Dy. CIT., Agra V. M/s Laxmi Transformers & Electricals, Agra

ITA 58/AGR/2010

• Counselvise Citation: 5820314 RSA 2010
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-02-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 12-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: RAKESH JAIN
• Keywords: Capital asset; Depreciation; Condonation of delay

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER & SHRI A. L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 58/AGRA/2010 ASST. YEAR : 2005-06 D.C.I.T., CIRCLE 1, VS. M/S. LAXMI TRANSFORMERS & ELECTRICALS, AGRA. B-8, UPSIDC, SIKANDRA, AGRA. (PAN : AABFL 1150 F) C.O. NO. 07/AGRA/2011 (IN ITA NO. 58/AGRA/2010) ASST. YEAR : 2005-06 M/S. LAXMI TRANSFORMERS & ELECTRICALS, VS. D.C.I.T ., CIRCLE 1, B-8, UPSIDC, SIKANDRA, AGRA. AGRA. (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI A.K. SHARMA, JR. D.R. FOR ASSESSEE : SHRI RAKESH JAIN, C.A. DATE OF HEARING : 13.02.2012 DATE OF PRONOUNCEMENT : 14.02.2012 ORDER PER BHAVNESH SAINI, J.M. : THE DEPARTMENTAL APPEAL AS WELL AS CROSS-OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A)-I, AGRA DATED 15.12.2009 FO R THE ASSESSMENT YEAR 2005-06. 2. WE HAVE HEARD THE REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. THE CROSS-OBJECTION IS TIME BARRED. THE ASSESSEE FILED DETAILED APPLICATION FOR CONDONATION OF DELAY. IN THE CROSS OBJECTION, THE A SSESSEE RAISED TWO GROUNDS, OUT OF WHICH ITA NO. 58/AGRA/2010 & C.O. NO. 07/AGRA/2011 2 GROUND NO. 1 OF THE CROSS OBJECTION IS CONNECTED WI TH GROUND NO. 1 OF THE DEPARTMENTAL APPEAL. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMIT TED THAT SINCE THE MATTER IS ARISING OUT OF THE IMPUGNED ORDER AND THE ASSESSEE CAN SUPPORT THE RES ULTANT GROUND OF THE CROSS OBJECTIONS EVEN WITHOUT FILING THE CROSS-OBJECTION AND THAT DUE TO CHANGE OF COUNSEL, THERE WAS DELAY IN FILING THE CROSS OBJECTION, THE DELAY IN FILING THE CROSS-OBJE CTION MAY BE CONDONED. THE LD. DR HAS NO OBJECTION IF THE DELAY IN FILING THE CROSS-OBJECTIO N IS CONDONED. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES AND THAT THE LD. DR HAS NO OBJECT ION IN CONDONATION OF DELAY, THE DELAY IN FILING THE CROSS-OBJECTION IS CONDONED. 4. ON GROUND NO. 1 OF THE DEPARTMENTAL APPEAL, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS.9,33,864/- MADE ON ACCOUNT OF LOSS D UE TO FIRE. THE ASSESSEE ON GROUND NO. 1 OF THE CROSS-OBJECTION CHALLENGED THE PART OF ADDITION OF RS.4,29,288/- ON THE SAME ISSUE. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT (A) ON ACCOUNT OF DIFFERENCE BETWEEN THE LOSS DUE TO FIRE AS ASSESSED BY THE LOSS ASSESSOR AND AS PER AUDITED BOOKS OF ACCOUNT OF THE ASSESSEE. IT WAS CLAIMED THAT THE DISALLOWANCE WAS MADE WITHOUT EVEN CONSIDERING DIFFERENT ADJUSTMENTS MADE BY THE LOSS ASSESSOR IN ARRIVING AT THE VALUE OF LOSS FOR THE SPECIFIC PURPOSE OF SETTLEMENT OF THE INSURANCE CLAIM. THE ASSESSING OFFICER STATED I N THE ASSESSMENT ORDER THAT THE ASSESSEE HAS DEBITED A SUM OF RS.15,13,920/- TO THE PROFIT AND L OSS ACCOUNT ON ACCOUNT OF LOSS DUE TO FIRE IN THE FACTORY PREMISES. THE ASSESSEE STATED THAT TOTAL LO SS WAS OF RS.30,48,200/-, OUT OF WHICH RS.27,79,200/- WAS ON ACCOUNT OF LOSS IN STOCK. THE VALUE OF SALVAGE WAS RS.5,25,000/-. THUS, THE NET LOSS WAS WORKED OUT TO RS.19,54,200/-, OUT OF WHICH RS.7,81,680/- WAS ELIGIBLE FOR INSURANCE CLAIM. THEREFORE, REMAINING LOSS OF RS.11 ,72,520/- WAS DEBITED TO THE PROFIT & LOSS ACCOUNT ON ACCOUNT OF LOSS OF STOCK. FURTHER, THE LOSS TO THE BUILDING WAS ASSESSED AT ITA NO. 58/AGRA/2010 & C.O. NO. 07/AGRA/2011 3 RS.5,69,000/-, OUT OF WHICH RS.2,27,600/- WAS ELIGI BLE FOR INSURANCE CLAIM. HENCE, THE BALANCE OF RS.3,41,400/- WAS DEBITED TO THE PROFIT & LOSS ACCO UNT ON ACCOUNT OF LOSS TO THE BUILDING. THUS, THE TOTAL LOSS OF RS.15,13,920/- (RS.11,72,520/- FO R STOCK AND RS.3,41,400/- FOR BUILDING) WAS DEBITED TO THE PROFIT & LOSS ACCOUNT. IN THE BALANC E SHEET, UNDER THE HEAD ADVANCES, THE ASSESSEE HAS SHOWN CLAIM RECEIVABLE OF RS.10,09,280 /- COMPRISING RS.7,81,680/- FOR LOSS OF STOCK AND RS.2,27,600/- FOR DAMAGE OF BUILDING. THE CLAIM WAS SETTLED BY THE INSURANCE COMPANY IN SUBSEQUENT YEAR VIDE LETTER DATED 29.03.2006 FOR RS .10,09,807/-. THE ASSESSEE SUBMITTED LETTER OF CHIEF FIRE OFFICER, AGRA BEFORE THE ASSESSING OFFIC ER WHO EVALUATED THE LOSS DUE TO FIRE AT RS.31,00,000/- AND THE ASSESSEE CLAIMED LOSS OF RS. 30,48,200/-. THE ASSESSEE DID NOT HAVE REPORT OF LOSS ASSESSOR APPOINTED BY THE INSURANCE COMPANY . THE ASSESSEE INFORMED THE ASSESSING OFFICER THAT NEW INDIA INSURANCE COMPANY HAD APPOIN TED M/S. A.K. GOVIL AND ASSOCIATES AS INSURANCE SURVEYOR AND LOSS ASSESSOR IN ITS CASE. T HE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD INSURED ITS STOCK FOR RS.80,00,000/- A ND FACTORY BUILDING FOR RS.35,00,000/- FOR THE PERIOD 09.02.2005 TO 08.02.2006 AND 17.07.2005 TO 1 6.07.2006 RESPECTIVELY. THE ASSESSING OFFICER HELD THAT THE REPORT OF THE CHIEF FIRE OFFI CER HAS NO RELEVANCE AND REPORT OF INSURANCE COMPANY IS RELEVANT IN THIS CASE. THE REPORT FROM T HE INSURANCE COMPANY WAS CALLED FOR. THE VALUATION OF STOCK DAMAGED IN FIRE HAS BEEN DISCUSS ED IN THE REPORT. THE SURVEYOR HAS EXCLUDED UNDER INSURANCE @ 22.810%. SALVAGE HAS BEEN VALUED AT RS.5,25,000/-. LOSS ON ACCOUNT OF STOCK HAS BEEN ASSESSED AT RS.10,19,808/-. THE ASSESSOR H AS SHOWN ADJUSTED LOSS AT RS.11,60,049.17 P AND NOTED THAT THE ASSESSEE AGREED TO SUCH ASSESSME NT. AGAINST THIS NET ADJUSTED LOSS, THE ASSESSEE HAS ALREADY RECEIVED INSURANCE AMOUNT OF RS.10,09,2 80/- FROM THE INSURANCE COMPANY AND THE BALANCE OF RS.1,50,760/- ONLY WAS DUE FROM THE INSU RANCE COMPANY. THE ASSESSING OFFICER, THEREFORE, HELD THAT SINCE THE ASSESSEE AGREED FOR ASSESSMENT OF LOSS AT THE AMOUNT ABOVE AND THE ITA NO. 58/AGRA/2010 & C.O. NO. 07/AGRA/2011 4 AMOUNT RECEIVED WAS AT RS.10,09,280/-, THEREFORE, T HE BALANCE OF RS.1,50,769/- IS ONLY ALLOWABLE AS LOSS SUFFERED. ACCORDINGLY, THE ASSESSING OFFICE R ALLOWED THE LOSS OF RS.1,50,767/- AND ADDED BACK THE BALANCE OF RS.13,63152/-. 5. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A) AND EXPLAINED THE DETAILS OF STOCK AND BUILDING BEFORE HER. IT WAS EXPLAINED THA T THE QUANTITY OF TRANSFORMERS FOR UTTAR HARYANA IS 82 IN NUMBER AS PER BOOKS AS ALSO ACCEPT ED BY THE LOSS ASSESSOR. HOWEVER, THE LOSS ASSESSOR HAS TAKEN THE VALUE OF LOSS FOR ONLY 80 TR ANSFORMERS. THEREFORE, FOR TWO TRANSFORMERS, THE CLAIM OF ASSESSEE SHOULD BE ALLOWED. SIMILARLY, FOR REJECTION OF MATERIAL BY THE SUPPLIER, THE ASSESSEE GAVE DETAILED SUBMISSION, WHICH IS NOTED I N THE IMPUGNED ORDER AND THE ASSESSEE CLAIMED THAT LOSS IS ALLOWABLE TO THE ASSESSEE, AS THE TRANSFORMER HAS BEEN DESTROYED. SIMILARLY, THE ASSESSEE EXPLAINED REGARDING VALUE OF THE TRANS FORMERS, THEIR SALE PRICE AND GROSS PROFIT MARGIN AND GIVEN DETAILED REASONS FOR OBJECTING TO THE COST ADOPTED BY THE LOSS ASSESSOR AS AGAINST THE ACTUAL COST NOTED BY THE ASSESSEE. IT W AS, THEREFORE, SUBMITTED THAT THE CLAIM OF THE ASSESSEE SHOULD BE ALLOWED AS AGAINST THE LOSS ESTI MATED BY THE ASSESSOR. THE DETAILED OBJECTION OF THE ASSESSEE TO THE ASSESSORS REPORT WITH REGAR D TO THE STOCK HAVE BEEN NOTED IN PARA 3.6 OF THE APPELLATE ORDER. ULTIMATELY, THE ASSESSEE EXPLAINED THAT THE HYPOTHECATED REDUCTION OF RS.3,01,358/- MADE BY THE ASSESSOR IS LIABLE TO BE IGNORED. WITH REGARD TO BUILDING, THE ASSESSEE HAS TAKEN THE VALUE OF LOSS FOR BUILDING AT RS.5,69 ,000/- BASED ON THE ESTIMATION OF RESTORATION COST WORKED OUT BY M/S. TECHNO ARCH GROUP VIDE THEI R REPORT DATED 25.03.2005 WHO ARE CIVIL ENGINEERS AND INCOME-TAX APPROVED VALUERS AND HAD C ALCULATED SUCH RESTORATION COST AT RS.5,81,350/-. ON THE OTHER HAND, THE ASSESSOR HAS CALCULATED THE RESTORATION COST AT RS.2,59,260/-. THE ASSESSING OFFICER HAS NOT FOUND ANY MISTAKE IN THE ESTIMATION GIVEN BY THE APPROVED VALUER. ITA NO. 58/AGRA/2010 & C.O. NO. 07/AGRA/2011 5 THEREFORE, THE LOSS WORKED OUT BY THE ASSESSEE AT R S.3,09,740/- ON THIS ACCOUNT SHOULD BE ALLOWED AS DEDUCTION. 6. THE SUBMISSIONS OF THE ASSESSEE WERE FORWARDED T O THE ASSESSING OFFICER FOR VERIFICATION. THE ASSESSING OFFICER FILED THE REMAND REPORT AND T HE LD. CIT(A) SUMMARIZED HIS REPORT IN THE APPELLATE ORDER IN WHICH THE ASSESSING OFFICER ACCE PTED THAT THE VALUE OF LOSS SHOULD HAVE BEEN TAKEN TO 82 TRANSFORMERS AS AGAINST 80 TRANSFORMERS . THE ASSESSING OFFICER ALSO ACCEPTED THAT SIMILAR VALUE OF LOSS OF TRANSFORMERS SHOULD BE ALL OWED AS DEDUCTION. THE COST OF TRANSFORMERS WORKED OUT BY THE ASSESSEE WAS FOUND ACCEPTABLE BY THE ASSESSING OFFICER. THE ASSESSEES CONTENTION REGARDING DEAD/SPOILED STOCK WAS ACCEPTE D BY THE ASSESSING OFFICER. THE ASSESSING OFFICER, HOWEVER, CONTENDED THAT THE ASSESSEE COULD NOT SUBMIT ANY EVIDENCE IN SUPPORT OF HIS CLAIM AND THE LOSS DISALLOWED BY THE ASSESSOR ON AC COUNT OF UNDER INSURANCE. 7. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF TH E ASSESSEE IN THE LIGHT OF MATERIAL ON RECORD, DELETED PART OF THE ADDITION. HER FINDINGS IN PARA 3.8 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 3.8 I HAVE CONSIDERED THE RELEVANT FACTS AND RIVAL CONTENTIONS. IN VIEW OF THE FOREGOING DISCUSSION, I HOLD AS UNDER :- A. STOCK :- A. THE APPELLANT IS ENTITLED FOR DEDUCTION OF LOSS TO THE EXTENT ACCEPTED BY ASSESSING OFFICER IN THE REMAND REPORT. B. THE VALUE OF UNDER INSURANCE IS RELEVANT ONLY FO R THE PURPOSES OF INSURANCE CLAIM AND NOT FOR DETERMINING ACTUAL VALU E OF STOCKS LOST IN FIRE. ON THE CONTRARY, THE REDUCTION IN THE VALUE OF ASSESSED LO SS BY THE PERCENTAGE OF UNDER- INSURANCE BY THE ASSESSOR ENDORSES THE FACT THAT TH E LOSS HAD ACTUALLY OCCURRED. ITA NO. 58/AGRA/2010 & C.O. NO. 07/AGRA/2011 6 THE ASSESSOR HAS REDUCED THE ASSESSED LOSS BY 22.81 % ON ACCOUNT OF UNDER INSURANCE CALCULATED IN THE FOLLOWING MANNER :- RS. TOTAL STOCK EXCLUDING REJECTED BY THE BUYER LYING W ITHIN THE FACTORY PREMISES AS ON DATE OF LOSS 10,909,539.43 LESS: DEAD/SOILED STOCKS AT 5% 545,476.97 VALUE AT RISK 10,364,062.46 AS AGAINST THE ABOVE, SUM INSURED WAS BEING 80,00,0 00/-. THUS THE INSURED WAS FOUND UNDER INSURED TO THE EXTENT 22.81 0%. THUS, IT IS EVIDENT THAT THE ASSESSOR HAS NOT DENIE D THE LOSS OF STOCKS BUT HAS MERELY WORKED OUT THE VALUE STOCKS WHICH WAS NO T ELIGIBLE FOR INSURANCE CLAIM. THEREFORE, SUCH LOSS OF RS. 3,01,357.96 IS ALLOWABLE AS IT REPRESENTS ACTUAL LOSS OF STOCKS. TO SUM UP, THE ENTIRE VALUE OF LOSS OF STOCKS AS CL AIMED BY THE APPELLANT AT RS.11,72,520/- IS ALLOWABLE IN PRINCIPLE THOUGH MOD IFIED ACCORDING TO THE INSURANCE CLAIM FINALLY SETTLED. THE RE-COMPUTATIO N IS GIVEN IN THE CONCLUDING PARA ON PAGE 8 OF THIS ORDER. B. BUILDING: IN THIS REGARD, THE ASSESSING OFFICER HAS COMMENT ED THAT LOSS TO CAPITAL ASSET CANNOT BE DEBITED TO THE P&L ACCOUNT AND IS LIABLE TO BE TREATED AS PROVIDED IN SECTION 45A OF THE ACT. THUS, THE ASSE SSING OFFICER HAS NOT REFUTED THE CLAIM OF THE LOSS PER SE BUT POINTED OUT THE APPELL ANTS ERROR IN ITS TREATMENT. VIDE REJOINDER DATED 18.09.2009, THE APPELLANT HAS ADMIT TED THE SAME AND STATED THAT THE SAID AMOUNT REPRESENTS SHORT TERM CAPITAL LOSS WHICH CAN BE SET OFF AGAINST INCOME FROM BUSINESS AS PER SECTION 45(1A) OF THE A CT. HOWEVER, THE APPELLANTS CLAIM IS NOT TENABLE. SINCE ONLY A PART OF THE BUILDING HAS BEEN DESTROYE D IN THE FIRE, THE INSURANCE CLAIM RECEIPT IS LIABLE TO BE TREATED IN THE MANNER AS PRESCRIBED IN SECTION 43(6)(C) OF THE ACT. ACCORDINGLY, THE INCO ME IS COMPUTED AS UNDER :- RETURNED INCOME RS. 35,87,918 ADD: LOSS CLAIMED DUE TO FIRE RS. 15,13,920 RS. 51,01,838 LESS: LOSS BY FIRE TOTAL LOSS (STOCK) 19,54,200 LESS: INSURANCE CLAIM RECD. 10,19,808 LESS: FOR BUILDING 1,50,240 8,69,568 RS. 10,84,632 RS. 40,17,206 ADD: DEPRECIATION CLAIMED RS. 8,07,135 ITA NO. 58/AGRA/2010 & C.O. NO. 07/AGRA/2011 7 RS. 48,24,341 LESS: DEPRECIATION ALLOWABLE AS PER ACT RS. 7,92,111 TAXABLE INCOME SUBJECT TO THE ADDITIONS/DISALLOWANC ES RS. 40,32,230 SUSTAINED IN OTHER GROUNDS OF APPEAL. 8. THE LEARNED DR RELIED ON THE ORDER OF THE ASSESS ING OFFICER AND THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW : 9. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE IN THE ORDER OF THE LD. CIT(A). THE LD. CIT(A) REFERRE D THE DETAILED SUBMISSIONS OF THE ASSESSEE TO THE ASSESSING OFFICER FOR HIS COMMENTS AND THE ASSE SSING OFFICER ACCEPTED PART OF THE CLAIM OF THE ASSESSEE IN THE REMAND REPORT. THE CLAIM ACCEPT ED BY THE ASSESSING OFFICER IN THE REMAND REPORT WAS, THUS, RIGHTLY ACCEPTED BY THE LD. CIT(A ) FOR THE PURPOSE OF DELETING PART OF THE ADDITION. THE LD. CIT(A) ON THE BASIS OF THE MATERI AL ON RECORD PROPERLY APPRECIATED THE ISSUE FOR THE PURPOSE OF CALCULATING THE LOSS SUFFERED BY THE ASSESSEE. SINCE SUBSTANTIAL EVIDENCE HAS NOT BEEN FILED BY THE DEPARTMENT AND NO MATERIAL IS PRO DUCED BEFORE US TO CONTRADICT THE FINDING OF THE LD. CIT(A), WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). SIMILARLY, THE WORKING MADE BY THE LD. CIT(A) FOR T HE PURPOSE OF WORKING OUT THE LOSS TO THE ASSESSEE, THE LD. COUNSEL FOR THE ASSESSEE DID NOT POINT OUT ANY SPECIFIC ERROR IN THE APPELLATE ORDER. IN ABSENCE OF ANY MATERIAL ON RECORD CONTRAR Y TO THE FINDINGS OF THE LD. CIT(A), WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE IN THE ORDER OF LD. CIT(A). WE MAY ALSO MENTION HERE THAT THE ASSESSEE IN THE APPLICATION FOR CONDONATION OF DELA Y IN FILING THE CROSS OBJECTION, HAS MENTIONED IN PARA 2 THAT ADDITION OF RS.4,29,288/-, ON WHICH GROUND NO. 1 ABOVE IS RAISED, THE ASSESSEE DID NOT PREFER ANY SECOND APPEAL JUST TO PURCHASE PEACE AND SAVE ENERGY FROM PROLONGED LITIGATION. ITA NO. 58/AGRA/2010 & C.O. NO. 07/AGRA/2011 8 THE CONDUCT OF THE ASSESSEE IN MENTIONING SUCH FACT S IN THE APPLICATION FOR CONDONATION OF DELAY WOULD CLEARLY SUGGEST THAT THE ASSESSEE WAS NOT SER IOUS ABOUT CHALLENGING THE PART OF THE ADDITION ON THIS ISSUE. CONSIDERING THE TOTALITY OF FACTS AN D CIRCUMSTANCES, WE DO NOT INTEND TO INTERFERE IN THE APPELLATE ORDER. IN THE RESULT, THE GROUND NO. 1 OF THE DEPARTMENTAL APPEAL AND GROUND NO. 1 OF THE CROSS-OBJECTION ARE DISMISSED. 10. ON GROUND NO. 2, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF RS.94,000/- MADE ON ACCOUNT OF UNEXPLAINED PARTNERS CAPITAL. I T IS STATED THAT SHRI SANJAY SINGHAL, PARTNER IN THE ASSESSEE FIRM HAS ADDED RS.94,000/- TO HIS CAPI TAL ACCOUNT, WHICH WAS BY WAY OF LOAN RECEIVED FROM HIS WIFE SMT. SEEMA SINGHAL AT RS.40, 000/- ON 28.08.2004 AND RS.54,000/- ON 14.02.2005. SHE IS ASSESSED TO TAX AND HAS PERMANEN T ACCOUNT NUMBER. IT WAS SUBMITTED THAT THE SOURCE OF CAPITAL INTRODUCED IS EXPLAINED AND WIFE OF THE PARTNER FILED AFFIDAVIT CONFIRMING GIVING AMOUNT TO THE ASSESSEE. THE ASSESSING OFFICER IN TH E REMAND REPORT ACCEPTED THAT THE WIFE OF THE PARTNER IS ASSESSED TO TAX. THE ASSESSEE FILED CASH FLOW STATEMENT EXPLAINING THE AMOUNT SHOWN TO THE REVENUE AUTHORITIES. THE LD. CIT(A) ON PERUSAL OF EVIDENCE AND MATERIAL ON RECORD FOUND THAT SMT. SEEMA SINGHAL HAD ADEQUATE FUNDS TO ADVANCE LO AN TO THE PARTNER OF THE ASSESSEE FIRM, WHICH IS PRACTICALLY ACCEPTED BY THE ASSESSING OFFI CER IN THE REMAND REPORT ALSO. THEREFORE, THE ADDITION WAS DELETED. 11. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE LD. DR MERELY RELIED UPO N THE ORDER OF THE ASSESSING OFFICER AND HAS NOT POINTED OUT ANY INFIRMITY IN THE ORDER OF THE L D. CIT(A). THE PARTNER INTRODUCED CAPITAL IN THE ASSESSEE FIRM. THEREFORE, ONCE THE PARTNER ACCEPTED THE INTRODUCTION OF THE CAPITAL IN THE ASSESSEE ITA NO. 58/AGRA/2010 & C.O. NO. 07/AGRA/2011 9 FIRM, NO SUCH ADDITION COULD BE MADE IN THE CASE OF THE ASSESSEE FIRM. MOREOVER, THE SOURCE OF INTRODUCTION OF THE CAPITAL IS ALSO EXPLAINED. THER EFORE, THE LD. CIT(A) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE AD DITION. THE GROUND NO. 2 OF THE APPEAL OF REVENUE IS, THUS, DISMISSED. 12. ON GROUND NO. 3, THE REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.3,41,751/- ON ACCOUNT OF FOREIGN TRAVELING EXPENSES. THE ASSESSEE CHALLENGED PART OF THE ADDITION MAINTAINED ON THIS ISSUE IN A SUM OF RS.25,000/-. 13. THE LD. ASSESSING OFFICER DISALLOWED THE FOREIG N TRAVELING EXPENSE ON ACCOUNT OF FOREIGN VISIT MADE BY SHRI SANJAY SINGHAL, THE PARTNER OF T HE ASSESSEE FIRM. HE EXPLAINED THE DETAILS OF FOREIGN VISIT BY THE PARTNERS FOR THE PURPOSE OF BU SINESS. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE AND THAT THE ASSESSEE G OT EXPORT ORDERS, CONFIRMED THE PART OF THE DISALLOWANCE OF RS.25,000/- ON ACCOUNT OF PERSONAL ELEMENT IN THE EXPENDITURE AND DELETED THE REMAINING ADDITION. 14. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE AND THE CROSS-OBJECTION OF TH E ASSESSEE. THE LD. CIT(A) ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTL Y CAME TO THE CONCLUSION THAT THE ASSESSEE EXPENDED THE FOREIGN TRAVELING EXPENSE FOR BUSINESS PURPOSE. PERSONAL ELEMENT IN PART OF THE EXPENDITURE, LODGING AND BOARDING EXPENSES WAS ALSO RIGHTLY CONSIDERED BY THE LD. CIT(A) FOR THE PURPOSE OF CONFIRMING THE DISALLOWANCE OF RS.25,000 /-. GROUND NO. 3 OF THE DEPARTMENTAL APPEAL AND GROUND NO. 2 OF THE CROSS-OBJECTION OF ASSESSEE ARE, ACCORDINGLY, DISMISSED. ITA NO. 58/AGRA/2010 & C.O. NO. 07/AGRA/2011 10 15. ON GROUND NO. 4, THE REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.1,57,511/-. THE ASSESSING OFFICER FOUND THAT MOST OF THE PAYMENTS O F EXPENDITURE ARE MADE IN CASH AND SUPPORTED BY SELF MADE VOUCHERS. THE ASSESSING OFFI CER DELETED 1/10 TH OF EXPENDITURE. THE ASSESSEE FILED COMPARATIVE DETAILS OF LAST THREE YE ARS BEFORE THE LD. CIT(A) TO EXPLAIN THAT NET PROFIT OF ASSESSEE HAS INCREASED AS COMPARED TO THE EARLIER YEARS AND THE EXPENSE HAS, HOWEVER, DECREASED. THE LD. CIT(A) CONSIDERING THE EXPLANATI ON OF THE ASSESSEE DELETED THE ADDITION. IN THE ABSENCE OF ANY CONTRARY MATERIAL ON RECORD, WE DO N OT INTEND TO INTERFERE IN THE ORDER OF THE LD. CIT(A). THE SAME IS CONFIRMED AND THIS GROUND OF AP PEAL OF THE REVENUE IS DISMISSED. 16. ON GROUND NO. 5, THE REVENUE CHALLENGED THE DEL ETION OF ADDITION OF RS.18,923/- AND RS.24,336/- MADE ON ACCOUNT OF VEHICLE EXPENSE AND TELEPHONE EXPENSE. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE DELETED THE ADDITIONS. IT WAS EXPLAINED BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAS GOT ADDED 1/5 TH OF THE CAR EXPENSES ON ACCOUNT OF PERSONAL USER OF CAR BY THE PARTNERS AND AS PER PAST PRACTICE. SIMIL ARLY, FOR TELEPHONE EXPENSE, SAME SUBMISSIONS HAVE BEEN MADE. THE LD. CIT(A), THEREFORE, FOUND TH AT SINCE THE ASSESSEE HIMSELF HAS OFFERED FOR DISALLOWANCE IN THE RETURN OF INCOME ON BOTH THE HE ADS, THEREFORE, THE ADDITION HAS BEEN DELETED. 17. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT INTEND TO INTERFERE IN THE ORDER OF THE LD. CIT(A). THE ASSESSEE PLEADED BEFORE THE LD. CIT (A) THAT THE ASSESSEE HAD ALREADY MADE ADDITION IN THE RETURN OF INCOME FOR PERSONAL USER OF CAR AND TELEPHONE AS PER PAST PRACTICE. SINCE THE ASSESSEE HAS MADE DISALLOWANCE IN THE RETURN OF INCOME ITSELF ON BOTH THE HEADS ON ACCOUNT OF ITA NO. 58/AGRA/2010 & C.O. NO. 07/AGRA/2011 11 PERSONAL USER, THEREFORE, FURTHER ADDITION IS UNJUS TIFIED. WE, THEREFORE, DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF REVENUE. SAME IS ACCORDING LY DISMISSED. 18. NO OTHER POINT IS ARGUED. IN THE RESULT, THE DE PARTMENTAL APPEAL AS WELL AS CROSS-OBJECTION OF THE ASSESSEE ARE DISMISSED. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14 TH FEBRUARY, 2012 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY