DCIT, Patiala V. M/S Mahadev Alloys Pvt.Ltd,

ITA 88/CHANDI/2015

• Counselvise Citation: 8821514 RSA 2015
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-09-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 23-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJINDER KAUR
• Assessee Lawyers: ASHOK GOEL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 88/CHD/2015 ASSESSMENT YEAR: 2011-12 THE DCIT, VS M/S MADHAV ALLOYS P.LTD., CENTRAL CIRCLE, TALWARA ROAD, PATIALA. MANDI GOBINDGARH. PAN: AADCM6458N (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.RAJINDER KAUR RESPONDENT BY : SHRI ASHOK GOEL DATE OF HEARING : 24.09.2015 DATE OF PRONOUNCEMENT : 29.09.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(APPEALS)-I LUDHIANA DATED 11.11.2014 FOR ASSESSMENT YEAR 2011-12 CHALLENGING THE ORDER OF LD . CIT(APPEALS) IN DELETING THE ADDITION MADE ON ACCOU NT OF DISALLOWANCE OUT OF STORES AND SPARES. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SING OFFICER MADE ADDITION OF RS.18,74,893/- BY DISALLOW ING THE CLAIM OF STORES AND SPARES ONLY TO THE EXTENT OF RS.1,08,91,588/- AS AGAINST RS. 1,27,66,481/- CLAIM ED BY THE ASSESSEE. THE ASSESSING OFFICER HAS OBSERVED THAT THERE HAS BEEN A INCREASE IN THE STORES AND SPARES DURING THE YEAR UNDER CONSIDERATION WHICH WAS DISPROPORTIONATE TO T HE INCREASE IN PRODUCTION/SALES AND THE ASSESSEE ON BE ING 2 CONFRONTED WITH THE SAME, SUBMITTED THREE REASONS F OR SUCH INCREASE. THE ASSESSING OFFICER, AFTER EXAMINING E XPLANATION OF THE ASSESSEE, GAVE ALLOWANCE FOR SUCH POSSIBLE I NCREASE AND CONCLUDED THAT THE ASSESSEE HAS BOOKED THE EXPE NSES OF RS. 58,29,720/- IN THE IMMEDIATE PROCEEDING YEAR AF TER CONSIDERING THE SUBMISSION AND FIND IT REASONABLE T O ALLOW 15% ADDITIONAL EXPENDITURE ON ACCOUNT OF GENERAL PR ICE HIKE OF THE ITEMS RESULTING IN AN AMOUNT OF RS. 66,04,30 0/- AS THERE IS NO INCREASE IN THE PRODUCTION AS COMPARED TO THE PREVIOUS YEAR. FURTHER, THE ASSESSEE HAS ALSO EXPL AINED OF HAVING EXCESS EXPENSES ON ACCOUNT OF ROUTINE WEAR A ND TEAR IN THE UNIT INCREASING WITH THE PASSAGE OF TIME. T HE ASSESSING OFFICER, REASONABLY CONSIDERED INCREASE O N ACCOUNT OF ABOVE MENTIONED EXPLANATION FURTHER TO 15% BEING EXCESS EXPENSES ON ACCOUNT OF WEAR AND TEAR. THUS THE EXP ENSES COME TO THE TUNE OF RS. 77,09,945/- FOR THE YEAR. THE ASSESSEE FURTHER EXPLAINED THE EXPENSES TO THE TUNE OF RS. 31,81,643/- ON ACCOUNT OF EXPENSES ON ADHOC NATURE SUPPORTED BY THE BILLS. THE SAME IS BEING CONSIDER ED INTO AND AS SUCH, IT IS VERY REASONABLE TO CALCULATE THE EXPENSES ON ACCOUNT OF STORES AND SPARES FOR THIS YEAR TO 1. 08 CR. THE ASSESSING OFFICER, THUS, FIND IT QUITE REASONABLE T O ALLOW THIS EXPENDITURE OF RS.1.08 CR TO THE ASSESSEE AGAINST R S.1.27 CR AS THERE IS NO INCREASE IN THE PRODUCTION AND ALL T HE POSSIBLE CAUSES OF INCREASE IN THIS EXPENDITURE HAVE BEEN CO NSIDERED AS COMPARED TO THE PREVIOUS YEAR AND DUE TO WEIGHTA GE TO THIS SUBMISSION OF THE ASSESSEE AND ACCORDINGLY DIS ALLOWED RS. 18,74,893/-. 3 3. THE ADDITION WAS CHALLENGED BEFORE LD. CIT(APPEA LS) AND IT WAS EXPLAINED THAT COMPLETE DETAILS OF THE EXPEN DITURE WERE FILED WHICH WERE SUPPORTED BY ALL THE BILLS. IN MO ST OF THE CASES, EXCISE HAS BEEN CHARGED BY THE SUPPLIER. VAT IS ALSO CHARGED WHEREVER APPLICABLE. THE PAYMENTS ARE THRO UGH CHEQUES AND NOTHING ADVERSE HAS BEEN BROUGHT AGAINS T THE ASSESSEE. THE ASSESSEE HAS TWO MANUFACTURING ROLLI NG PLANTS. BOTH UNITS ARE OF 5 TO 6 YEARS OLD. GENERA LLY WITH THE PASSAGE OF TIME, ROUTINE WEAR AND TEAR OF THE UNITS INCREASE YEAR AFTER YEAR. IT WAS SUBMITTED THAT STORES AND SPARES HAVE BEEN CONSUMED FOR WHICH COMPLETE DETAILS HAVE BEEN FILED IN WHICH NO SPECIFIC DEFECTS HAVE BEEN POINTED OUT. T HE LD. CIT(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSE E AND FOUND THAT ASSESSING OFFICER HAS MADE THE CORRECT OBSERVATION BY HIGHLIGHTING DIS-PROPORTIONATE INCRE ASE IN EXPENSES PERTAINING TO THE STORES AND SPARES BUT TH EREAFTER, ASSESSING OFFICER HAS MADE DISALLOWANCE MERELY ON T HE BASIS OF ESTIMATES AND CONJECTURES. THE ASSESSING OFFICE R MADE MERE THEORETICAL DISALLOWANCE. THERE IS NO EVIDENC E THAT HAS BEEN BROUGHT ON RECORD WHICH SHOWS THAT BILLS PERTA INING TO STORES AND SPARES HAD BEEN INFLATED. NO DEFECTS IN THE BOOKS OF ACCOUNT HAVE BEEN POINTED OUT, THEREFORE, ASSESS ING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION AND ACCORD INGLY, ADDITION WAS DELETED. 4. AFTER HEARING RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSEE FIELD COMPLETE DETAILS OF THE EXPENDITURE BEFORE TH E ASSESSING OFFICER. EACH AND EVERY EXPENDITURE IS SUPPORTED B Y BILLS. 4 THE ITEMS WERE SUBJECTED TO EXCISE AND VAT AND PAYM ENTS ARE THROUGH CHEQUES. THESE SUBMISSIONS OF THE ASSESSEE HAVE NOT BEEN REBUTTED BY THE ASSESSING OFFICER. NO EVI DENCE HAS BEEN BROUGHT ON RECORD THAT BILLS PERTAINING TO STO RES AND SPARES HAD BEEN INFLATED. THE ASSESSING OFFICER EX AMINED BOOKS OF ACCOUNT AND VOUCHERS IN WHICH NO DEFECTS H AVE BEEN POINTED OUT. MERE INCREASE IN THE EXPENSES AS COMP ARED TO EARLIER YEARS WITHOUT BRINGING ANY MATERIAL ON RECO RD FOR MAKING ADDITION IS NOT JUSTIFIED. SINCE NO ADVERSE MATERIAL IS BROUGHT ON RECORD AGAINST THE ASSESSEE FOR MAKING T HE ADDITION, THEREFORE, LD. CIT(APPEALS) WAS JUSTIFIED IN HOLDING THAT ADDITION IS MADE MERELY ON THE BASIS OF ESTIMA TES AND CONJECTURES. WE, THEREFORE, DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE SAME IS ACCOR DINGLY, DISMISSED. 5. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA MEHROTRA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 TH SEPT., 2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD