SUPREME TREVES P.LTD, MUMBAI V. ADDL CIT 10(2), MUMBAI

ITA 9133/MUM/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4302 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 09-11-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 29-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S N RAJU
• Assessee Lawyers: BHAUMIK SANGHVI; SSH M M GOLAVALA
• Keywords: Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI- E,BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SANJAY GARG,JUDICIAL MEMBER /.ITA NO.9133/MUM/2010, /ASSESSMENT YEAR-2004-05 SUPREME TREVES PVT. LTD. C/O., KALYANIWALA & MISTRY ARMY & NAVY BUILDING, 3 RD FLOOR 148, MAHATMA GANDHI ROAD MUMBAI-400 001 PAN NO.AACCS 4085 Q VS. THE ADDL. CIT-10(2) AAYAKAR BHAVAN MUMBAI. ( / ASSESSEE ) ( / RESPONDENT) /ASSESSEE BY :S/SH. M.M. GOLAVALA AND BHAUMIK SANGHVI / REVENUE BY :SH. B.S.N. RAJU / DATE OF HEARING : 0 9 - 11 -2015 / DATE OF PRONOUNCEMENT :01.01.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER 27.10.10 OF CIT(A)-22, MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEAL. ASSESSEE-COMAPNY,ENGAGED IN THE BUSINESS OF MANUFAC TURING OF AUTOMOBILE INTERIOR AND OTHER OBJECTS FILED ITS RETURN OF INCOME ON 26.10.04 DECL ARING INCOME OF RS.8128/-.THE ASSESSING OFFICER(AO)COMPLETED THE ASSESSMENT ON 12.12.2006, U/S.143(3) OF THE ACT,DETERMINING THE INCOME OF THE ASSESSEE AT RS.8,128/- AT NORMAL PROV ISION AND RS.7.32 CRORES UNDER THE MAT PROVISIONS. 2. FIRST EFFECTIVE GROUND OF APPEAL (GOA-1-3) IS ABOUT CONFIRMING AN AD HOC DISALLOWANCE OF PACKING EXPENSES OF RS.17,72,000/-.DURING THE ASSES SMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD CLAIMED RS.87,57,615/- TOWARD PACKING EXPENSES, THAT IT HAD INCURRED EXPENSE OF RS.50.00 LACS ONLY DURING THE LAST AY. UNDER THE SA ME HEAD.HE ASKED THE ASSESSEE TO JUSTIFY THE SAME AND TO SUBMIT PARTY-WISE CHART OF SUCH EX PENSE WITH LEDGER ACCOUNT AND SUPPORTING BILLS WHERE AMOUNT EXCEEDED RS.20,000/-.VIDE ITS RE PLY,THE ASSESSEE SUBMITTED THE DETAILS OF THE SUPPLIERS AND STATED THAT THERE WAS ONLY MARGIN AL INCREASE IN THE EXPENDITURE, THAT IT HAS INCREASED FROM 1.43 % TO 1.81%, THAT THE INCREASE I N SALE IN TERMS OF VALUE WAS 37.22 %,THAT THE SALES HAD INCREASED TO A HIGHER PERCENT, THAT T HE ASSESSEE SELL MORE THAN 100 ITEMS, THAT THE PACKING AND COST VARIES FROM PRODUCT TO PRODUCT.AFT ER CONSIDERING THE SUBMISSION OF THE ASSESSEE,THE AO HELD THAT THE ASSESSEE HAD FAILED T O PROVIDE ANY PROPER AND JUSTIFIABLE ARGUMENTS IN TERMS OF QUANTITATIVE DETAILS OF PACKI NG MATERIAL, THAT THE EXPENSE HAD JUMPED TO 72% WHEREAS THE INCREASE IN SALE WAS 37% ONLY.FINAL LY, HE MADE A DISALLOWANCE OF 17.72 LACS OUT OF THE TOTAL EXPENDITURE OF 87.57 LACS. 2.1. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM,IT WAS CONTENDE D THAT 16 NEW ITEMS WERE PRODUCED DURING THE YEAR UNDER CONSIDERATION,THAT BETTER PAC KING WAS PROVIDED,THAT IT WAS DEALING IN ITA/9133/MUM/2010-SUPREME,AY.2004-05. 2 LARGE NUMBER OF ITEMS AND WAS USING DIFFERENT KIND OF PACKING MATERIAL.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER ,THE FAA HELD THAT THE PRODUCTION OF NEW ITEMS AND USE OF BETTER PACKING MATERIAL WOULD NOT ADD TO EXTRA EXPENSES,THAT PACKING WAS BASED ON SALES AND EXPENSES HAD TO BE MORE OR LESS IN THE PROPORTION OF SALES ONLY,THAT THE ASSESSEE HAD NOT EXPLAINED THE INCREASE IN PACKING EXPENDITURE.FINALLY,HE UPHELD THE ORDER OF THE AO. 2.2. BEFORE US,THE AUTHORISED REPRESENTATIVE(AR)ARGUED T HAT THE ASSESSEE HAD ESTABLISHED THAT THERE WAS INCREASE IN SALES VALUE (QUANTITY),THAT S ALES OF AUTOMOBILE INSULATION PARTS HAD INCREASED BY 41.71% IN NUMBERS AND HAD INCREASED BY 116.70% IN MTRS.,THAT FLOOR COVERING OF CARPETS INCREASED BY 57.39% IN NUMBER,THAT FELT HAD INCREASED BY 107.93% IN NUMBERS, THAT THE SALE PRICES HAD DECREASED BUT THE VOLUME H AD INCREASED,THAT THE FAA HAD IGNORED THE FACT THAT THE SALE VOLUME HAD INCREASED IN HIGHER P ROPORTION THAT THE VALUE IN SEVERAL PRODUCTS, THAT THE ASSESSEE SOLD 200 PRODUCTS AND HAD ADDED 6 0 NEW PRODUCTS DURING THE YEAR,THAT PACKING EXPENSES WOULD NOT INCREASE EXACTLY IN LINE WITH INCREASE IN SALES VALUE,THAT THE PACKING COST OF THE NEW PRODUCT WAS NOT THE SAME AS THE OLD PRODUCT THAT THE AO HAD NOT FOUND ANY DEFECT IN THE PURCHASE BILLS SUBMITTED BY THE ASSESSEE.HE REFERRED TO THE LETTERS OF THE ASSESSEE DATED 11.9.06 AND 1.12.06.THE DEPARTME NTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE AO HAD MADE AN ADDITION OF RS.17.72 LACS,THAT HE WA S OF THE OPINION THAT THE ASSESSEE HAD NOT EXPLAINED THE REASONS FOR INCREASE IN PACKING MATER IAL COST,THAT THE ASSESSEE HAD FILED THE DETAIL OF ALL THE SUPPLIER OF PACKING MATERIAL WHO HAD SOLD HIM GOODS OF MORE THAN RS. 20, 000/-DURING THE YEAR UNDER CONSIDERATION,THAT THE A SSESSEE HAD MANUFACTURED 60 NEW ITEMS, THAT THERE WAS INCREASE IN SALES OF VARIOUS ITEMS.I N OUR OPINION,MATHEMATICAL FORMULA CANNOT BE APPLIED IN A ROUTINE MANNER FOR MAKING DISALLOWA NCE ESPECIALLY WHEN THE BOOKS OF ACCOUNT ARE AUDITED AND AO DOES NOT REJECT THE BOOK RESULT OR POINTS OUT THE DEFECTS IN THE BOOKS OF ACCOUNTS.IN THE CASE UNDER CONSIDERATION,DETAILS OF PURCHASES OVER RS.20,000/- WAS AVAILABLE WITH THE AO AND HE HAD NOT FOUND ANY DEFECT IN THE BILLS SUPPLIED BY THE ASSESSEE.THE MATERIAL USED FOR PACKING THE PRODUCTS MAY VARY FRO M YEAR TO YEAR AND NO STRAIGHT JACKET METHOD CAN BE APPLIED IN THAT REGARD.NEITHER THE AO NOR THE FAA HAD COMPARED THE QUALITY OF THE PACKING MATERIAL USED DURING THE YEAR WITH T HE QUALITY OF THE PACKING MATERIAL OF THE EARLIER YEAR.IF THE PERCENT OF INCREASE IS CONSIDER ED THE DIFFERENCE IS VERY NEGLIGIBLE.THE EXPENDITURE IN THE EARLIER YEAR WAS 1.41 %,WHEREAS DURING THE YEAR UNDER CONSIDERATION,IT WAS 1.81%. JUST BECAUSE THE INCREASE IN PACKING MATERIA L IS NOT PROPORTIONATE TO THE TOTAL SALE NO DISALLOWANCE CAN BE MADE.IT IS THE ASSESSEE WHO HAS TO DECIDE HOW MUCH EXPENDITURE IS TO BE INCURRED UNDER A PARTICULAR HEAD. THE AO CAN DISALL OW THE EXPENDITURE ONLY IF HE FIND THAT THE EXPENDITURE WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS.WE FIND THAT THE ASSESSEE HAD MADE SPECIFIC SUBMISSIONS WIT H REGARD TO THE INCREASED EXPENDITURE UNDER THE HEAD PACKING MATERIAL IN HIS LETTERS DATE D 11.9.06 AND 1.12.2006.THE AO AND THE FAA HAD NOT CONSIDERED THE SUBMISSIONS MADE BY IT. CONSIDERING THE ABOVE FACTS, WE ARE OF THE OPINION THAT THE AD-HOC DISALLOWANCE MADE BY TH E AO AND CONFIRMED BY THE FAA IS NOT SUSTAINABLE.GROUND NO.1-3 ARE DECIDED IN FAVOUR OF THE ASSESSEE. 3. THE NEXT EFFECTIVE GROUND (GROUND OF APPEAL NO.4-5) DEALS WITH DISALLOWANCE OF RS.2.96 LACS.DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD PURCHASED COMPLETE WRIST UNIT FOR RS.2,96,100/-, THAT THE ASS ESSEE HAD CLAIMED THE EXPENDITURE UNDER THE HEAD REPAIRS.HE HELD THAT IT COULD NOT BE A REPAIR BILL AND MADE A DISALLOWANCE OF RS.2.96 LACS.HOWEVER,HOLDING IT AS CAPITAL EXPENDITURE,HE A LLOWED DEPRECIATION OF RS. 91,920/- TO THE ASSESSEE COMPANY. ITA/9133/MUM/2010-SUPREME,AY.2004-05. 3 3.1. IN THE APPELLATE PROCEEDINGS BEFORE THE FAA,THE ASS ESSEE CONTENDED THAT COMPLETE WRIST UNIT WAS PART OF A MACHINE I.E. WATER JET CUTTING R OBOT, THAT IT COSTED ABOUT RS.1.3CRORES, THAT THE EXPENDITURE WAS IN THE NATURE OF REPLACEMENT OF A SMALL PART OF A MACHINE,THAT THE EXPENDITURE WAS REVENUE IN NATURE.THE ASSESSEE PROD UCED PHOTOGRAPHS OF WATER CUTTING ROBOT AND THE WRIST UNIT OF THE MACHINE BEFORE THE FAA.AF TER CONSIDERING THE SUBMISSION OF THE ASSESSEE,HE HELD THAT THERE WAS NO SUPPORTING EVIDE NCE TO PROVE THAT THE EXPENDITURE WAS IN THE NATURE OF REPLACEMENT OF A SMALL PART OF THE MA CHINE,THAT THE BILL PRODUCED BY THE ASSESSEE DID NOT INDICATE THAT IT WAS AN ATTACHMENT TO THE R OBOT.HE FINALLY, UPHELD THE DISALLOWANCE MADE BY THE AO. 3.2. BEFORE US,THE AR STATED THAT ASSESSEE WAS USING AN IMPORTED MACHINE UNIT TO MANUFACTURE ITS PRODUCT,THAT THE WATER JET CUTTING ROBOT CONSIS TED OF MANY PARTS,THAT THE COMPLETE WRIST UNIT WAS ONE OF THE PART OF THE MACHINE,THAT BECAUSE OF THE WEAR AND TEAR IT HAD TO BE REPLACED, THAT THE REPLACED PART WAS CALLED COMPLETE WRIST UNIT,TH AT THE EXPENDITURE WAS INCURRED FOR REPAIRING THE ROBOT AND HENCE ALLOWABLE.THE DR SUPP ORTED THE ORDER OF THE FAA. 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS.IN OUR OPINION, THE FAA HAD NOT ANALYSED THE FACTS OF THE CASE PROPERLY AND HAD UPHELD THE DISALLOWANC E WITHOUT UNDERSTANDING THE BASIC STRUCTURE OF THE MACHINE.THE ASSESSEE HAD PRODUCED THE PHOTOGRAPH OF ROBOT AND THE WRIST UNIT.HE COULD HAVE CALLED FOR FURTHER INFORMATION R EGARDING THE WRIST UNIT IF HE HAD ANY DOUBTS IN THAT REGARD.THEREFORE,REVERSING HIS ORDER WE HOL D THAT EXPENDITURE INCURRED BY THE ASSESSEE SHOULD BE TREATED AS REVENUE EXPENDITURE.EFFECTIVE GROUND NO.2 IS DECIDED IN FAVOUR OF THE ASSESSEE. 4. NEXT EFFECTIVE GROUND OF APPEAL, (GROUND OF APPEAL NO.6) IS REGARDING DISALLOWANCE OF MADE UNDER THE HEAD PRIOR PERIOD EXPENDITURE AMOUNTING T O RS.8.40 LACS.DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD CLAI MED EXPENDITURE INCURRED DURING THE EARLIER PERIOD AS CURRENT YEARS EXPENDITURE.HE HELD THAT BILL STATED 26/3/03 AMOUNTING TO RS.8.40 LACS PERTAINED TO AY.2003-04.HE HELD THAT T HE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THAT THE EXPENDITURE IN QUEST ION COULD NOT BE ALLOWED DURING THE YEAR UNDER CONSIDERATION. 4.1. IN THE APPELLATE PROCEEDINGS,THE ASSESSEE CONTENDED BEFORE THE FAA THAT THERE WAS TIME LAG BETWEEN RAISING INVOICE AND DISPATCHING THE GOO DS BY THE SUPPLIER I.E.INGERSOLL RAND WASSERS.THE ASSESSEE FILED THE COPIES OF THE BILL S AND PROOF OF CLEARANCE OF GOODS BEFORE THE FAA.HE HELD THAT ITEM MENTIONED IN THE BILL AND CLE ARANCE DOCUMENTS WERE NOT MATCHING, IT WAS NOT POSSIBLE TO CONCLUSIVELY PROVE THE ITEMS PU RCHASED THROUGH INVOICE DT.26.3.2003 WERE RECEIVED BY THE ASSESSEE IN THE YEAR UNDER APP EAL.HE UPHELD THE DISALLOWANCE MADE BY THE AO. 4.2. BEFORE US, THE AR ARGUED THAT SPARES WERE PURCHASED FROM INGERSOLL RAND,GERMANY VIDE BILL DATED 26.3.2003, THAT A CHART WAS PRODUCED EXP LAINING HOW THE INVOICES AND SUPPORTING DOCUMENTS LIKE SHIPPING ADVICE AND BILL OF ENTRY WE RE MATCHING,THAT THE SPARES WERE DISPATCH -ED BY AIR ON 31.3.2003 FROM GERMANY, THE CUSTOMS H AD CLEARED THE CONSIGNMENTS IN APRIL 2003, THAT FACTORY RECORDS PROVED THAT GOODS WERE R ECEIVED IN APRIL 2003.HE REFERRED TO PAGE NO.90, 94,100, 119, 126.THE DR RELIED UPON THE ORDE R OF THE FAA. 4.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE GOODS WERE PURCHASED FROM GERMANY ON 26.3.2003 (PAG E-68-69, 73-75, 83-84, 94-95 AND 100-101, 108,113,121 ),THAT THE DELIVERY CHALLANS A ND GOODS RECEIPTS NO. PROVE THAT THE SPARE PARTS WERE RECEIVED DURING THE PERIOD 11.4.03 TO 24 .4.2003 (PAGE 72 , 79-82, 87-89, 93,104- 105,111,119 AND 126 OF THE PAPER BOOK).WE HAVE COMP ARED THE SPARE PARTS SPECIFICATION AND QUANTITY MENTIONED ON THE INVOICE,DELIVERY NOTES AN D WE FIND THAT THEY MATCH THE DETAILS. CONSIDERING THESE SPECIFIC FACTS AND CIRCUMSTANCES OF THE CASE,WE ARE OF THE OPINION THAT THE ITA/9133/MUM/2010-SUPREME,AY.2004-05. 4 EXPENDITURE INCURRED BY THE ASSESSEE FOR PURCHASING THE SPARE PARTS CANNOT BE TERMED PRIOR PERIOD EXPENDITURE.THEREFORE,REVERSING THE ORDER OF THE FAA WE DECIDE THE THIRD EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. 5. THE LAST GROUND OF APPEAL (GROUND OF APPEAL 7-9) DE AL WITH DISALLOWANCE OF PROCESSING CHARGES OF RS. 15.06 LACS AND RS.1.50 LACS RESPECTI VELY.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE HAD PAID PROCESSING CHAR GES TO VARIOUS PARTIES, AMOUNTING TO RS.1.55CRORES.HE ISSUED NOTICES U/S.133(6) OF THE A CT TO SEVEN PARTIES.OUT OF THE SEVEN IN TWO CASE NO REPLY WAS RECEIVED,IN ONE CASE THE NOTICE W AS RECEIVED BACK WITH THE REMARK NOT KNOWN AND IN ONE CASE THE PARTY WAS NOT AVAILABLE AT THE GIVEN ADDRESS.HE DIRECTED THE ASSESSEE TO SUBMIT CONFIRMATION FROM THE ABOVE SAID PARTIES, A COPY OF THE LEDGER ACCOUNT AND ACKNOWLEDGEMENT OF RETURN OF INCOME.CONSIDERING THE ENTIRETY OF FACTS,THE AO HELD THAT THE ASSESSEE HAD FAILED TO ESTABLISH IDENTITY AND GENUI NENESS OF FOUR PARTIES, NAMELY NAINABEN PANWAR, SHRI LOKHANDE,VISHWAS ENTERPRISES AND DIVER CEY INDUSTRIAL SERVICES(DIS).IN CASE OF REMAINING THREE PARTIES HE RESTRICTED THE PROCESSIN G CHARGE TO 25%. THUS, HE MADE A DISALLOWANCE OF RS. 1.12 CRORES(1.02 CROES FOR FOUR PARTIES + RS.9.95 LACS FOR THREE PARTIES). 5.1. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FAA AND MADE ELABORATE SUBMISSIONS. AFTER CONSIDERING THE S AME THE FAA CALLED FOR A REMAND REPORT(RR)FROM THE AO.VIDE HIS RR DT.27.2.2007,THE AO MADE COMMENTS ABOUT THE TRANSACT -TIONS ENTERED INTO BY THE ASSESSEE WITH THE SEVEN PARTIES.AFTER CONSIDERING THE RR AND THE SUBMISSION OF THE ASSESSEE,THE FAA HELD THAT THE AO HAD RECORDED HIS STATEMENTS, THAT HE HAD OBTAINED RELEVANT DOCUMENTS, THAT HE HAD NOT GIVEN ANY ADVERSE FILING REGARDING GE NUINENESS OF FIVE PARTIES TO WHOM PROCESSING CHARGES WERE PAI D NAMELY, NAINABEN R.PANWAR, MUNNIBEN BHATTI, POLYCAM TECHNO SERVICES, VISHWAS E NTERPRISES AND MOHAN LOKHANDE.HE DIRECTED THE AO TO DELETE THE DISALLOWANCE MADE UND ER THE HEAD PROCESSING CHARGES WITH REFERENCE TO THE ABOVE MENTIONED PARTIES.WITH REGAR D TO DIS AND LAXMI INDUSTRIAL SERVICES (LIS),HE HELD THAT AS PER THE AO THE PAYMENTS WERE MADE FOR LOADING/UNLOADING/PACKING WORK,THAT THE BILL PRODUCED BY THE ASSESSEE SHOWED THAT IT HAD PAID LOADING UNLOADING CHARGES ETC, THAT PROCESSING CHARGES PAID TO DIS AND LIS WE RE RIGHTLY DISALLOWED. 5.2. DURING THE COURSE OF HEARING BEFORE US,THE AR CONTE NDED THAT THE PROPRIETOR OF DIC HAD APPEARED BEFORE THE AO IN THE REMAND PROCEEDINGS, T HAT HE HAD CONFIRMED THE TRANSACTION WITH THE ASSESSEE, THAT HE HAD ACCEPTED THAT PAYMEN TS WERE RECEIVED BY HIM, THAT THE AO HAD MADE NO ADVERSE COMMENT IN THE REMAND REPORT, THAT DIS WAS RENDING SERVICES SINCE 1999, THAT NO DISALLOWANCE WAS MADE IN THE EARLIER YEARS, THAT VIDE ITS LETTER DT.26.10.10 IT WAS EXPLAINED TO THE FAA, IT WAS EXPLAINED THAT THE DIS WOULD PERFORM THREE JOBS FOR THE ASSESSEE FIBRE SORTING, PACKING OF FINISHED GOODS AND LOADIN G/UNLOADING, THAT FIBER SORTING WAS BOOKED UNDER THE HEAD PROCESSING CHARGES,THAT THE STATEMEN TS OF THE PROPRIETOR OF THE DIS WERE RECORDED AFTER A PERIOD OF SIX YEARS, THAT THE PROP RIETOR OF LIS HAD STATED ON OATH THAT HE WAS LOOKING AFTER LOADING/UNLOADING AND OTHER WORK ASSI GNED TO IT BY THE ASSESSEE.HE REFERRED TO PAGE NO.190-208 OF THE PAPER BOOK. THE DR SUPPORTED THE ORDER OF THE FAA. 5.3. WE HAVE HEARD THE RIVAL SUBMISSIONS.WE FIND IN THE REMAND REPORT(RR) THAT THE AO HAD SPECIFICALLY MENTIONED THAT THE PROPRIETOR OF DIS H AD CATEGORICALLY ADMITTED THAT HE HAD RECEIVED PAYMENT FROM THE ASSESSEE, THAT HE HAD ALS O MENTIONED THAT THE IDENTITY AND NATURE OF TRANSACTIONS WERE IN ORDER.WE HAVE GONE THROUGH THE PAPERS RELIED UPON BY THE AR. WE FIND THAT THE ASSESSEE HAD PAID SEPARATE CHARGES FOR FIB ER SORTING AND HAD PAID THE AMOUNT UNDER THE HEAD PROCESSING CHARGES, THAT THE AO HAD NOT ENQUIRED ABOUT THE HEADS UNDER WHICH PAYMENTS WERE RECEIVED BY DIS WHILE RECORDING THE S TATEMENT,THAT THE FAA HAD NOT CONSIDERED THE STATEMENT OF THE PROPRIETOR OF DIS P ROPERLY AND HAD CONCLUDED THAT DIS WAS OFFERING SERVICES LIKE LOADING/UNLOADING AND PACKIN G ONLY.ONCE THE RECIPIENT HAD ADMITTED ITA/9133/MUM/2010-SUPREME,AY.2004-05. 5 THAT IT HAD RECEIVED THE PAYMENT FROM THE ASSESSEE AS MENTIONED IN THE BOOKS OF ACCOUNT THERE WAS NO JUSTIFICATION FOR MAKING ANY ADDITION.SIMILA R IS THE CASE OF LIS.IT IS FOUND THAT BOTH THE ENTITIES ARE ASSESSED TO TAX AND HAVE SHOWN THE INCOME RECEIVED FROM THE ASSESSEE IN THEIR RETURN OF INCOME.THE AO HAD NOT DOUBTED THE GENUINE NESS OF PAYMENT.THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES,WE ARE OF THE OPINION T HAT THE ORDER OF THE FAA CANNOT BE ENDORSED.REVERSING HIS ORDER WE DECIDE THE LAST EFF ECTIVE OF GROUND OF APPEAL (GOA 7-9) IN FAVOUR OF THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS AL LOWED. ORDER PRONOUNCED IN T HE OPEN COURT ON 1 ST JANUARY, 2016. 1 , 2016 SD /- SD/- ( / SANJAY GARG ) ( / RAJENDRA ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER MUMBAI, DATE: 01.01.2016 . . . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.