Milind Gupta, Bhubaneswar V. ITO, Ward-5(2), Bhubaneswar

ITA 382/CTK/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9568 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 04-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: JAGABANDHU SAHUGOUTAM SAHU
• Keywords: Business expenditure; Revenue expenditure
• Section: 43B; 201; 192

Judgement Text

P A G E 1 | 11 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO S . 382 & 383 /CTK/201 7 ASSESSMENT YEAR S : 20 3 1 - 1 4 & 2014 - 15 MILIND GUPTA,N - 2/160, IRC VILLAGE, NAYAPALLI, BHUBANESWAR. VS. ITO, WARD 5(2), BHUBANESWAR PAN/GIR NO. AAUPG 8639 F (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI JAGABANDHU SAHU/GOUTAM SAHU , AR REVENUE BY : SHRI SUBHENDU DUTTA, DR DATE OF HEARING : 08 / 0 8 / 201 9 DATE OF PRONOUNCEMENT : 27 / 0 9 / 201 9 O R D E R PER C.M.GARG,JM THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS BOTH DATED 29.6.2017 OF THE CIT(A) - 2, BHUBANESWAR FOR THE ASSESSMENT YEARS 2013 - 14 & 2014 - 15, RESPECTIVELY. 2. GROUND NO.1 TAKEN IN BOTH THE APPEALS IS GENERAL IN NATURE. 3. GROUND NO.2 OF APPEAL FOR THE ASSESSMENT YEAR 2013 - 14 RELATES TO CONFIRMATION OF DISALLOWANCE U/S.2(24)(X) R.W.S 36(1)(VA) OF THE ACT IN RESPECT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PF OF RS.44,097/ - . 3. BRIEFLY STATED THE FACTS OF THE CASE ARE TH AT THE ASSESSING OFFICER, INTER ALIA , DID NOT ALLOW DEDUCTION FOR EMPLOYEES CONTRIBUTION TOWARDS PF OF ITA NOS. 382 & 383/CTK/2017 ASSESSMENT YEARS : 2031 - 14 & 2014 - 15 P A G E 2 | 11 RS.44,097/ - WHICH WAS DEPOSITED BEYOND THE PERIOD PRESCRIBED IN THE RELEVANT STATUTE BUT BEFORE THE DUE DATE OF FILING THE RETURN U/S.139(1). THE LEARNE D CIT(A) UPHELD THE ASSESSMENT ORDER ON THIS POINT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD OF THE TRIBUNAL. WE FIND THAT THE ASSESSEE HAS DEPOSITED THE EPF AMOUNT OF RS.44,097/ - BEFORE DUE DATE OF FILING OF TH E RETURN U/S.139(1) OF THE ACT. THE ADDITION WAS MADE ON THE GROUND THAT THE EMPLOYEES CONTRIBUTION TO PF WAS NOT DEPOSITED WITHIN THE TIME PRESCRIBED UNDER THE P.F.ACT. LD D.R. RELIED ON THE CIRCULAR NO.22/2015 DATED 17.12.2015. 5. THE CBDT ISSUED CIRC ULAR NO. 22/2015 DATED 17TH DECEMBER 2015 CLARIFYING THAT THE ISSUE IS WELL SETTLED IN SO FAR AS EMPLOYERS CONTRIBUTION IF DEPOSITED ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME, IS ALLOWABLE. HOWEVER, THE CBDT WAS CATEGORICAL IN STATING THAT THE SETTLED POSITION DOES NOT APPLY TO DEDUCTION RELATING TO EMPLOYEES CONTRIBUTION GOVERNED BY SECTION 36(1)(VA). WE FIND THAT THE FOLLOWING DECISIONS OF THE VARIOUS HIGH COURTS ARE IN FAVOUR OF THE AS SESSEE ALLOWING DEDUCTION OF EMPLOYEES CONTRIBUTION PAID BEYOND DUE DATE: (I) CIT VS. HINDUSTAN ORGANIC CHEMICALS LTD. (2014) 366 ITR 1 (BOM) (II) CIT VS. GHATGE PATIL TRANSPORT LIMITED 368 ITR 749 (BOM.) (III) CIT VS. AIMIL LTD. 321 ITR 508 (DEL.) ITA NOS. 382 & 383/CTK/2017 ASSESSMENT YEARS : 2031 - 14 & 2014 - 15 P A G E 3 | 11 (IV) SPECTRUM CONSULTANTS INDIA (P) LTD VS CIT 215 TAXMAN 597 (KAR.) (V) CIT VS. RAJ AGRO INDUSTRIES LTD. 334 ITR 122 (P&H) O (VI) CIT VS. KICHHA SUGAR CO . LTD. 356 ITR 351 (UTTARAKHAND) O (VII) CIT VS. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LTD. 366 ITR 163 (RAJ.) 6 . IN FOLLOWING DECISIONS, THE HONBLE HIGH COURTS STRICTLY INTERPRETED SECTION 36(1) (VA) IN FAVOUR OF THE REVENUE AND DENIED DEDUCTION : (I) POPULAR VEHICLES & SERVICES PVT LTD VS. CIT [2018] 96 TAXMANN.COM 13 (KER.) (II) CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION - [2014] 41 TAXMANN.COM 100 (GUJ.) 7 . CONSIDERING THE MAJORITY VIEW RENDERED BY HONBLE HIGH COURTS O N THE ISSUE OF LATE DEPOSIT OF EMPLOYEES CONTRIBUTION , THE DECISION FAVOURABLE TO THE ASSESSEE SHOULD BE FOLLOWED AS PER THE RATIO LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLES PRODUCT LTD., 88 ITR 192 (SC). 8. IT MAY BE NOTED THAT IN THE CASE OF PCIT VS. RAJASTHAN STATE BEVERAGES CORPORATION LTD. REPORTED IN 84 TAXMAN .COM. 185, THE SUPREME COURT HAS DISMISSED THE SLP FILED BY THE REVENUE AGAINST THE JUDGMENT OF THE HON'BLE RAJASTHAN HIGH COURT IN PR. CIT VS RAJASTHAN STATE BEVERAGES ITA NOS. 382 & 383/CTK/2017 ASSESSMENT YEARS : 2031 - 14 & 2014 - 15 P A G E 4 | 11 CORPORATION LTD ., REPORTED IN [2017] 84 TAXMANN.COM 173(RAJ.), WHEREIN, WHERE IT WAS HELD AS UNDER : - SECTION 43B, READ WITH SECTION 36(1)(VA), OF THE INCOME - TAX ACT, 1961 BUSINESS DISALLOWANCE CERTAIN DEDUCTIONS TO BE ALLOWED ONLY ON ACTUAL PAYMENT (PF AND ESI CONTRIBUTION) HIGH COURT BY IMPUGNED ORDER HELD THAT AMOUNT CLAIMED ON PAYMENT OF PF AND ESI HAVING BEEN DEPOSITED ON OR BEFORE DUE DATE OF FILING OF RETURNS, SAME COULD NOT BE DISALLOWED UNDER SECTION 43B OR UNDER SECTION 36(1)(VA) WHETHER SLP AGAINST SAID IMPUGNED ORDER WAS TO BE DISMISSED H ELD, YES [PARA 2] [IN FAVOUR OF ASSESSEE] 9 . IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE CONTRIBUTION TO EPF WAS DEPOSITED BY THE ASSESSEE BEFORE DUE DATE OF FILING THE RETURN OF INCOME U/S.139(1) OF THE ACT. ALTHOUGH THE CBDT CIRCULAR NO.22/2015 DATED 17.12.2015 PROVIDES THAT THE DEDUCTION RELATING TO EMPLOYEES CONTRIBUTION TO WELFARE FUND ARE GOVERNED BY SECTION 36(1) ( VA) OF THE ACT AS RELIED BY THE LD D.R. IN THE CASE OF CIT VS. BHARAT HOTELS LTD., (2019) 103 TAXMANN.COM 295 (DEL), THE HONB LE DELHI HIGH COURT HELD THUS: 7. THE ISSUE HERE CONCERNS THE INTERPLAY OF SECTION 2(24)(X) OF THE ACT READ WITH SECTION 36(1)(VA) OF THE ACT ALONGSIDE PROVISIONS OF THE EMPLOYEES PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT , 1952 (ESPECIALLY REGULATION 38 OF THE EMPLOYEES PROVIDENT FUNDS SCHEME, 1952) AND THE PROVISIONS OF THE EMPLOYEES STATE INSURANCE ACT , 1948. THE AO HAD BROUGHT TO TAX AMOUNTS WHICH WERE DEDUCTED BY THE EMPLOYER/ASSESSEE FROM THE SALARIE S AND WAGES PAYABLE TO ITS EMPLOYEES, AS PART OF THEIR CONTRIBUTIONS. IT IS NOT IN DISPUTE THAT THE EMPLOYER S RIGHT TO CLAIM DEDUCTIONS UNDER THE MAIN PART OF SECTION 43 - B OF THE ACT IS NOT AN ISSUE. TH E QUESTION THE AO HAD TO THEN DECIDE WAS WHETHER THE AMOUNTS DEDUCTED FROM THE SALARIES OF THE EMPLOYEES WHICH HAD TO BE DEPOSITED WITHIN THE STIPULATED TIME (IN TERMS OF NOTIFICATION/CIRCULAR DATED 19.03.1964 WHICH WAS MODIFIED ON 24.10.1973), AS FAR AS T HE EPF CONTRIBUTION WENT AND THE PERIOD OF THREE WEEKS AS FAR AS THE ESI CONTRIBUTIONS WENT. THE AO MADE A TABULAR ANALYSIS WITH RESPECT TO THE CONTRIBUTIONS DEDUCTED AND ITA NOS. 382 & 383/CTK/2017 ASSESSMENT YEARS : 2031 - 14 & 2014 - 15 P A G E 5 | 11 ACTUALLY DEPOSITED. THE CUMULATIVE EFFECT OF NOTIFICATIONS UNDER THE EMPLOYEES PROVIDENT FUNDS ACT , 1952 AND THE EMPLOYEES STATE INSURANCE ACT , 1948 WAS THAT IN RESPECT OF THE EPF SCHEME CONTRIBUTIONS THE DEDUCTIONS WERE TO BE DEPOSIT ED WITHIN 15 DAYS OF THE SUCCEEDING WAGE PERIOD WITH A GRACE PERIOD OF 5 DAYS; FOR ESI CONTRIBUTIONS THE DEPOSIT WITH THE CONCERNED STATUTORY AUTHORITY HAD TO BE MADE WITHIN THREE WEEKS OF THE SUCCEEDING WAGE MONTH/PERIOD. THE CIT IN THIS CASE CONFIRMED TH E ADDITIONS - MADE BY THE AO BASED ON THE ENTIRE AMOUNTS THAT WERE DISALLOWED. THE ITAT HOWEVER GRANTED COMPLETE RELIEF. 8. HAVING REGARD TO THE SPECIFIC PROVISIONS OF THE EMPLOYEES PROVIDENT FUNDS ACT AND ESI ACT AS WELL AS THE CONCERNED NOTIFICATIONS WHICH GRANTED A GRACE PERIOD OF 5 DAYS (WHICH APPEARS TO HAVE BEEN LATE WITHDRAWN RECENTLY ON 08.01.2016), WE ARE OF THE OPINION THAT THE ITAT S DECISION IN THIS CASE WAS NOT CORRECT. THE ASSESSEE UNDOUBT EDLY WAS ENTITLED TO CLAIM THE BENEFIT AND PROPERLY TREAT SUCH AMOUNTS AS HAVING BEEN DULY DEPOSITED, WHICH WERE IN FACT DEPOSITED WITHIN THE PERIOD PRESCRIBED (I.E. 15 + 5 DAYS IN THE CASE OF EPF AND 21 DAYS + ANY OTHER GRACE PERIOD IN TERMS OF THE EXTENT NOTIFICATION). AS FAR AS THE AMOUNTS CONSTITUTING DEDUCTIONS FROM EMPLOYEES SALARIES TOWARDS THEIR CONTRIBUTIONS, WHICH WERE MADE BEYOND SUCH STIPULATED PERIOD, OBVIOUSLY THE ASSESSEE WAS NOT ENTITLED TO CLAIM THE DEDUCTION FROM ITS RETURNS. 9. IN VIEW O F THIS DISCUSSION, THE REVENUE S APPEAL IS PARTLY ALLOWED. THE AO IS DIRECTED TO EXAMINE THE CONTRIBUTIONS MADE WITH REFERENCE TO THE DATES WHEN THEY WERE ACTUALLY MADE AND GRANT RELIEF TO SUCH OF THEM WHICH QUALIFIED FOR SUCH RELIEF IN TERMS OF THE PREVAI LING PROVISIONS AND NOTIFICATIONS. WE ALSO CLARIFY THAT THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION IN TERMS OF SECTION 36(1)(VA) OF THE ACT. 10. IN VIEW OF ABOVE FINDINGS OF HONBLE DELHI HIGH COURT I N ITS RECENT JUDGMENT (SUPRA), THE ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CONTRIBUTIONS MADE WITH REFERENCE TO THE DATES WHEN THEY WERE ACTUALLY MADE AND GRANT RELIEF TO SUCH OF CLAIM WHICH QUALIFIED FOR SUCH RELIEF IN TERMS OF PREVAILING PROVISIONS OF THE ACT. WE CLEARLY OBVERSE THAT ITA NOS. 382 & 383/CTK/2017 ASSESSMENT YEARS : 2031 - 14 & 2014 - 15 P A G E 6 | 11 THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION S IN TERMS OF SECTION 36(1)(VA) OF THE ACT. ACCORDINGLY, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 1 1 . GROUND NO.3 FOR THE ASSESSMENT YEAR 2013 - 14 AND GROUND NO.2 OF APPEAL FOR THE ASSESSMENT YEAR 2013 - 14 RELATES TO SUSTENANCE OF ADDITION TO THE EXTENT OF 10% BY THE CIT(A) IN RESPECT OF REPAIRS AND MAINTENANCE, TRAVELLING, CONVEYANCE AND DEMONSTRATION CHAR GES AND CARRIAGE INWARD EXPENSES. 1 2 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE PLACED ON THE TRIBUNAL. WE FIND THAT THE ASSESSING OFFICER MADE DISALLOWANCE OF THE TOTAL EXPENSES ON ACCOUNT OF REPAIR & MAINTENANCE @ 30% AND WI TH REGARD TO TRAVELLING, CONVEYANCE AND DEMONSTRATION CHARGES AND CARRIAGE INWARD @ 20%, INTER ALIA, OBSERVING THAT PAYMENTS HAVE BEEN MADE IN CASH ON DAY TO DAY BASIS, WHICH WAS REDUCED TO 10% BY THE CIT(A) IN RESPECT OF THE ABOVE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE RATE OF DISALLOWANCE IS EXCESSIVE. THE MAIN REASON OF DISALLOWANCE BY THE AUTHORITIES BELOW THAT NO THIRD PARTY BILLS ARE AVAILABLE AND ALL THE VOUCHERS ARE SELF MADE. BEFORE US ALSO, LD A.R. COULD NOT FURNISH ANY EXTERNAL VOUCHERS I N SUPPORT OF THE CLAIM. ON BARE PERUSAL OF THE ASSESSMENT ORDER, IT WAS CLEARLY DISCERNIBLE THAT THE PAYMENTS WERE MADE BY OTHER PARTIES ON BEHALF OF THE ASSESSEE AND ONLY CREDIT NOTES ARE ISSUED AND, THEREFORE, THE GENUINENESS OF THE EXPENSES COULD NOT BE VERIFIED AND MOST OF THE VOUCHERS ARE SELF MADE. HOWEVER, THE ASSESSING OFFICER HAS NOT POINTED OUT ANY ITA NOS. 382 & 383/CTK/2017 ASSESSMENT YEARS : 2031 - 14 & 2014 - 15 P A G E 7 | 11 SPECIFIC DEFECTS IN THE BILLS AND VOUCHERS. HOWEVER, THE CIT(A) AFTER TAKING INTO CONSIDERATION ALL THESE ASPECTS AND ALSO CONSIDERING THAT THE DISAL LOWANCE IS EXCESSIVE, REDUCED TO 10% OF THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE. THEREFORE, THE ORDER OF THE CIT(A) IN RESTRICTING THE DISALLOWANCE TO 10% IS FAIR AND REASONABLE AND NEED NOT BE INTERFERED WITH. HENCE, THIS GROUND FOR BOTH THE ASSESS MENT YEARS IS DISMISSED. 1 3 . GROUND NO.4 FOR THE ASSESSMENT YEAR 2013 - 14 AND GROUND NO.3 FOR THE ASSESSMENT YEAR 2014 - 15 RELATES TO CONFIRMATION OF ADDITION OF RS.13,05,649/ - AND RS.14,39,430/ - FOR THE ASSESSMENT YEARS 2013 - 14 & 2014 - 15, RESPECTIVELY. 1 4 . THE FACTS ARE THAT THE ASSESSING OFFICER NOTICED THAT I N THE P&I ACCOUNT, THE ASSESSEE HAS DEBITED A SUM OF RS. 26,11,299/ - FOR A.Y. 2013 - 14 AND RS.28,78,861/ - FOR A.Y. 2014 - 15 UNDER THE HEAD 'ELECTRICITY CHARGES'. THE ASSESSING OFFICER REQUIRED THE ASS ESSEE TO FURNISH THE EVIDENCE IN SUPPORT OF PAYMENT OF THE ELECTRICITY DUES AND TO FURNISH THE COPY OF LEDGER ACCOUNT. THE A.R. OF THE ASSESSEE FILED PHOTOCOPIES OF TWO ELECTRICITY BILLS ONLY EVIDENCING PAYMENT OF RS. 7,09,211/ - AND RS. 7,34,001/ - ON 31.03 .2013 AND 30.04.2013 RESPECTIVELY FOR THE ASSESSMENT YEAR 2013 - 14 . BUT NO OTHER BILLS AS WELL AS DETAILS INCLUDING THE COPY OF LEDGER ACCOUNT IN RESPECT OF THE ABOVE EXPENSES COULD BE FILED BY THE A.R. ON GOING THROUGH THE COPIES OF THE ELECTRICITY BILLS, IT IS FOUND THAT THE BILL WAS RAISED BY THE CENTRAL ELECTRICITY SUPPLY OF ORISSA LTD IN FAVOUR OF ONE M/S. PROTECTION ITA NOS. 382 & 383/CTK/2017 ASSESSMENT YEARS : 2031 - 14 & 2014 - 15 P A G E 8 | 11 MANUFACTURING PVT LTD. THE A.R. WAS ASKED TO EXPLAIN THE REASONS AS TO WHY THE PAYMENT WAS MADE BY THE ASSESSEE AND DEBITED TO THE P&L AC COUNT AS REVENUE EXPENDITURE WHEN THE BILL WAS RAISED IN THE NAME OF SOME OTHER PARTY. IT WAS EXPLAINED BY THE A.R. THAT THE ASSESSEE HAD TAKEN ON RENT THE FACTORY PREMISES OF M/S PROTECTION MANUFACTURING PVT LTD TO RUN ITS MANUFACTURING ACTIVITIES IN THE SAID FACTORY PREMISES. THE A/R WAS ASKED TO FURNISH A COPY OF AGREEMENT SHOWING THAT THE ASSESSEE HAD TAKEN ON LEASE OF THE PREMISES TO RUN ITS BUSINESS ACTIVITY. HOWEVER, THE A.R. COULD NOT FURNISH ANY EVIDENCE IN THIS REGARD. THE ASSESSING OFFICER FOUND THAT M/S PROTECTION MANUFACTURING PVT LTD IS A COMPANY WHERE THE ASSESSEE IS A DIRECTOR. THERE WAS NO AGREEMENT BETWEEN THE ASSESSEE AND THE COMPANY TO SHOW THAT THE ASSESSEE WILL UTILIZE THE FACTORY PREMISES OF - THE COMPANY FOR BUSINESS PURPOSES. FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE , IT IS ALSO SEEN THAT THERE WAS NO PAYMENT OF RENT TO THE ABOVE COMPANY IN RESPECT OF LEASING OUT OF THE PREMISES. THERE WAS ALSO NO EVIDENCE ON RECORD THAT THE ASSESSEE HAD INCURRED SUCH HUGE EXPENSES IN RESPECT OF CONSUM PTION OF ELECTRICITY DURING THE ASST. YEAR 2013 - 14 AND 2014 - 15 . THE ASSESSEE HAD NOT FURNISHED THE COPY OF THE MANUFACTURING ACCOUNT TO SHOW THAT THE ASSESSEE HAD UTILIZED SO MUCH OF POWER SUPPLY TO RUN THE MACHINERIES FOR THE PURPOSE OF MANUFACTURING. FU RTHER, AT COLUMN 28(B) OF THE AUDIT REPORT IN FORM NO.3CD, THE AUDITOR HAS CERTIFIED THAT THERE WAS NO MANUFACTURING ACTIVITY BY THE ASSESSEE AND HENCE, THERE WAS NO MENTION ABOUT THE ITA NOS. 382 & 383/CTK/2017 ASSESSMENT YEARS : 2031 - 14 & 2014 - 15 P A G E 9 | 11 PURCHASE AND CONSUMPTION OF RAW MATERIALS, YIELD OF FINISHED PRODUCTS, C LOSING STOCK FINISHED PRODUCTS ETC. 1 5 . THE AO ALSO FOUND THAT T HE ASSESSEE HAS SHOWN GROSS SALES IN THE P&L ACCOUNT WITHOUT SHOWING ANY MANUFACTURING ACCOUNT FROM WHICH IT CAN BE REASONABLY INFERRED THAT THE ASSSSEE HAD INCURRED SUCH HUGE EXPENSES ON ACCOUNT OF CONSUMPTION OF ELECTRICITY FOR MANUFACTURING PROCESS. FUR THER, IN THE AUDIT E D ACCOUNTS, THE ASSESSEE HAS SHOWN GROSS SALES ON ACCOUNT OF MOULDED FURNITURE TO THE TUNE OF RS. 17,40,870/ - , SALE OF AIR COOLERS TO THE TUNE OF RS. 37,04.700/ - AND SALE OF CHAIR PRODUCTS TO THE TUNE OF R S.20,316/ - TOTALING TO RS.54,65, 886/ - FOR THE ASSESSMENT YEAR 2013 - 14. 1 6 . SIMILARLY, FOR THE ASSESSMENT YEAR 2014 - 15, THE ASSESSEE SHOWN GROSS SALES ON ACCOUNT OF MOULDED FURNITURE TO THE TUNE OF RS. 20,32,700/ - , SALE OF AIR COOLERS TO THE TUNE OF RS. 27,90,500/ - AND SALE OF CHAIR PRO DUCTS TO THE TUNE OF RS. 20,849/ - , TOTALING TO RS.48,46,049/ - . 1 7 . THE ASSESSEE HAS NOT FURNISHING THE CLOSING STOCK OF FINISHED PRODUCTS IN ITS BOOKS OF ACCOUNT, THEREFORE, HE PRESUMED THAT IF THE GROSS SALES OF THESE SALES ARE TAKEN INTO ACCOUNT AS MANUFACTURING ACTIVITY , THEN THE RATIO OF CONSUMPTION OF ELECTRICITY TO MANUFACTURE THESE PRODUCTS INCLUDING THE GROSS PROFIT WILL BE MORE THAN 50% OF THE GROSS SALES. THERE ARE OTHER EXPENSES INVOLVED IN THE MANUFACTURING ACTIVITY SUCH AS LABOUR CHARGES, CONSUMPTION OF RAW MATERIALS, WATER CHARGES, ETC, AND, THEREFORE, HE O BSERVED THAT THE HUGE EXPENSES ON ACCOUNT OF CONSUMPTION OF ITA NOS. 382 & 383/CTK/2017 ASSESSMENT YEARS : 2031 - 14 & 2014 - 15 P A G E 10 | 11 ELECTRICITY IN RESPECT OF MANUFACTURING ACTIVITY IS BASELESS AND UNREASONABLE AND, ACCORDINGLY DISALLOWED 50% OF THE EXPENDITURE INCURRED ON ACCOUNT OF ELECTRICITY NOT BEING UTILIZED FOR THE PURPO SE OF MANUFACTURING ACTIVITY. 1 8 . ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER . HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 1 9 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS PLACED ON THE RECORD OF THE TRIBUNAL. THE CONTENTION OF LD A.R. OF THE ASSESSEE IS THAT THE ESTIMATION MADE BY THE AO IS NOT JUSTIFIED AND THE PRESUMPTION OF THE LD CIT(A) THAT THE ELE CTRICITY EXPENSES IS EXCESSIVE IS WITHOUT ANY MATERIAL ON RECORD. HE ALSO SUBMITTED THAT THE PLANT & MACHINERY USED BY THE ASSESSEE FOR ITS MANUFACTURING ACTIVITIES ARE SECOND HAND AND OLD AND, THEREFORE, THE CONSUMPTION OF LOT OF ELECTRICITY HAS NOT BEEN CONSIDERED IN ITS RIGHT PROSPECTIVE. WHEREAS, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 20 . IT IS ALSO NOT DISPUTED THAT THERE IS NO AGREEMENT BETWEEN THE ASSESSEE AND PROTECTION MANUFACTURING PRIVATE LIMITED FOR SHARING THE ELECTRICITY. DURING THE ASSESSMENT YEARS UNDER CONSIDERATION, THE AUDITOR OF THE ASSESSEE HAS CERTIFIED THAT THERE IS NO MANUFACTURING ACTIVITY UNDERTAKEN BY THE ASSESSEE , HOWEVER, THE CLAIM OF ELECTRICITY EXPENSES SEEMS TO BE EXCESSIVE. ALTHOUGH THE CLAIM OF THE ASSESSEE T HAT THE SAME IS BUSINESS EXPENDITURE AND FULLY VERIFIABLE DULY SUPPORTED BY DOCUMENTS BUT NEITHER BEFORE THE AUTHORITIES BELOW NOR BEFORE US, COULD FURNISH ANY ITA NOS. 382 & 383/CTK/2017 ASSESSMENT YEARS : 2031 - 14 & 2014 - 15 P A G E 11 | 11 POSITIVE MATERIAL ON RECORD TO SUBSTANTIATE THE CLAIM. IN VIEW OF ABOVE, WE FIND NO INFIRMITY IN THE ORDERS OF LOWER AUTHORITIES TO INTERFERE. HENCE, THIS GROUND OF APPEAL IS DISMISSED. 2 1 . IN THE RESULT, APPEAL FOR THE ASSESSMENT YEAR 2013 - 14 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND APPEAL FOR THE ASSESSMENT YEAR 2014 - 15 IS DISMISSED. ORDER PRONOUNCED ON 27 / 0 9 /201 9 . S D/ - SD/ - (LAXMI PRASAD SAHU) ( CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER CUTTACK; DATED 27 / 0 9 /20 9 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : MILIND GUPTA,N - 2/160, IRC VILLAGE, NAYAPALLI, BHUBANESWAR 2. THE RESPONDENT. ITO, WARD 5(2), BHUBANESWAR 3. THE CIT(A) - 2 , BHUBANESWAR 4. PR.CIT - 2, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//