THE SUPREME INDUSTRIES LTD, MUMBAI V. ASST CIT LTU, MUMBAI

ITA 7261/MUM/2014

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0656 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 04-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Depreciation; Additional evidence; Capital receipt; Capital expenditure
• Section: 234B; 14A; 115JB; 201; 143(2); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORESHRI VIKAS AWASTHY, JUDICIAL MEMBER& SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No. 7261/Mum/2014 (A.Y 2010-11) ITA No. 5840/Mum/2019 (A.Y 2011-12) ITA No. 2006/Mum/2017 (A.Y 2012-13) The Supreme Industries Ltd, 612, Raheja Chambers, 213, Nariman Point, Mumbai-400 021 Vs. The ACIT, LTU-2 29 th Floor, World Trade Centre No. 1, Cuffee Parade, Mumbai – 400 005. स्थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACT1344F Appellant .. Respondent ITA No. 4754/Mum/2014 (A.Y 2009-10) ITA No. 7230/Mum/2014 (A.Y 2010-11) The ACIT, LTU-2 29 th Floor, World Trade Centre No. 1, Cuffee Parade, Mumbai – 400 005. Vs. The Supreme Industries Ltd, 612, Raheja Chambers, 213, Nariman Point, Mumbai-400 021 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACT1344F Appellant .. Respondent Appellant by : Nitesh Joshi Respondentby : Sanjeev Kashyap Date of He aring 06.12.2021 Date of P ronounceme nt 04.01.2022 The Supreme Industries Ltd - 2 - आदेश / O R D E R PER AMARJIT SINGH, AM: 4754/Mum/2014, A.Y 2009-10 The revenue has filed this appeal against the order of the CIT(A)-24, Mumbai and the revenue has pressed the ground of appeal No. 2 as under: 2. On the f acts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to restrict the addition to Rs. 16,98,745/- as against the disallowance of Rs. 1,84,26,413/- made by the A.O f or the purpose of computing book prof it as pr the provisions of Sec. 115JB of the Act. 1.1. The facts in brief are that vide ITAT order No. 4754/Mum/2014 dated 20.12.2019, the appeal filed by the revenue was adjudicated. Subsequently, the revenue has filed the Miscellaneous Application (MA) vide MA No. 91/Mum/2021, stating that ITAT vide above mentioned order had not adjudicated the ground of appeal No. 2 of the Revenue, pertaining to adding of disallowance made u/s 14A of the Income Tax Act, 1961 (in short „the Act‟) for computing book profit u/s 115JB of the Act. Thereafter, ITAT vide order dated 06.08.2021 allowed the MA of filed by the revenue and recalled the order dated 20.12.2019 to adjudicate the second ground of appeal The Supreme Industries Ltd - 3 - pertaining to adding of disallowance 14A of the Act for computing the book profit u/s 115JB of the Act. 1.2 We have heard both the parties and perused the material available on record. During the course of assessment, the A.O has added an amount of Rs. 1,84,26,413/- disallowed u/s 14A of the Act for computing the book profit u/s 115JB of the Act. The Ld. CIT(A) has restricted the addition to the extent of Rs. 16,98,745/-. During the course of appellate proceedings before us the Ld. Counsel for the assessee contended that as per the ITAT Special Bench Delhi decision in the case of ACIT Vs. Vireet Investments Pvt Ltd, 165 ITD 27 (Delhi Trib), the disallowance made u/s 14A of the Act cannot be added while computing the book profit u/s 115JB of the Act. 1.3 Heard both the sides on this issue and perused the decision of ACIT Vs. Vireet Investments Pvt. Ltd (Supra), wherein held that disallowance made u/s 14A cannot be added for computing the book profit u/s 115JB of the Act. Since the issue on hand being squarely covered following the decision of ACIT Vs. Vireet Investment Pvt. Ltd. as supra, do not find any force in the ground of appeal of the revenue, therefore the same stands dismissed. The Supreme Industries Ltd - 4 - 1.4 In the result, the appeal raised by the revenue is dismissed. 2006/Mum/2017, A.Y 2012-13 2. The assessee has filed the appeal against the order of the Ld. CIT(A)-1, Mumbai. The assessee has not pressed the ground of appeal Nos. 2, 3(a) & 3(b). The ground of appeal No. 5 is general in nature not required any adjudication. The effective grounds of appeal Nos. 1 (a) and 4 are as under: 1.(a) The Ld. CIT(A) erred in law in not giving direction to the A.O to give consequential eff ect in assessment year under appeal in respect of claim of depreciation to the tune of Rs. 2,43,19,289/- while computing the taxable total income under the normal provisions of the Act af ter considering the outcome of appeals f or the earlier assessment year. 4(a). The Ld. CIT(A) erred in law in upholding the action of the AO in rejecting the additional claim of the appellant that the industrial promotion subsidy (IPS) received amounting to Rs. 33,90,28,500/- is capital in nature on the ground that IPS is ref und of VAT/CST and waiver of electricity duty and hence is revenue in nature. (c) The appellant submits that IPS subsidy has been granted for getting up of new units in backward areas with a view of intensif ying and accelerating the process of dispersal of industries to the less developed region and with the object of generating employment opportunities in the state of The Supreme Industries Ltd - 5 - Maharashtra particularly in backward areas and hence, be regarded as capital in nature and not eligible to tax. 2.1 The facts in brief are that the return of income declaring income of Rs. 29,71,70,880/- and showing book profit made u/s 115JB of the Act of Rs. 3,16,93,39,678/- was filed on 24.11.2012. The return of income was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 25.08.2013. During the course of assessment the A.O observed that on comparison of depreciation claimed by the assessee during the previous year vis-à-vis allowable on the basis of WDV worked out as per assessment orders of the earlier years, the assessee is entitled for depreciation amounting to Rs.87,44,46,212/- as against the depreciation amounting of Rs. 89,87,65,502/- claimed in the return of income. Consequently, the assessee‟s claim of depreciation to the tune of Rs.2,43,19,289/- was disallowed and added back to the total income. 2.2 Before the Ld. CIT(A) the assessee has submitted that A.O has not computed the depreciation as per the written down value of the assets, after giving effect to the order of the earlier years. The ld. CIT(A) has not issued any direction to the A.O and simply stated that the assessee would be free to take recourse to the relevant The Supreme Industries Ltd - 6 - provisions of the Act, once the orders of the earlier years attain finality. 2.3 We have heard both the parties and perused the material available on record. During the course of assessment proceedings the A.O has neither granted the depreciation after taking into consideration of the actual written down value of the assets nor disprove the working of computation of depreciation claimed by the assessee in its submission. The ld. CIT(A) has also not issued specific direction to the A.O for allowing correct amount of admissible depreciation to the assessee. In the light of the above facts, we are of considered view that the A.O should provide depreciation on the basis of actual written down value of the assets, therefore we restore this issue to the file of the A.O for providing depreciation on the basis of written own value after verification and examination of the supporting details and information submitted by the assessee. Therefore this ground of appeal raised by the assessee is allowed for statistical purposes. 2.4 Ground of appeal No. 4 with respect of addition of the subsidy amount received amounting to Rs. 33,90,28,500/- treating the same as Revenue in nature. The Supreme Industries Ltd - 7 - During the course of assessment proceedings the A.O noticed that the Govt of Maharashtra has granted subsidy to the assessee company in terms of Package Scheme of Investment 2001 to set up project in the notified industrially backward districts of the state. The A.O stated that there was no nexus between the subsidy granted and the capital cost of the project therefore the subsidy amount was added to the total income of the assessee by treating the same as of the nature of revenue receipt. 2.5 Aggrieved, assessee has filed appeal before the Ld. CIT(A). The CIT(A) has rejected the appeal of the assessee, holding that nowhere in the scheme, it was mentioned that subsidy was pertained to the capital cost of the project. 2.6 During the course of appellate proceedings before us the Ld. Counsel contended that assessee has set up the project in the backward district of Maharashtra, Gadegaon Vill, Jalgoan Dist in accordance with the package scheme of 2001 of Maharashtra. It is further contended that the scheme provides for substantial incentives to the industries for setting up projects in notified backward districts of Maharashtra. It was further submitted that in accordance with the scheme the assessee was entitled to subsidies incentives mainly The Supreme Industries Ltd - 8 - annual refund comprising of VAT and Central Sales Tax (CST) and electricity duty exemption. The Ld. Counsel for the assessee has also placed reliance on the following decisions; “1. Kirloskar Oil Engines Ltd [2015], 55 Taxmann.com 96 (Bombay)” 2. Chaphalkar Brothers Pune, [2017], 88 taxmann.com 178(SC). 3. LG Electronics India (P) Ltd, [2017], Delhi Trib 2.7 On the other hand, the LD DR has relied on the order of the lower authorities. 2.8 We heard both the parties and perused the material available on record. During the year under consideration, the assessee received subsidy from Government of Maharashtra which was claimed exemt on the ground that the same was capital innature. The A.O was of the view that amount of subsidy was not granted with reference to the assets acquired and treated the subsidy amount as revenue receipt. During the course of assessment and appellate proceedings before the A.O and Ld. CIT(A) the assessee has specifically submitted that it has set up project in the notified backward area of Maharashtra in accordance with the package scheme of Govt of Maharashtra. In accordance with the scheme, the The Supreme Industries Ltd - 9 - assessee has received subsidy from Govt of Maharashtra which was claimed exempt on the ground that the same was capital in nature. In the light of the facts and material placed on the record it is observed that purpose of the subsidy was to provide incentives for setting up projects in backward areas of Maharashtra and for generation of employment and the benefit of the scheme was available to the new units. Therefore, we consider that the object of the subsidy scheme was to enable the assessee to set up a new unit which was clearly in the nature of capital receipt. Had it been object of the assessee to run the business more profitably then the receipt was to be revenue in nature. With the assistance of Ld. Representatives, we gone through the decision of Hon‟ble Bombay High Court in the case of Kirloskar Oil Engines Ltd, (supra), wherein it is held as under: “Section 4 of the IT Act, 1961 income Chargeable as assessment year 1997-98 special capital incentive given to assessee by state government to enable assessee to set up a new unit in state would be capital receipt.” In the case of Chapalkar Brothers, Pune (supra) the Hon‟ble Supreme Court held that since the object of incentive scheme was to encourage and development of multiple theatre complexes incentives would be capital in nature and not revenue receipt. In the case of LG The Supreme Industries Ltd - 10 - Electronics India (supra) the Special Bench of ITAT Delhi held that the assessee‟s receipts from State Govt. to the extent of subsidy under package scheme of incentive, 2001 for accelerating flow of investments in industries in state, i.e for expansion of industries and also to create employment opportunities was not form of exemption from payment of taxes on increased turnover and from payment of electricity duty such subsidy receipts assumed character of capital receipt irrespective of forum in which it was disbursed. 2.9 In the light of the above facts and findings it is clear that in the case of the assessee the project for various plastic product with large capacities was set up in notified backward area of Maharashtra in accordance with the package Scheme of Incentives-2001 of Maharashtra Government. The main object of the scheme was to intensifying and accelerate the process of dispersal of industries in the less developed region, coupled with the object of generating employment opportunities in backward areas. Therefore, we consider that the decision of the Ld. CIT(A) is not justified. Accordingly, this ground of appeal is allowed. 2.10 In the result, the appeal filed by the assessee is partly allowed for statistical purposes. The Supreme Industries Ltd - 11 - 7261/Mum/2014, A.Y 2010-11 & 7230/Mum/2014, A.Y 2010-11 3. These are the cross appeals filed by the assessee as well as the revenue against the common order of the CIT(A)-24, Mumbai. 3.1 The issues involved in both the appeals are similar and identical hence they are clubbed and heard together. 3.2 As regards the ground of appeal of the assessee 1(a) & (b) and revenue ground of appeal No. 1 with regard to upholding action of the A.O by disallowing a sum of Rs. 16,83,942/- under Rule 8D(2)(iii) of the Act, during the course of assessment the A.O noticed that assessee has received huge dividend of Rs. 3,38,12,925/- during the year under consideration, however assessee has not apportioned any expenses incurred for earning this exempt income. Therefore, after examination of the return of income and the submissions of the assessee the A.O stated that he was not satisfied with regard to correctness of the claim of expenditure made by the The Supreme Industries Ltd - 12 - assessee and computed disallowance u/s 14A r.w.r 8D of the Act to the extent of Rs. 1,16,44,129/- 3.3 Aggrieved, assessee has filed an appeal before the CIT(A). The Ld. CIT(A) after considering the relevant material and evidences found that assessee has not used borrowed funds for making investments on which it has earned exempt income. The Ld.CIT(A) noticed that assessee had used its own interest free funds for making investments on which the dividend income was earned. Therefore, the Ld. CIT(A) had deleted the disallowance of entire interest made by the A.O under section 14A r.w.r 8D of the I.T. Rule, however restricted the disallowance to the tune of Rs. 16,83,942/- under Rule 8D(2)(iii) of the Act, after taking into consideration the nature of investment and the administrative support required to manage the investment etc. 3.4 During the course of appellate proceedings before us, the Ld. Counsel for the assessee has mainly contended that the A.O has not made any satisfaction before making disallowance u/s 14A r.w.r 8D of the Act as required u/s 14A(2) of the Act. 3.5 On the other hand, the Ld.DR has supported the orders of the A.O. The Supreme Industries Ltd - 13 - 3.6 We heard both the parties and perused the material available on record. During the course of assessment the A.O noticed that the assessee has earned huge dividend income to the amount of Rs. 3,38,12,925/- on which the assessee has not made any apportion of any expenses incurred for earning this exempt income. Therefore, after applying the provisions of Sec. 14A r.w.r 8D the A.O has made disallowance of Rs. 1,16,44,189/- and added to the total income of the assessee. The Ld. CIT(A) has deleted the addition except sustaining of Rs. 16,83,942/- under Rule 8D(iii) after considering that assessee has used its own interest free funds for making investment on which exempt income was earned. The ld. CIT(A) has sustained the aforesaid disallowance up to administrative expenses after taking into consideration the nature of investment activities of the assessee company which required administrative support to the manage of investment. We have taken into consideration the contention of Ld. Counsel that as per Sec. 14A(2) r.w.r 8D the A.O needs to record the satisfaction with correctness of the claim made by the A.O. We considered that recording of satisfaction is sine qua non for invoking Rule 8D, however it does not specify any particular manner in which such satisfaction ought to be recorded by the A.O. In the case of the assessee it has earned dividend income of Rs. 3,31,29,825/-, however, it has not made any disallowance The Supreme Industries Ltd - 14 - under administrative expenditure for earning the exempt income. Under the circumstances when the assessee has earned huge dividend income but not shown any expenditure for managing the investment the A.O after examination of the return of income in para 5.1 of the assessment order has categorically stated that he was not satisfied with regard to the correctness of claim of expenditure made by the A.O and provision of Rule 8D of the IT Rules was invoked. Looking to the above facts and circumstances we consider that Ld. CIT(A) has rightly restricted the disallowance to the extent of Rs. 16,83,942/- under Rule 8D(2)(iii) towards administrative expenditure for managing the different kind of investment and administrative support required for such investment etc. In the light of the above facts and findings we do not find any merit in the appeal of the revenue and appeal of the assessee therefore both the grounds i.e. assessee and revenue are dismissed. 3.7 As regard the ground of appeal No. 1(c) of the assessee and ground of appeal No. 2 of the revenue, the Ld. CIT(A) has restricted the addition of Rs. 16,83,942/- as against the disallowance of Rs. 1,16,44,129/- made by the A.O for the purpose of computing the book profits as per the provision of Sec. 115JB of the Act. The Supreme Industries Ltd - 15 - 3.8 We heard both the parties and perused the material on record. We consider that the Special Bench of the ITAT Delhi in the case of ACIT Vs. Vireet Investments Pvt. Ltd (Supra) held that such disallowance cannot be added for computing the book profit u/s 115JB of the Act. Therefore, we direct the A.O to exclude the some of Rs. 16,83,942/- from computing the book profit under Section 115JB of the Act. Accordingly, the ground of appeal of the assessee on this issue is allowed and the ground of appeal of the revenue is dismissed. 3.9 Ground of appeal No. 2 of the assessee with regard to disallowance of commission of Rs. 1,32,99,794/- u/s 40(a)(ia) of the Act. During the course of the assessment the A.O noticed that the assessee had claimed deduction of Rs. 1,32,99,714/- on account of provision of commission to Ganapati Distributors, however, examination of details filed during the course of assessment the A.O observed that aforesaid commission was paid by the assessee to 8 persons on the basis of letter from Ganapati Distributors. The A.O stated that these 8 persons have not rendered any services to the assessee to whom the commission was paid and the services were rendered only by M/s Ganapati Distributors. The Supreme Industries Ltd - 16 - 3.10 Therefore the A.O has disallowed the commission paid by the assessee of Rs.1, 32,99,714/- and added to the total income of the assessee. The assessee has filed the appeal before the CIT(A), the Ld. CIT(A) has dismissed the assessee‟s appeal holding that the assessee has not produced any evidences to substantiate the claim for rendering the services by all 8 persons. 3.11 During the course of appellate proceedings before us the Ld. Counsel for the assessee contended that the A.O has not asked the assessee to produce the additional evidences of rendering of services by the other 8 persons to whom the commissions were paid by the assessee. The Ld. Counsel has also filed the paper book comprising details and copies of documents filed before the lower authorities along with the additional evidences pertaining to memorandum of understanding between the M/s Ganapati Distributors and other 8 persons, the copy of acknowledgement of filing of return of income along with computation of total income etc. 3.12 On the other hand, the Ld. DR relied on the order of the lower authorities. 3.13 We heard the rival contentions and perused the material available on record. Since the A.O has not specifically asked the assessee to produce the additional The Supreme Industries Ltd - 17 - evidences of rendering of services by other 8 persons, therefore to decide the issue on merit we have admitted the additional evidences filed by the assessee as placed in paper book. In the light of the above facts and findings we restore this issue to the file of the A.O for deciding the same denovo after verification and examination of the additional evidences filed by the assessee. Accordingly, this ground of appeal of the assessee is allowed for statistical purposes. 3.14 Ground of appeal No. 3 with regard to disallowance of expenditure incurred for concretization of road as capital expenditure. During the course of assessment the A.O noticed that assessee has claimed deduction of expenses of Rs. 1,22,59,924/- on concretization of existing tar road and claimed the same as revenue deduction while computing the total income. The A.O was of the view that assessee had incurred huge expenditure which had charged the structure of the road and provided enduring benefit to the assessee. Therefore, the A.O has disallowed the assessee‟s claim for treating the expenditure as revenue expenditure. The A.O has treated the same as capital expenditure and added to the total income of the assessee and provided depreciation @ 10% on the aforesaid expenses. The Supreme Industries Ltd - 18 - 3.15 Aggrieved, the assessee has filed appeal before the CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee. 3.16 During the course of appellate proceedings before us, the Ld. Counsel for the assessee has contended that expenditure were incurred towards repairing of the existing road, and no new road had been constructed. The Ld. Counsel has also placed reliance on the decision of the Hon‟ble Bombay High Court in the following cases: “1. Venkateswara Hatchery (P), Ltd, [1996], 86 taxman 235, AP. 2. Chemaux Ltd, 1994, 74 taxman 201 (BOm)” 3.17 On the other hand the Ld. DR supported the order of the lower authorities. 3.18 We have heard both the parties and perused the material available on record. During the financial year relevant to the assessment year under consideration the assessee has incurred expenditure to the extent of Rs. 1,22,59,924/- on concretization of tar road and claimed the expenditure as revenue expenditure. However, the A.O has treated the said expenditure as a capital expenditure and added to the total income of the assessee. It is undisputed fact that the assessee has not The Supreme Industries Ltd - 19 - constructed any new road during the year and it has incurred the expenditure for concretization of the existing road for its maintenance. Therefore no new asset was brought into existence by the assessee and object of the said expenses was for proper maintenance of the existing road. We have also perused the judicial pronouncement referred by the Ld. Counsel in the case of Cemaux Ltd, (supra), wherein the Hon‟ble High court of Bombay has held that the assessee company incurred expenses on repairs of approach road and resurfacing of katcha roads inside its factory premises and the same was allowable as revenue expenditure. In the case of CIT Vs. Venkateswara Hatchery (supra) 3 the Hon‟ble High Court of Andhra Pradesh held that the crucial fact to be noted that the expenditure was incurred not for laying new roads but for improving the existing one. In the light of the above fact and judicial findings, we considered that the decision of the Ld. CIT(A) is not justified therefore we direct the A.O to allow the deduction as revenue expenditure and withdraw the depreciation already allowed to the assessee. Accordingly, this ground of appeal of the assessee is allowed. 3.19 As regards the ground of appeal No. 4 with regard to setting up of a new unit in a backward area, the facts and circumstances in this appeal are identical to ITA The Supreme Industries Ltd - 20 - 2006/Mum/2017, A.Y 2012-13, therefore, the decision rendered at para 2.3 to 2.9 would apply mutatis mutandis for this case also. Accordingly, we allow this ground of appeal of the assessee. 3.20 As regards ground of appeal No. 5 pertains to levying of interest u/s 234B of the Act, in this regard we considered that levying of interest is mandatory as per the provisions of law, therefore we dismiss the ground of appeal as infructuous. 3.21 In the result the appeal filed by the assessee is partly allowed and appeal of the revenue is dismissed. 5840/Mum/2019, A.Y 2011-12 4. The assessee has filed the appeal against the order of the CIT(A)-1, Mumbai. 4.1 As regards ground of appeal No. 1, with regard to disallowing 0.5% of average investment under Rule 8D(2)(iii) of the Act, the facts and circumstances in this appeal are identical to ITA 7261/Mum/2014, A.Y 2010- 11, therefore, the decision rendered at para 3.2 to 3.6 of this order would apply mutatis mutandis for this case also. Accordingly, we dismiss this ground of appeal of the assessee. The Supreme Industries Ltd - 21 - 4.2 As regards ground of appeal No. 2, with regard to capitalizing expenditure incurred for concretization of tar road, the facts and circumstances in this appeal are identical to ITA 7261/Mum/2014, A.Y 2010-11, therefore the decision rendered at para 3.12 to 3.15 would apply mutatis mutandis for this case also. Accordingly, we allow this ground of appeal of the assessee. 4.3 Ground of appeal No. 3 with regard to the disallowance of Rs. 19,76,169/- as bogus purchases. During the course of assessment the A.O stated that the assessee has made purchases from M/s M/s Heta Sales Pvt Ltd, to the tune of Rs. 19,76,169/-. The A.O has treated these purchases as bogus purchases on the basis of information received from DGIT (Inv), Mumbai that the said party was listed in the Hawala parties. Aggrieved, assessee has filed an appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal of the assessee. 4.4 During the course of appellate proceedings before us, the Ld. Counsel for the assessee contended that the assessee has submitted copies of bills for purchase of material, delivery challan for the supplying of purchased The Supreme Industries Ltd - 22 - material placed at page No. 123 to 129 of the paper book. He has also submitted copies of bank statement and details of payments made through account payee cheque to the parties. He further contended that A.O has treated the purchases as bogus without considering the aforesaid documents and evidences. It was also submitted that by treating the M/s Heta Sales Corp Ltd as bogus party would not automatically amount to treat the transaction entered into by the assessee as also bogus. 4.5 On the other hand the LD. DR supported the order of the lower authority. 4.6 We heard both the sides and perused the material available on record. During the course of assessment the A.O has treated the purchases made by the assessee from M/s Heta Sales Pvt Ltd, bogus transactions on the basis of information available with the DGIT (Inv), Mumbai that said party was listed as bogus party. In this regard we observe that assessee has submitted the revelent details i.e purchase bills, details of delivery challan for the purchases made, payment made through account payee cheque etc as evidences for the genuineness of the transactions made by the assessee with the said party. However the A.O has not disproved the above referred relevant supporting evidences produced by the assessee in support of the purchase transaction. It is also The Supreme Industries Ltd - 23 - observed that A.O has also not proved that there was no sales made against the aforesaid purchases. We are of the considered view that without disproving the aforesaid material evidences provided by the assessee it is not justified to disallow the entire purchases. In the light of the above fact and findings to meet the ends of justice. We consider it would be appropriate to restrict the addition @ 12.5% of such purchases. Accordingly, we restrict the addition @ 12.5% of the purchase amount of Rs.19,76,169/-. Therefore, this ground of appeal of the assessee is partly allowed. 4.7 With regards the ground of appeal No. 4 with regard to setting up of a new unit in a backward area, as the facts and circumstances in this appeal are identical to ITA 2006/Mum/2017, A.Y 2012-13, therefore, the decision rendered at para 2.3 to 2.9 would apply mutatis mutandis for this case also. Accordingly, we allow this ground of appeal of the assessee. 4.8 As regards the ground of appeal No. 5 is general in nature not required any adjudication. 4.9 In the result the appeal of the assessee is partly allowed. The Supreme Industries Ltd - 24 - 5. In the result the appeals filed by the assessee is partly allowed or statistical purpose and appeal filed by the revenue is dismissed. Order pronounced in the open court on 04.01.2022. Sd/- Sd/- (VIKAS AVASTHY) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 04.01.2022 आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अिीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. संबंतधि आयकर आयुक्त / The CIT(A) 4. आयकर आयुक्त(अिील) / Concerned CIT 5. तिभागीय प्रतितनतध, आयकर अिीलीय अतधकरण, अहमदाबाद / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशानुसार/BY ORDER, सत्यातिि प्रति //True Copy// ( Asst. Registrar) ITAT, Mumbai The Supreme Industries Ltd - 25 - Date Initial 1. Draft dictated on 01.12.21 PS 2. Draft placed before author 02.12.21 & 29.12.21 PS 3. Draft proposed & placed before the second member PS 4. Draft discussed/approved by Second Member. PS 5. Approved Draft comes to the Sr.PS/PS PS 6. Kept for pronouncement on 7. File sent to the Bench Clerk 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Dictation Pad is enclosed 1. Other Member... on whi