASSESSEE'S EXPLANATIO N IN THIS RESPECT IS REJECTED. IF ASSESSEE'S CLAIM OF DEPRECIATION ON SUCH VEHICLE @ 50% IS REJECTED AND DEPRECIATION ON SUCH VEHICLE IS ALLOWED AT THE NORMAL RATE OF 15 %. 4.5 THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS.34, 43,957- ON SUCH VEHICLE AT 25%, (HALF OF 50% AS THE ASSET HAS BEEN PUT TO USE FOR L ESS THAN 180 DAYS), ON ADDITION OF VEHICLE OF RS.13,77,579/-. IN VIEW OF ABOVE DISCUSS ION THE ELIGIBLE DEPRECIATION ON SUCH VEHICLE @7.5% IS WORKS OUT TO BE RS.1,03,318/- . HENCE THE EXCESS CLAIM OF DEPRECIATION AT RS.2,41,077/- IS DISALLOWED AND ADD ED BACK TO TOTAL INCOME. (DISALLOWANCE OF DEPRECIATION-RS.2,41,077/-) DISALLOWANCE OF FOREIGN TRAVEL EXPENSE: DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSEE WAS ASKED TO SUBMIT THE DETAILS OF EXPENSES INCURRED ON FOREI GN TOUR AND PURPOSE OF SAME AND PROOF THAT SUCH FOREIGN TOUR WAS UNDERTAKE N FOR BUSINESS PURPOSE. ASSESSEE HAS SUBMITTED THE TOUR REPORT AS UNDER AND HAS ALSO SUBMITTED THE COPIES OF PASSPORT OF SUCH PERSON WHO HAVE TRAVELED ABOARD. ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 5 TOUR NO. NAME PLACE MONTH OF TRAVEL EXP. ON TICKET EXP. ON FOREX OTHER TOTAL 1. NIRAV PARIKH USA MAY 2008 383922 72350 18561 474833 2. NIRAV PARIKH EUROPE SEP 2008 50860 80825 189511 321196 3. NIRAV PARIKH USA NOV 2008 112500 49450 183366 345316 4. NIRAV PARIKH EUROPE FEB 2008 145471 64600 206660 416731 5. NIRAV PARIKH USA MAY 2008 259024 73666 10387 343077 6. PRAVIN PATEL USA MAY 2008 107957 21406 11087 140450 7. PRAVIN PATEL USA NOV 2008 117974 52670 35981 206625 8. UMESH DARJI VISA CHARGES- REJECTED 9205 9205 1177708 414967 655554 2257434 TOUR REPORT NO.1 USA YEAR 2008-09 NAME OF PERSON TRAVELLED : NIRAV PARIKH DESIGNATION OF PERSON TRAVELLED : (M.D.) SR. NO. NAME OF CUSTOMER TYPE OF CUSTOMER VISITED ON MONTH PURPOSE OF VISIT 1. AMERICAN GRINDING USA NEW CUSTOMER MAY 2008 BUSINESS DEVELOPMENT 2. ANCHOR ABRASIVES REGULAR CUSTOMER MAY 2008 BUSINESS DEVELOPMENT AND ATTENDING COMPLAINTS 3. A.R. SOLTIS WEST LEC - USA NEW CUSTOMER MAY 2008 BUSINESS DEVELOPMENT 4. GRIER ABRASIVES USA NEW CUSTOMER MAY 2008 BUSINESS DEVELOPMENT 5. SIERA GRINDING NEW CUSTOMER MAY 2008 BUSINESS DEVELOPMENT & TO EXPLORE THE POSSIBILITY OF PURCHASE OF ANY PLANT AND MACHINERY 6. BLOUNT IC. USA NEW CUSTOMER MAY 2008 BUSINESS ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 6 DEVELOPMENT 7. INTERNATIONAL ABRASIVES USA REGULAR CUSTOMER MAY 2008 BUSINESS DEVELOPMENT AND ATTENDING COMPLAINTS 8. COLONIAL WEST USA REGULAR CUSTOMER MAY 2008 BUSINESS DEVELOPMENT AND ATTENDING COMPLAINTS 9. MIDWEST SUPERIOR REGULAR CUSTOMER MAY 2008 BUSINESS DEVELOPMENT AND ATTENDING COMPLAINTS 10. JAME R KUKURIN ASSOCIATION - USA REGULAR CUSTOMER MAY 2008 BUSINESS DEVELOPMENT AND ATTENDING COMPLAINTS TOUR REPORT NO -2 EUROPE YEAR 2008-09 NAME OF PERSON TRAVELLED : NIRAV PARIKH DESIGNATION OF PERSON TRAVELLED : (M.D.) SR NO. NAME OF CUSTOMER TYPE OF CUSTOMER VISITED ON MONTH PURPOSE OF VISIT 1. COMET SCHLEIFSCHEIBEN GMBH REGULAR CUSTOMER SEP/OCT, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS 2. AVN SLIJPMATERALEN NETHERLAND REGULAR CUSTOMER SEP/OCT, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS 3. MEISTER ABRASIVES REGULAR CUSTOMER SEP/OCT, 2008 BUSINESS DEVELOPMENT 4. BUHLER GMBH (GERMANY) REGULAR CUSTOMER SEP/OCT, 2008 BUSINESS DEVELOPMENT 5. STUMPP SCHUELE & SOMMAPPA SPRINGS (P) LTD. REGULAR CUSTOMER SEP/OCT, 2008 BUSINESS DEVELOPMENT 6. THE CARBO GROUP (GERMANY) GMBH REGULAR CUSTOMER SEP/OCT, 2008 BUSINESS DEVELOPMENT 7. ZISCHE SCHLEIFWERKZEUGE GMBH REGULAR CUSTOMER SEP/OCT, 2008 BUSINESS DEVELOPMENT TOUR REPORT NO. 3 USA YEAR 2008-09 NAME OF PERSON TRAVELLED : NIRAV PARIKH DESIGNATION OF PERSON TRAVELLED : (M.D.) ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 7 SR NO. NAME OF CUSTOMER TYPE OF CUSTOMER VISITED ON MONTH PURPOSE OF VISIT 1. ANCHOR ABRASIVES REGULAR CUSTOMER NOVEMBER, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS 2. PACIFIC HOE SAW USA REGULAR CUSTOMER NOVEMBER, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS 3. BLOUNT IC - USA NEW CUSTOMER NOVEMBER, 2008 BUSINESS DEVELOPMENT 4. GRIER ABRASIVES USA NEW CUSTOMER NOVEMBER, 2008 BUSINESS DEVELOPMENT 5. SIERA GRINDING NEW CUSTOMER NOVEMBER, 2008 BUSINESS DEVELOPMENT & TO EXPLORE THE POSSIBILITY OF PURPOSE OF ANY PLANT AND MACHINERY 6. BLOUNT IC. USA NEW CUSTOMER NOVEMBER, 2008 BUSINESS DEVELOPMENT 7. INTERNATIONAL ABRASIVES USA REGULAR CUSTOMER NOVEMBER, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS 8. COLONIAL WEST USA REGULAR CUSTOMER NOVEMBER, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS 9. MIDWEST SUPERIOR REGULAR CUSTOMER NOVEMBER, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS TOUR REPORT NO - 4 EUROPE YEAR 2008-09 NAME OF PERSON TRAVELLED : NIRAV PARIKH DESIGNATION OF PERSON TRAVELLED : (M.D.) SR NO. NAME OF CUSTOMER TYPE OF CUSTOMER VISITED ON MONTH PURPOSE OF VISIT 1. BECO AUSTRIA REGULAR CUSTOMER FEBRUARY, 2009 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS. 2. AVN SLIJPMATERIALEN - NETHARLAND REGULAR CUSTOMER FEBRUARY, 2009 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS. 3. TORMEK AB - SWEDEN NEW CUSTOMER FEBRUARY, 2009 BUSINESS DEVELOPMENT 4. DARMANN EASTERN EUROPE NEW CUSTOMER FEBRUARY, 2009 BUSINESS DEVELOPMENT 5. NOMA TOOLS NEW CUSTOMER FEBRUARY, 2009 BUSINESS DEVELOPMENT 6. ELECTROPRECIZIA S.A. ROMANIA NEW CUSTOMER FEBRUARY, 2009 BUSINESS DEVELOPMENT 7. MVM SRL. ITALY NEW CUSTOMER FEBRUARY, 2009 BUSINESS DEVELOPMENT 8. OLESCH IMPEX SRL ROMANIA NEW CUSTOMER FEBRUARY, 2009 BUSINESS DEVELOPMENT 9. CARBO GROUP GERMANY REGULAR FEBRUARY, BUSINESS DISCUSSION ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 8 CUSTOMER 2009 TOUR REPORT NO. 5 USA YEAR 2008-09 NAME OF PERSON TRAVELLED : NIRAV PARIKH DESIGNATION OF PERSON TRAVELLED : (DIRECTOR) SR NO. NAME OF CUSTOMER TYPE OF CUSTOMER VISITED ON MONTH PURPOSE OF VISIT 1. ANCHOR ABRASIVES REGULAR CUSTOMER MAY, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS. 2. INTERNATIONAL ABRASIVES USA REGULAR CUSTOMER MAY, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS. 3. COLONIAL WEST USA REGULAR CUSTOMER MAY, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS. 4. MIDWEST SUPERIOR - USA REGULAR CUSTOMER MAY, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS. TOUR REPORT NO. 6 USA YEAR 2008-09 NAME OF PERSON TRAVELLED : PRAVIN PATEL DESIGNATION OF PERSON TRAVELLED : (PRODUCTION MANAG ER ) SR NO. NAME OF CUSTOMER TYPE OF CUSTOMER VISITED ON MONTH PURPOSE OF VISIT 1. SIERA GRINDING USA NEW CUSTOMER MAY, 2008 BUSINESS DEVELOPMENT & TO EXPLORE THE POSSIBILITY OF PURCHASE OF ANY PLANT AND MACHINERY 2. BLOUNT IC USA NEW CUSTOMER MAY, 2008 BUSINESS DEVELOPMENT 3. INTERNATIONAL ABRASIVES USA REGULAR CUSTOMER MAY, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS. 4. COLONIAL WEST USA REGULAR CUSTOMER MAY, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS. 5. MIDWEST SUPERIOR USA REGULAR CUSTOMER MAY, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS. 6. JAME R. KUKUNIN ASSOCIATES - USA REGULAR CUSTOMER MAY, 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS. TOUR REPORT NO. 7 USA IRAN - YEAR 2008-09 NAME OF PERSON TRAVELLED : PRAVIN PATEL DESIGNATION OF PERSON TRAVELLED : (PRODUCTION MANGE R) SR NO. NAME OF CUSTOMER TYPE OF CUSTOMER VISITED ON MONTH PURPOSE OF VISIT 1. BLOUNT IC. USA NEW CUSTOMER NOVE MBER 2008 BUSINESS DEVELOPMENT ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 9 2. INTERNATIONAL ABRASIVES USA REGULAR CUSTOMER NOVEMBER 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS. 3. COLONIAL WEST USA REGULAR CUSTOMER NOVEMBER 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS. 4. MIDWEST SUPERIOR USA REGULAR CUSTOMER NOVEMBER 2008 BUSINESS DEVELOPMENT & ATTENDING COMPLAINTS. 5. OMID FANNAR IRAN NEW CUSTOMER NOVEMBER 2008 BUSINESS DEVELOPMENT THE ASSESSEE'S SUBMISSIONS HAVE BEEN CONSIDERED CAR EFULLY AND FOUND ACCEPTABLE. FROM THE ABOVE IT CAN BE SEEN THAT THE ASSESSEE HAS ONLY SUBMITTED DETAILS OF PAYMENTS MADE AND THE TOUR CONDUCTED. IN RESPECT OF PURPOSE OF BUSINESS THE ASSESSEE HAS SUBMITTED ONLY THE GENERAL EXPLANATION SUCH AS BUSINESS DEVELOPMENT ATTENDING COMPLAINTS AND TO EXPLORE THE POSSIBILITI ES OF PURCHASE OF ANY PLANT AND MACHINERY. HOWEVER THE ASSESSEE HAS NOT SUBMITTED A NY PROOF THAT ANY SUCH MEETINGS WERE CONDUCTED WITH SUCH PERSONS WITH WHOM THE ASSESSEE HAS CLAIMED TO HAD MEETING FOR BUSINESS DEVELOPMENT OR HAS ATTENDE D THE COMPLAINTS. NO PROOF OF ANY CORRESPONDENCE, WHATSOEVER WITH SUCH PERSON HAV E BEEN PLACED ON RECORDS. EVEN THE COPIES OF COMPLAINTS RECEIVED AND RECTIFIC ATION THEREOF HAVE NOT BEEN SUBMITTED BY THE ASSESSEE. THE ASSESSEE HAS ALSO FA ILED TO SUBMIT THE COPY OF TOUR REPORT SUBMITTED BY ANY OF SUCH PERSONS WHO HAD UND ERTAKEN FOREIGN TOUR. IN ABSENCE OF SUCH DETAILS/PROOF IT CAN BE SEEN THAT T HE ASSESSEE HAS MISERABLY FAILED TO SUBSTANTIATE ITS CLAIM THAT THE FOREIGN TOUR WAS AN YWAY RELATED FOR BUSINESS PURPOSES. BUT LD. AO WAS NOT AGREED WITH THE CONTENTION OF TH E ASSESSEE. HENCE, HE DISALLOWED THE FOREIGN TRAVEL EXPENSES OF RS.22,57, 434/- DISALLOWANCE OF COMMISSION EXPENSE THE ASSESSEE COMPANY HAS CLAIMED EXPENSES ON ACCOUN T OF 'COMMISSION' AT RS.5692470/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS REQUESTED TO SUBMIT TH E DETAILS OF SAME AND ALSO THE NATURE AND PROOF OF SERVICES BEING RENDERE D BY SUCH PERSONS TO WHOM THE COMMISSIONS WERE CLAIMED TO HAVE BEEN PAID DURING THE YEAR, ALONG WITH THE COPY OF AGREEMENTS ENTERED INTO WITH SUCH PERSONS. IN RESPONSE TO THE SAME THE ASSESSEE VIDE ITS LETTER D ATED 25.11.2011 HAS ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 10 SUBMITTED THE DETAILS OF PERSONS TO WHOM THE COMMIS SIONS WERE CLAIMED TO HAVE BEEN PAID. FROM THE PERUSAL OF SAME IT WAS OBS ERVED THAT THE ASSESSEE HAVE CLAIMED TO HAVE PAID COMMISSION TO TOTAL 36 PE RSONS. FOLLOWING NOTICE WAS SENT TO THE ASSESSEE, AS UNDER: 'DURING THE COURSE OF ASSESSMENT PROCEEDINGS YOU WE RE REQUESTED TO SUBMIT THE NATURE AND PROOF OF SERVICES RENDERED BY THE PERSON S TO WHOM COMMISSIONS WERE PAID AND COPY OF AGREEMENTS WITH SUCH PERSONS. IN R ESPONSE TO SAME VIDE YOUR LETTER 16.09.2011, YOU HAVE SUBMITTED THE COPY OF A GREEMENTS ENTERED INTO WITH SHRI ANIL JAIN, M/S ANIL TRADERS, MS/ BONDED ABRASI VES AGENCIES, M/S KAMDAR METAL CUTTING SOLUTIONS, SHRI NB SHARMA, SHRI PJ TH OMAS, M/S PS ASSOCIATES, M/S PEE DEE CORPORATION, M/S POLY ABRASIVES CORP., SHRI RAJESH PANDEY, M/S RAKSHIT ENTERPRISE, SMT. RENU SHARMA AND TEJAS M SH AH. HOWEVER IN RESPECT OF OTHER PERSONS TO WHOM YOU HAVE PAID COMMISSION DURI NG THE YEAR, NEITHER ANY DETAILS/PROOF OF SERVICES RENDERED BY SUCH PERSONS NO, AGREEMENTS ENTERED INTO WITH SUCH PERSONS HAVE BEEN SUBMITTED. HENCE YOU ARE REQ UESTED TO EXPLAIN TO WHY COMMISSION PAID TO SUCH PERSONS IN RESPECT OF WHOM NEITHER THE DETAILS/PROOF OF SERVICES BEING RENDERED NOR AGREEMENTS HAVE BEEN SU BMITTED SHOULD NOT BE DISALLOWED'. IN RESPONSE TO THE ABOVE THE ASSESSEE VIDE ITS LETT ER DATED 12.12.2011 SUBMITTED AS UNDER: 'IN THIS REGARDS WE ARE ENCLOSING HEREWITH THE STAT EMENT SHOWING DETAILS OF PERSON TO WHOM COMMISSION PAID, ADDRESS, PAN, AMT OF COMMI SSION PAID, IDS DEDUCTED THEREON, & DETAILS OF AGREEMENT AVAILABLE & COPY OF AGREEMENT AVAILABLE. (THERE ARE ONLY 6 PARTY FOR WHICH COMMISSION AGREEMENT IS NOT AVAILABLE I.E. OUT OF TOTAL COMMISSION AMT OF RS.56,92,470/- AMT FOR WHICH COMM ISSION AGREEMENT NOT AVAILABLE IS ONLY RS.66,796/-. WE ARE ALSO ENCLOSIN G HEREWITH THE DETAILS OF CUSTOMER FOR WHICH COMMISSION IS PAID TO THE AGENTS FOR WHIC H AGREEMENT COPY IS NOT AVAILABLE & SALES TO THOSE CUSTOMERS DURING THE YEA R'. 6.4 IT IS ADMITTED FACT THAT THE ASSESSEE DURING TH E COURSE OF ASSESSMENT PROCEEDINGS COULD NOT SUBMIT COPY OF AGREEMENTS IN CASE OF FOLL OWING PERSONS, EVEN THOUGH ENOUGH OPPORTUNITIES WAS ALLOWED TO THEM. HENCE THE ASSESSEE HAS FAILED TO ESTABLISH THAT INDEED THESE PERSONS WERE ENGAGED BY THE ASSESSEE FOR SOME SERVICES. IN ABSENCE OF ANY AGREEMENT EVEN THE BASIS OF PAYME NT OF COMMISSION IS NOT ASCERTAINABLE. FURTHER NO PROOFS OF SERVICES BEING RENDERED BY THESE PERSONS HAVE BEEN SUBMITTED BY THE ASSESSEE. NAME OF PERSON TOTAL AMOUNT (RS.) A. D. VENKITARAM RS. 4145 B. MANOJ J. SINGH RS.18341 ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 11 C. SAIKRISHNA ENTERPRISE RS. 13942 D. SANWARMAL RS.21696 E. SASA INDIA RS. 11024 F. SHIVA SUBRAMANIUM RS. 6047 G. SURYA CHANDRA TRADERS RS. 5543 6.5 THE ASSESSEES EXPLANATIONS HAVE BEEN CONSIDERE D CAREFULLY, FROM THE ABOVE IT CAN BE SEEN THAT THE ASSESSEE HAS FAILED TO SUBM IT ANY DETAILS OR EVIDENCE TO PROVE THE GENUINENESS OF THE PAYMENTS OF SALES COMMISSION , NEED OF SAME AND THE PROOF OF SERVICES RENDERED BY ABOVE REFERRED PERSONS. THE AS SESSEE HAS GIVEN ONLY THE DETAILS OF PAYMENTS MADE AND THE DETAILS OF TDS DEDUCTED ON SAID PAYMENTS BEING MADE. IT IS SETTLED LEGAL PRINCIPLE THAT BURDEN OF PROVING T HAT A PARTICULAR EXPENDITURE HAS BEEN LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FO R THE PURPOSES OF BUSINESS IS ON THE ASSESSEE. THEREFORE, DISALLOWANCE OF COMMISSION AT RS.80,738/ - WAS MADE AGAINST THE ASSESSEE. ADDITION U/S 68 OF THE ACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE WAS REQUESTED TO SUBMIT THE CONFIRMATIONS FROM THE CUST OMERS FROM WHOM THE ADVANCES WERE RECEIVED IN EXCESS OF RS. 1 LAKH. IN RESPONSE TO THE SAME THE ASSESSEE VIDE ITS LETTER DATED 30.11.2011 HAS SUBMI TTED AS UNDER: IN THIS REGARD WE HAVE TO STATE THAT WE HAVE ALREA DY SUBMITTED PARTYWISE DETAILS OF ADVANCES. LEDGER A/C, PAYMENT CONFIRMATION FROM BAN K AND COPY OF INVOICES AGAINST THE ADVANCE RECEIVED IS ATTACHED HEREWITH F OR THE PARTY FROM WHOM ADVANCE IS MORE THAN RS. 1 LACS.' 7.2 THE ASSESSEE HAD NOT SUBMITTED CONFIRMATION FRO M SUCH CUSTOMER M/S HILLCREST GRANITE COMPANY AGAINST WHOM THE ADVANCE RECEIVED H AS BEEN SHOWN AT RS.24,43,389/-. HENCE VIDE LETTER OF THIS OFFICE DA TED 08.12.2011 THE ASSESSEE WAS REQUESTED TO EXPLAIN AS UNDER. 'DURING THE COURSE OF ASSESSMENT PROCEEDINGS YOU WE RE REQUESTED TO SUBMIT THE CONFIRMATIONS FROM THE CUSTOMER FROM WHOM THE ADVAN CES HAVE BEEN RECEIVED IN EXCESS OF RS.1,00,000/-. HOWEVER TILL DATE YOU HAVE NOT SUBMITTED CONFIRMATIONS FROM SUCH PERSONS. IN VIEW OF SAME YOU ARE ONCE AGA IN REQUESTED TO SUBMIT THE ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 12 CONFIRMATION FROM SUCH PERSONS FAILING WHICH THE MA TTER WILL BE DECIDED AS PER FACTS AVAILABLE ON RECORDS'. 7.3 IN RESPONSE TO THE SAME THE ASSESSEE VIDE ITS L ETTER DATED 16.12.2011 HAS SUBMITTED AS UNDER: 'IN THIS REGARDS WE HAVE TO STATE THAT THERE IS ONL Y ONE CUSTOMER 'HILLCREST GRANITE CO. INC' SITUATED AT 1402, OLD MIDDLETON ROAD, ELBE RTON, GA 30635, USA FROM WHOM THE ADVANCE RECEIVED IN EXCESS OF RS.1,00,000/ - AS ON 31 ST MARCH 2009. ASSESSEE HAS ASKED FOR THE BALANCE CONFIRMATION VIA EMAIL COMMUNICATION FROM THE CUSTOMER BUT ASSESSEE IS NOT GETTING ANY REPLY FROM THEIR CUSTOMER. ALSO NOTE THAT THE CUSTOMER IS OVERSEAS CUSTOMER HENCE PERSONAL FO LLOW UP POSSIBLE. FURTHER TO SUPPORT OUR CLAIM IN THIS REGARDS, WE AR E SUBMITTING HEREWITH COPY OF EMAIL THROUGH WHICH CUSTOMER HAS ORDERED FOR THE GO ODS. CONFIRMATION FROM THE BANK ABOUT RECEIPT OF THE ADVANCE, COPY OF CUSTOMER LEDGER FOR THE PERIOD APRIL 2008 TO APRIL 2009 AND COPY OF THE SALES INVOICE. IT MAY BE NOTED THAT THE SUM SO RECEIVED HAS BEEN A DJUSTED AGAINST INVOICE SALES INVOICE RAISED IN SUBSEQUENT YEAR AND THUS OFFERED FOR TAXATION IN SUBSEQUENT YEAR'. ASSESSEES SUBMISSION HAS BEEN CONSIDERED BY THE LD . AO BUT NOT FOUND ACCEPTABLE. THEREFORE, AN ADDITION OF RS.24,5 4,519/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. VALUATION OF CLOSING STOCK DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED THAT THE ASSESSEE HAD SHOWN THE AMOUNT RECIEVABEL ON ACCOUNT OF UNUTILIZED/CLOSING BALANCE ON ACCOUNT OF MODVAT/CENVAT CREDIT UNDER L OAN AND ADVANCES AND THE SAME WAS NOT INCLUDED IN THE VALU E OF CLOSING BALANCE OF STOCK. SINCE THE PROVISIONS OF SECTION 145A OF THE ACT REQUIRES THAT THE TAXES/DUTY/CESS/FEES RELATED TO STOCK NEED TO BE IN CLUDED IN THE VALUE OF CLOSING STOCK, SO ASSESSEE WAS REQUESTED TO EXPLAIN AS UNDER: 'FROM THE PERUSAL OF DETAILS SUBMITTED VIDE YOUR LE TTER DATED 25.11.2011, IT IS OBSERVED THAT YOU HAVE SHOWN FOLLOWING AMOUNTS A S RECEIVABLES FROM EXCISE/SALES TAX AUTHORITIES. ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 13 A. EXCISE DUTY SET OFF RG 23A RS. 64048/- B. EXCISE DUTY SET OFF RG 23C- SUSPENSE RS. 26345 1 /- C. SALES TAX- RECEIVABLE RS. 32584/- D. SERVICE TAX RECEIVABLES RS. 1047530/- IN THIS RESPECT YOU ARE REQUESTED TO EXPLAIN AS TO WHETHER THE SAME ARE INCLUDED IN THE VALUE OF THE CLOSING STOCK OR NOT. IF NOT THEN YOU ARE REQUESTED TO EXPLAIN AS TO WHY THE SAME SHOULD NOT BE INCLUDED I N THE VALUE OF THE CLOSING STOCK AS PER PROVISIONS OF SECTION 145A OF THE ACT. 8.2 IN RESPONSE TO THE SAME THE ASSESSES VIDE ITS L ETTER DATED 16.12.2011 HAS SUBMITTED AS UNDER: 'YOUR GOODSELF HAS ASKED AS TO WHETHER THE CLOSING BALANCE OF EXCISE DUTY SET OFF RG 23A AMOUNTING TO RS.64,048/-, EXCISE DUT Y SET OFF RG 23C -SUSPENSE AMOUNTING TO RS.64,048/-,SALES TAX RECEIVABLE AMOUN TING TO RS.32,584/- AND SERVICE TAX RECEIVABLE AMOUNTING TO RS.10,47,530/- HAVE BEEN ADDED TO THE VALUE OF CLOSING STOCK OR NOT. IN THIS REGARD, WE WOULD LIKE TO CLARIFY THAT SINCE THE ASSESSEE IS FOLLOWING NET METHOD FOR ACCOUNTING FOR EXCISE DUTY AND SALES TAX, IT IS NOT INCLUDING THE CLOSING BALANCE OF VARIOUS TAXES IN I TS VALUATION OF CLOSING STOCK. IT MAY BE NOTED THAT THE TAXES PAID ON PURCHASES AR E NOT BOOKED AS EXPENDITURE SINCE THE SET OFF CREDIT IS AVAILABLE FOR THE SAME. SINCE THESE ITEMS HAVE NOT BEEN DEBITED TO PROFIT & LOSS ACCOUNT, IT CANNOT BE ADDE D TO THE VALUE OF CLOSING STOCK. IN SUPPORT OF OUR CLAIM, WE RELY ON FOLLOWING DECISION S: ACIT VS NARMADA CHEMATUR PETROCHEMICALS LTD. 327ITR 369 (GUJ) CIT VS ENGLISH ELECTRIC CO. OF INDIA LTD. 243 ITR 5 12 (MAD) CIT VS DYNAVISION LTD. 267 ITR 600 (MAD) CIT VS PARRY CONFECTIONERY LTD. 299 ITR 321 (MAD) WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, WE WOULD FURTHER LIKE TO STATE THAT IF YOUR GOODSELF DECIDES TO ADD THE VALUE OF SUCH TAXE S TO THE VALUE OF CLOSING STOCK, THAN SIMILAR ADJUSTMENT SHOULD BE DONE TO THE VALUE OF OPENING STOCK ALSO. THE EXPLANATIONS OF THE ASSESSEE WERE CONSIDERED BY THE LD. AO BUT NOT FOUND ACCEPTABLE AS THE UNUTILIZED CREDIT OF TA XES VIZ. MODVAT/CENVAT IS A KIND OF SUBSIDY AND INCENTIVE GIVEN BY THE GOVERN MENT. IT CANNOT BE TREATED AS ADVANCES GIVEN TO THE GOVERNMENT ON ACCO UNT OF SALES TAX/EXCISE DUTY PAYABLE. IN FACT, MODVAT/CENVAT RECEIVED/CLAIM ED BY THE ASSESSEE ON PURCHASE OF RAW MATERIAL IS BENEFIT GIVEN BY THE GO VERNMENT. IT CAN BE SET ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 14 OFF AGAINST THE LIABILITY OF THE ASSESSEE ON ACCOUN T OF EXCISE DUTY PAYABLE ON THE FINISHED PRODUCT MANUFACTURED BY THE ASSESSEE C OMPANY. HENCE, ADDITION OF RS.14,07,613/- ON ACCOUNT OF VAL UATION OF CLOSING STOCK WAS MADE AGAINST THE ASSESSEE AND TOTAL INCOM E OF THE RS.6,55,65,561/- WAS ASSESSED BY THE LD. AO. 4. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO ALLOWED THE APPEAL OF THE ASSESS EE. 5. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. SO FAR DISALLOWANCE OF RS.2,41,077/- MADE ON ACCOUNT O F DEPRECIATION TO ASSESSEE AT HIGHER RATE ON VEHICLES IS CONCERNED. F ROM THE RECORD, IT IS OBSERVED THAT THE ASSESSEE HAD CLAIMED DEPRECIATION @ 50% ON CERTAIN VEHICLES ACQUIRED BY IT. SINCE, THE SAID VEHICLE WA S NOT REGISTERED BY THE RTO AS COMMERCIAL VEHICLE. IN RESPONSE TO THAT ASSESS EE SAID COMMERCIAL VEHICLE MEANS 'HEAVY GOODS VEHICLE', 'HEAVY PASSEN GER MOTOR VEHICLE', 'LIGHT MOTOR VEHICLE', 'MEDIUM GOODS VEHICLE' AND ' MEDIUM PASSENGER MOTOR VEHICLE' BUT DOES NOT INCLUDE 'MAXI-CAB', 'MO TOR-CAB', 'TRACTOR' AND 'ROAD-ROLLER'. THE EXPRESSIONS 'HEAVY GOODS VEHICLE ', 'HEAVY PASSENGER MOTOR VEHICLE', 'LIGHT MOTOR VEHICLE' 'MEDIUM GOODS VEHICLE', 'MEDIUM PASSENGER MOTOR VEHICLE', 'MAXI-CAB', 'MOTOR-CAB', 'TRACTOR' AND 'ROAD- ROLLER,' SHALL HAVE THE MEANING RESPECTIVELY ASSIGN ED TO THEM IN SECTION-2 OF THE MOTOR VEHICLES ACT. 1988 (59 OF 1988)' AS CAN BE SEEN, COMMERCIAL VEHICLE WOULD INCLUDE LI GHT MOTOR VEHICLE. FOR THIS PURPOSE, AS MENTIONED IN THE NOTE S WE HAVE TO REFER TO THE ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 15 DEFINITION OF LIGHT MOTOR VEHICLE IN SECTION 2 OF T HE MOTOR VEHICLES ACT, 1988. THE RELEVANT DEFINITION IS REPRODUCED HEREUNDER FOR YOUR READY REFERENCE: 'LIGHT MOTOR VEHICLE' MEANS A TRANSPORT VEHICLE OR OMNIBUS THE GROSS VEHICLE WEIGHT OF EITHER OF WHICH OR A MOTOR CAR OR TRACTOR OR ROAD-ROLLER THE UNLADEN WEIGHT OF ANY OF WHICH, DOES NOT EXCEED [7500] KILOGRAMS: AS CAN BE SEEN FROM THE DEFINITION, LIGHT MOTOR VEH ICLE INCLUDES, MOTOR CAT UNLADEN WEIGHT OF WHICH DOES NOT EXCEED 7500 KGS. THEREFORE, FROM THE ABOVE DISCUSSION, IT CAN BE SAI D THAT MOTOR CAR A MOTE HAVING UNLADEN WEIGHT BELOW 7500 KGS. IS ELIGI BLE FOR HIGHER RATE OF DEPRECIATION. THERE IS NO REQUIREMENT TO GET IT REG ISTERED WITH RTO AUTHORITIES AS COMMERCIAL VEHICLE. WE ARE OF THE OP INION THAT THIS GROUND DESERVES TO BE DISMISSED. 5.2 SO FAR ADDITION OF RS.22,57,434/- MADE ON ACCOU NT OF FOREIGN TRAVEL EXPENSES ARE CONCERNED. IN RESPECT OF THIS GROUND L D. AR STATED THAT FOREIGN TOUR WAS FOR THE PURPOSE OF BUSINESS ONLY. ASSESSEE HAS SUBMITTED COPIES OF TRAVELLING BILLS AND BILLS FOR FOREIGN EXCHANGE PUR CHASE AND COPY OF E-MAILS RELATED TO FOREIGN VISIT. LD. AR STATED THAT SIMILAR EXISTENCES WERE ALSO AL LOWED IN THE EARLIER YEARS. WE CAN SEE ASSESSEE HAS SUBMITTED EACH AND E VERY DETAIL PERTAINING TO FOREIGN TOUR AND SAME WAS FOR BUSINESS PURPOSE AND LD. AO AND FURTHER STATED THAT THIS BUSINESS DEVELOPMENT AND ATTENDING COMPLAINTS AND TO EXPLORE THE POSSIBILITIES OF PURCHASE OF ANY PLANT AND MACHINERY ETC. IT IS FURTHER STATED PROFIT OF THE COMPANY IS AFTE R TAX IS RS.3,00,58,558/- AND OUT OF THE SAID PROFIT RS.22,57,434/- WAS INCUR RED ON THE FOREIGN TOUR. ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 16 ON ACCOUNT OF ABOVE OBSERVATION, WE DISMISS THIS G ROUND OF THE APPELLANT. 5.3 SO FAR DELETING THE ADDITION OF RS.80,738/- MAD E ON ACCOUNT OF UNSUBSTANTIATED COMMISSION EXPENSES ARE CONCERNED. IT IS ADMITTED FACT THAT ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEE DING COULD NOT SUBMIT COPY OF AGREEMENTS IN CASE OF FOLLOWING PERSONS. TH E ASSESSEE HAS GIVEN DETAILS OF PAYMENTS MADE AND THE DETAILS OF THE TDS DEDUCTED ON SAID PAYMENTS BEING MADE. LD. AR STATED THAT THESE EXPENSES WERE FOR THE PURP OSE OF BUSINESS OF THE ASSESSEE. RELIANCE IN THIS RESPECT IS PLACED ON THE FOLLOWING DECISION. A. CIT VS. CALCUTTA AGENCY LTD. 19 ITR 191 (SC) AS ASSESSEE HAS GIVEN NAMES AND ADDRESS OF CONCERNE D PERSONS AND TDS WAS ALSO DEDUCTED FROM SAID PAYMENT. THEREFORE, WE HEARD THE LD. DR AND AR AS WELL. IN O UR CONSIDERED OPINION THIS GROUND IS NOT SUSTAINABLE; THEREFORE, WE DISMISS THIS GROUND. 5.4 SO FAR DELETING THE ADDITION OF RS.24,54,519/- MADE U/S.68 OF THE ACT IS CONCERNED. IN REFERENCE TO DETAILS FOR ADVANCES REC EIVED BY APPELLANT MORE THAN RS.1 LACK, THE AO IN THE CASE OF M/S. HILLCRES T GRANITE CO. FOUND ADVANCE OF RS.24,43,389/- AS ON 31/03/2009. THE APP ELLANT FAILED TO GIVE CONFIRMATION FROM THE PARTY AND AO HELD THIS ADVANC E AS UNEXPLAINED CASH CREDIT AND ADDED U/S.68 OF THE ACT. THE APPELLATE D URING APPEAL SUBMITTED SUCH CONFIRMATION AS ADDITIONAL EVIDENCES SINCE THE CUSTOMER IS A FOREIGN ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 17 PARTY. THE APPELLANT FURTHER CONTENDED THAT MONEY I S RECEIVED IN USD THROUGH REGULAR BANKING CHANNEL AS ADVANCE AND APPE LLANT SUPPLIED THE GOODS TO SAID PARTY IN APRIL 2009. SUCH EXPORT WAS DULY EVIDENCED BY BILLS, VOUCHERS AND BANKING TRANSACTIONS WITH NOW A CONFIR MATION WAS FILED WITH LD.CIT. THE AO IN HIS REMAND REPORT CASTED DOUBT AB OUT CERTIFICATE SO PRODUCED. BUT WE ARE AGREE WITH THE CONTENTION OF T HE AR BECAUSE ASSESSEE AS FILED BILL VOUCHERS AND PAYMENT OF FEES THROUGH BANKING CHANNEL. THEREFORE, WE DISMISS THIS GROUND OF APPELLANT. 5.5 SO FAR DELETING THE ADDITION OF RS.14,07,613/- MADE ON ACCOUNT OF VALUATION OF CLOSING STOCK ARE CONCERNED. THE AO OB SERVED FROM THE BALANCE SHEET UNDER THE HEAD LOAN & ADVANCES THE FOLLOWI NG AMOUNTS ON ACCOUNT OF UNUTILIZED & CLOSING BALANCE ON ACCOUNT MODVAT/CENVAT CREDIT AND INVOKED THE SECTION 145A OF THE ACT. I. EXCISE DUTY SET OFF RG 3G 23A RS.64048 II. EXCISE DUTY SET OFF RG 23C (SUSPENCE) RS. 263451 III. SALES TAX RECEIVABLE RS. 32584 IV. SERVICE TAX RECEIVABLE RS.1047530 IN SUPPORT OF THE CASE, LD. AR STATED THAT APPELLAN T HAS FULFILLED THE OBLIGATION BY WAY OF OBSERVATION IN THE AUDIT REPOR T. THE SAME PRACTICE WAS FOLLOWED IN EARLIER YEARS. THEREFORE, IT CANNOT BE SAID THAT APPELLANT IS NOT FOLLOWING THE PROVISION OF SECTION 145A. IN RESPECT OF ITS CONTENTION LD. AR CITED AN ORDER OF COORDINCATE BENCH OF AHMEDABAD IN THE MATTER OF ALPHANIL INDUSTRIES VS. ACIT IN ITA NO.169/AHD/2005 AND 170/AHD/2005 FOR ASST. YEAR 199 9-00 & 2000-01 HAS ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 18 DISCUSSED THE PRINCIPLE RELATED TO VALUATION OF CLO SING STOCK U/S.145A OF THE ACT, WHICH HAS FOLLOWS AS UNDER: '17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE DISPUTE IS REGARDING VALUATION OF CLOSING STOCK IN VIEW OF THE INSERTION OF PROVISIONS OF SECTION 145A OF THE ACT. THE LEARNED ASSESSING OFFICER OBSE RVED THAT THE ASSESSEE HAS NOT INCLUDED THE ELEMENT OF EXCISE DUTY WHICH WAS PAID BY THE ASSESSEE ON HIS PURCHASES OF RAW MATERIAL. IN VIEW OF NON INCLUSION OF THIS E XCISE DUTY IN RESPECT OF WHICH MODVAT CREDIT WAS AVAILABLE TO THE ASSESSEE, ACCORD ING TO THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), INCOME OF RS.2 6,95,884/- WAS UNDERSTATED BY THE ASSESSEE. ON THE OTHER HAND THE CLAIM OF THE ASSESSEE IS THAT BY INCLUSION OF THIS EXCISE DUTY IN THE CLOSING STOCK THERE WILL NO EFFECT IN THE PROFIT AS THE CORRESPONDING AMOUNT WILL ALSO BE THEN-INCLUDED IN THE PURCHASES. THE ASSESSEE IN SUPPORT OF THE ABOVE ARGUMENT RELIED UPAN THE VIEW EXPRESSED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA IN ITS GUIDELINES, W HEREIN IT WAS EXPLAINED THAT FOLLOWING OF EITHER INCLUSIVE METHOD OF ACCOUNTING OR EXCLUSIVE METHOD OF ACCOUNTING WILL NOT HAVE ANY EFFECT ON THE PROFIT D ISCLOSED BY THE PROFIT AND LOSS ACCOUNT. THE ONLY EFFECT OF FOLLOWING INCLUSIVE MET HOD WILL BE THAT THE EXCISE DUTY LIABILITY WILL APPEAR IN THE BALANCE SHEET WHICH WI LL BE ADDED BACK TO THE INCOME OF THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 4 3B TO THE EXTENT NOT PAID BY THE ASSESSEE BEFORE THE DUE DATE OF FURNISHING OF RETUR N OF INCOME UNDER SECTION 139(1) OF THE ACT. THE ABOVE VIEW WAS ALSO EXPRESSED BY TH IS BENCH OF THE TRIBUNAL IN THE CASE OF THE DEPUTY COMMISSIONER OF TAX, CIRCLE-1, B ARODA VS. GUJARAT FLUORO- CHEMICALS LTD. IN ITA NO.3742/AHD/2002 ASSESSMENT Y EA 00 ORDER DATED 28.09.2006. IN OUR CONSIDERED OPINION, THE LOWER AU THORITIES HAVE NOT PROPERLY APPRECIATED THE EFFECT OF SECTION 145A OF THE ACT. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BY WAY OF AN ILLUSTRATION CONC LUDED THAT THERE WILL BE A DIFFERENCE IN THE PROFIT ON FOLLOWING INCLUSIVE AND EXCLUSIVE METHOD OF ACCOUNTING FOR EXCISE DUTY. IN THE ILLUSTRATION CITED IN THE O RDER, THE LD COMMISSIONER OF INCOME TAX(APPEALS) FOUND THE DIFFERENCE AT RS.80/- . ACCORDING TO THE LD COMMISSIONER OF INCOME TAX(APPEALS) IN THE INCLUSIV E METHOD IN THE ILLUSTRATION, THE ASSESSEE'S WORKED OUT TO RS.380/- WHEREAS IN TH E EXCLUSIVE METHOD, THE ASSESSEE'S PROFIT COMES TO RS.300/-. THERE WAS A DI FFERENCE OF RS.80/- IN THE PROFIT. WE ON A CLOSER LOOK AT THE ILLUSTRATION FIND THAT D IFFERENCE HAS OCCURRED DUE TO AN ERROR BY THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) IN NOT CONSIDERING THE EXCISE DUTY EXPENDITURE OF THE ASSESSEE. IT WAS OBS ERVED FROM THE ILLUSTRATION THAT ASSESSEE HAS COLLECTED EXCISE DUTY OF RS.180/- BY U TILIZING THE RAW MATERIAL ON WHICH EXCISE DUTY OF RS.100/- WAS PAID TO THE GOVERNMENT. THUS, THE ASSESSEE WAS LIABLE TO PAY A FURTHER EXCISE DUTY OF RS.80/- TO THE GOVE RNMENT, WHEN THE EXPENDITURE OF RS.80/- IS TAKEN INTO ACCOUNT IN THE ILLUSTRATION, GIVEN FOR INCLUSIVE METHOD THEN THE PROFIT AS PER INCLUSIVE, METHOD ALSO WORKS OUT TO R S.300/- WHICH IS EXACTLY THE SAME AS PER EXCLUSIVE METHOD. FURTHER, THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS)IN THE ILLUSTRATION CITED IN HIS ORDER HA S NOT ACCOUNTED FOR THE AMOUNT OF ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 19 MODVAT UTILISED BY THE ASSESS IN PAYMENT OF EXCISE DUTY IN RESPECT OF RAW MATERIAL NOT UTILISED FOR MANUFACTURING. IN THE ILLUSTRATION THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS SHOWN THAT ASSESSEE HAS UTI LISED AMOUNT OF RS.180/- OUT OF AMOUNT OF RS.200/- OF EXCISE DUTY PAID ON PURCHA SE AGAINST THE EXCISE DUTY LIABILITY OF RS.180/- SALES. HOWEVER, THIS UTILIZAT ION OF RS.180/- WAS ALLOWED TO THE ASSESSEE IN RESPECT OF STOCK WHICH WAS NOT USED FOR MANUFACTURING ALSO TO THE EXTENT OF RS.80/-. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IGNORED THE FACT THAT IF IN FUTURE THE CLOSING STOCK IS NOT UTILISED FOR MANUFACTURING, THEN THE MODVAT CREDIT UTILISED WOULD BE REVERSED AND THE AS SESSEE WOULD BE FURTHER LIABLE TO PAY RS.80/- TO THE GOVERNMENT. IN A NUTSHELL THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ARRIVED AT A WRONG CONCLUSION B ECAUSE OF NOT CONSIDERING THE ASSESSEE'S LIABILITY FOR UTILIZATION OF MODVAT CRED IT IN RESPECT OF UNCONSUMED RAW MATERIAL. THE ISSUE CAN BE LOOKED INTO FROM YET ANO THER ANGLE. SECTION 145A REQUIRES REVALUATION OF NOT INVENTORY ALONE BUT ALS O REQUIRES REVALUATION OF PURCHASE AND SALES. ON REVALUATION OF PURCHASE BY I NCLUDING THE AMOUNT OF EXCISE DUTY IN RESPECT OF WHICH MODVAT CREDIT IS AVAILABLE TO THE ASSESSEE, THE PURCHASE OF THE ASSESSEE WILL INCREASE RESULTING IN CORRESPONDI NG DECREASE IN THE PROFIT OF THE ASSESSEE. THE ASSESSEE'S CONTENTION THAT VALUE OF C LOSING STOCK IS CREDITED IN THE PROFIT AND LOSS ACCOUNT TO SET OFF THE VALUE OF UNC ONSUMED ITEMS OF PURCHASE AND THEREFORE, BOTH SHOULD HAVE SAME BASIS CANNOT BE CO NTROVERTED. THE ONLY EXCEPTION TO THIS THEORY IS THAT WHEN THE MODVAT VALUE IS LES S THAN THE COST THEN EFFECTIVELY UNREALISED LOSS IS ALLOWED AS A DEDUCTION TO THE AS SESSEE ON THE WELL SETTLED PRINCIPLES. IN THE INSTANT CASE, THE LOWER AUTHORIT IES WERE NOT JUSTIFIED IN REVALUING ONLY CLOSING STOCK SO AS TO INCLUDE THE AMOUNT OF E XCISE DUTY PAID ON PURCHASE WITHOUT REVALUING THE CORRESPONDING PURCHASES. WE H AVE GONE THROUGH THE GUIDELINES EXPLAINED BY THE ICAI AND FIND OURSELVES IN AGREEMENT THEREWITH THAT THERE WILL NOT BE ANY EFFECT ON THE PROFIT OF LOSS ARRIVED AT EITHER BY FOLLOWING INCLUSIVE METHOD OF ACCOUNTING OR EXCLUSIVE METHOD OF ACCOUNTING FOR EXCISE DUTY. THE ONLY EFFECT WILL BE THAT THE EXCISE DUTY PAYABL E ON CLOSING STOCK OF FINISHED GOODS WILL BE TO THE EXTENT NOT DEPOSITED WITH THE GOVERNMENT BEFORE THE DUE DATE OF FURNISHING OF RETURN WILL BE ADDED TO THE NCOME OF THE ASSESSEE IN VIEW OF PROVISION OF SECTION 43B OF THE ACT. IN VIEW OF THE DISCUSSIO N MADE HEREINABOVE, IN OUR CONSIDERED OPINION, THERE WILL BE NO EFFECT IN THE TAXABLE PROFIT OF THE ASSESSES BY INCLUDING THE AMOUNT OF EXCISE DUTY PAID ON PURCHAS ES IN THE VALUE OF CLOSING STOCK OF RAW MATERIAL, WHETHER AS RAW MATERIAL OR AS FORM ING PART OF WORK-IN PROGRESS OR FINISHED GOODS. WE THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE IN BOTH THE YEAR UNDER APPEAL AND ALLOW THE G ROUNDS OF APPEAL OF THE ASSESSEE.' AFTER CONSIDERING THE ABOVE JUDGMENT AND ARGUMENTS OF THE LD.AR, WE DISMISS THIS GROUND OF APPEAL OF THE DEPARTMENT. ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 20 6. NOW WE TAKE THE DEPARTMENTS APPEAL IN ITA NO.70 5/AHD/2011 FOR ASST. YEAR 2010-11, ON THE FOLLOWING GROUNDS: I. THE LD. COMMISSIONER OF INCOME-TAX((APPEALS)-XIV, A HMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.3,6 1,615/- MADE ON ACCOUNT OF DEPRECIATION TO ASSESSEE AT HIGHER RATE ON VEHICLES NOT REGISTERED AS COMMERCIAL VEHICLES WITH RTO. II. THE LD. COMMISSIONER OF INCOME-TAX(APPEALS)-XIV, AH MEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.27, 47,361/- MADE ON ACCOUNT OF FOREIGN TRAVEL EXPENSES NOT PROVED TO HAVE BEEN INC URRED FOR THE PURPOSE OF ASSESSEE'S BUSINESS. III. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, A HMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 16 ,79,194/- MADE ON ACCOUNT OF VALUATION OF CLOSING STOCK. IV. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, A HMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 14 ,450/- MADE U/S.14A OF THE ACT. V. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XLV, AHMEDABAD OUGHT TO HAVE U PHELD THE ORDER OF THE ASSESSING OFFICER. VI. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. C OMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD MAY BE SET-A-SIDE AND THAT OF THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 6.2 SO FAR GROUND RELATED TO DELETING THE DISALLOWA NCE OF RS.3,61,615/- MADE ON ACCOUNT OF DEPRECIATION TO ASSESSEE AT HIGH ER RATE ON VEHICLES ARE CONCERNED. WE HAVE ALREADY CONFIRMED ORDER OF THE C IT(A) IN ITA NO.704/AHD/2014. ON THE SAME WE DISMISS THIS GROUND OF APPEAL. 6.3 SO FAR GROUND RELATED TO DELETING THE ADDITION OF RS.27,47,361/- MADE ON ACCOUNT OF FOREIGN TRAVEL EXPENSE ARE CONCERNED. WE HAVE ALREADY GIVEN RELIEF TO THE ASSESSEE IN ITA NO.704/AHD/2014 AND S AME WILL APPLY IN THIS APPEAL ALSO. THEREFORE, WE DISMISS THIS GROUND. 6.4 SO FAR GROUND RELATED TO DELETING THE ADDITION OF RS.16,79,194/- MADE ON ACCOUNT OF VALUATION OF CLOSING STOCK IS CONCERN ED. IN ITA ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 21 NO.704/AHD/2014, WE CONFIRMED THE ORDER OF THE CIT WITH DULY DISCUSSION. SAME WILL APPLY HERE, THEREFORE, THIS GROUND OF DEP ARTMENT IS DISMISSED. 6.5 SO FAR GROUND RELATED TO DELETING THE ADDITION OF RS.14,450/- MADE U/S.14A OF THE ACT IS CONCERNED. THE APPELLANT COMP ANY HAS CALCULATED THE DISALLOWANCE OF RS.37,667/- I.E. @ 0.5% OF RS.75,33 ,508/- (BEING OF AVERAGE VALUE OF INVESTMENT). HOWEVER, NO DISALLOWANCE HAS BEEN MADE IN RESPECT OF INTEREST EXPENSE OF RS.3,18,503/-. SINCE THE SUM OF RS.81,424/- WAS PERTAINING TO TERM LOAN, AS THE COMPANY IS PAYING I NTEREST ON TERM LOAN AND SUCH TERM LOAN HAS BEEN GRANTED FOR SPECIFIC PROJEC T. HENCE INTEREST COST HAVING DIRECT NEXUS WITH THE SAID PROJECT, AND THE REMAINING AMOUNT OF INTEREST WAS OUT OF WORKING CAPITAL LIMITS WHICH HA VE NOT BEEN UTILIZED TO MAKE THE INVESTMENTS. IN SUPPORT OF THE CONTENTION THE APPELLANT RELIED ON RATIO OF RELIANCE UTILITIES & POWER LTD. AND JUSTIFIED ALTERNATIVELY THAT NO PRUDENT BUSINESS PERSON WILL INVEST FOR RETURN OF 6 TO 8% P.A. FROM THE BORROWED FUND HAVING INTEREST RATE OF 12% P.A. CIT(A) OF THE OPINION THA T THE CONTENTION OF APPELLANT THAT THERE IS NO DIRECT AS WELL AS INDIRE CT NEXUS THAT BORROWED FUNDS WERE UTILIZED FOR INVESTMENT. FURTHER FOLLOWI NG RATIO OF RELIANCE UTILITIES & POWER LTD (SUPRA), THE APPELLANT HAS SU FFICIENT INTEREST FREE FUNDS WHICH CAN BE CONSIDERED FOR INVESTMENT. IN OUR CONSIDERED OPINION, LD CIT(A) HAS RIGHTLY D ELETED THE ADDITION OF RS.14,450/-. THEREFORE, THIS GROUND OF DEPARTMEN T IS DISMISSED. 6.6 SO FAR GROUND NO.5 AND 6 ARE CONCERNED. SAME AR E GENERAL AND NEED NOT BE ADJUDICATED. ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 22 7. NOW WE TAKE THE ASSESSEES APPEAL IN ITA NO.334/ AHD/2015 FOR ASST. YEAR 2011-12, ON THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE I T IS MOST RESPECTFULLY SUBMITTED THAT THE LD. CIT(A) HAS ERRED ON FACTS BY CONFIRMIN G THE ADDITION ON ACCOUNT OF DISALLOWANCE OF FOREIGN TRAVEL EXPENSE OF RS.35,15, 007/-. DATED 19/08/2013, THE ASSESSEE WAS ASKED TO FURNISH DETAILS/EXPLANATION/JUSTIFICATION IN RESPECT TO FOR EIGN TRAVELLING EXPENSES. IN RESPONSE TO THE SAME THE ASSESSEE FILED SUBMISS ION DATED 12/09/2013. THE RELEVANT PORTION OF THE SAME IS REP RODUCED AS UNDER: 'DETAILS FOREIGN TRAVELING EXPENSES (POINT NO. 30) THE SAME ARE ENCLOSED FOR YOUR READY REFERENCE. WE ARE SUBMITTING HEREWITH A TABLE SHOWING TOUR WISE DETAILS OF EXPENSES, NAME OF THE PERSON TRAVELING, PLACES VISITED AND PURPOSE OF VISIT. WE ALSO SUBMIT PHOTOCOPY OF T HE PASSPORT OF ALL THE PERSONS WHO HAVE TRAVELED. WE ARE ALSO ENCLOSING TOUR WISE DETAILS OF PARTIES CONTACTED/MET AND COPIES OF ALL EXPENSES VOUCHERS PERTAINING TO EACH TRAVEL. WE ARE ALSO ENCLOSING THE COPY OF EMAIL CORRESPONDENCE WITH FOREIGN PARTIES IN RESPECT OF FOREIGN TRAVEL TO SUBSTANTIATE OUR CLAIM THAT THE TRAVEL WAS DONE FOR THE PURPOSE OF OUR BUSINESS.' THE ASSESSEE HAS SUBMITTED THE DETAILS OF EXPENSES INCURRED ON FOREIGN TOUR AT RS.35,15,007/- IN RESPECT OF FOREIG N TOURS CONDUCTED BY SHRI NIRAV PARIKH, SHRI PRAVIN S. PATEL, PRAMIT DAVE , U MESH DARJI ALONG WITH COPIES OF TRAVELLING BILLS AND BILLS FOR FOREIGN EX CHANGE PURCHASE. HOWEVER THE ASSESSEE HAS NOT SUBMITTED THE PURPOSE AND PROO F THAT SUCH FOREIGN TOUR WAS UNDERTAKEN FOR THE PURPOSES OF BUSINESS. FROM THE ABOVE IT CAN BE SEEN THAT THE ASSESSEE HAS ONLY SUBMITTED THE DETAILS OF PAYMENTS MADE AND THE TOUR CONDUCTED. IN RESPECT OF PURPOSE OF BUSINESS THE ASSESSEE HAS SUBMITTED ONLY THE GENERA L EXPLANATION SUCH AS ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 23 BUSINESS DEVELOPMENT, ATTENDING COMPLAINTS AND TO E XPLORE THE POSSIBILITIES OF PURCHASE OF ANY PLANT AND MACHINERY. HOWEVER THE AS SESSEE HAS NOT SUBMITTED ANY PROOF THAT ANY SUCH MEETINGS WERE CON DUCTED WITH SUCH PERSONS WITH WHOM THE ASSESSEE HAS CLAIMED TO HAVE MEETING FOR BUSINESS DEVELOPMENT OR HAS ATTENDED THE COMPLAINTS. NO PROO F OF ANY CORRESPONDENCE, WHATSOEVER WITH SUCH PERSON HAVE BE EN PLACED ON RECORDS. EVEN THE COPIES OF COMPLAINTS RECEIVED AND RECTIFIC ATION THEREOF HAVE NOT BEEN SUBMITTED BY THE ASSESSEE. THE ASSESSEE HAS AL SO FAILED TO SUBMIT THE COPY OF TOUR REPORT SUBMITTED BY ANY OF SUCH PERSON S WHO HAD UNDERTAKEN FOREIGN TOUR. IN ABSENCE OF SUCH DETAILS/PROOF IT C AN BE SEEN THAT THE ASSESSEE HAS MISERABLY FAILED TO SUBSTANTIATE ITS CLAIM THAT THE FOREIGN TOUR WAS ANYWAY RELATED FOR BUSINESS PURPOSES. LD.AO WAS NOT CONVINCED WITH THE PLEA OF THE ASSESS EE. HENCE, MADE THE ADDITION OF RS. 35,15,007/-. AND SAME WAS CONFIRMED BY THE LD. CIT( A). 8. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. THE APPELLANT COMPANY HAS SUBMITTED THE COPY OF EMAIL C ORRESPONDENCE WITH FOREIGN PARTIES IN RESPECT OF FOREIGN TRAVEL TO SUB STANTIATE THE CLAIM THAT THE TRAVEL WAS DONE FOR THE PURPOSE OF THEIR BUSINESS O NLY. LD AR FURTHER STATED THAT SIMILAR ADDITION WERE MADE IN THE ASSET. YEAR. 2009-10 AND 2010-11 AND SAME WERE DELETED. IN ITA NO.704/AHD/2014 AND ITA N O.705/AHD/2014 WE HAVE ALLOWED THE SIMILAR EXPENSES OF FOREIGN TOU R. THEREFORE, WE ALLOW THIS GROUND OF ASSESSEE. ITA NOS. 704 & 705/AHD/2014 & 334/AHD/2015 ASSESSEE & REVENUE STERLING ABRASIVES LTD. AY : 2009-10, 2010-11 & 2011-12, RESPECTIVELY 24 9. IN THE RESULT, APPEALS FILED BY THE DEPARTMENT I N ITA NOS.704, 705/AHD/2014 FOR ASST YEAR 2009-10 & 2010-11 ARE DI SMISSED AND FILED BY THE ASSESSEE IN ITA NO.334/AHD/2015 FOR ASST. YEAR 2011-12 IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 13/11/2017 SD/- SD/- . . ( ) ( ) ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13/11/2017 **BT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-XIV & 8, AHMEDABAD. 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION- .. 27/10/2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 03/11/20147 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. - .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. DATE OF DESPATCH OF THE ORDER