Income Tax Appellate Tribunal - Jodhpur
M/S. Chirag Marbles Pvt. Ltd. , ... vs Department Of Income Tax on 31 May, 2013
1
IN THE INCOME TAX APPELLATE TRIBUNAL
JODHPUR BENCH, JODHPUR
BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER
AND SHRI N.K. SAINI, ACCOUNTANT MEMBER
ITA No. 464/JU/2010
Assessment year : 2007-08
PAN: AAACC 6560 E
The ITO vs. M/s Chirag Marbles Pvt. Ltd.
Ward- 1 Gunjol, Nathdwara,
Rajsamand Distt. Rajsamand
(Appellant) (Respondent)
Department by : Shri N.A. Joshi
Appellant by : Shri Amit Kothari
Date of hearing : 31-05-2013
Date of pronouncement : 24-06-2013
ORDER
PER N.K. SAINI, A.M.
This is an appeal by the Department against the order dated 03-05-2010 of the ld. CIT(A) ,Central, Udaipur. Following grounds have been raised in this appeal.
''On the facts and in the present circumstances of the case, the ld. CIT(A) has erred in:-
1. Deleting addition of Rs. 17,73,882/- made by applying the provisions of Section 145 (3) of the Act.
2. Deleting addition of Rs. 6,06,660/- made on account of excess stock.
3. Deleting disallowance of remuneration of Rs. 96,000/-.''
2.1 The first issue vide Ground No. 1 relates to deletion of addition of Rs. 17,73,882/-. 2.2 The facts of the case related to this issue in brief are that the assessee was engaged in manufacturing and trading of Marble Blocks and Tiles. The assessee furnished its E- return of income on 30-10-2007 declaring total income at Rs. Nil which was processed u/s 143(1) of Income Tax Act, 1961 (hereinafter referred to as ' the Act' in short ) on 09-02- 2 2009. Being a survey case, the case was selected for scrutiny. During the course of assessment proceedings, the Assessing Officer noticed that the assessee was also doing the job work of other parties and had shown G.P. Rate at 0.79% on total turnover of Rs. 82,90,129/- as against G.P. Rate at 22.74% on total turnover of Rs. 91,33,142/- in the immediately preceding year. The Assessing Officer pointed out following discrepancies in the books of account ''(i) The manufacturing cost of sawing goods comes to Rs. 68.58 per sq. mtr i.e. Rs. 80.58 per cft as per the cost of production submitted by the assessee. However, the assessee is charging sawing charging at Rs. 35/- to Rs. 55/-per cft. As such, the assessee is charging sawing charges on an average 50% of its manufacturing cost. Some sawing charges bills are mentioned as under-
S.N. Invoice No. Date Rate per cft
1. 137 01-01-2007 Rs. 35/- per cft
2. 138 03-01-2007 Rs. 35/- per cft
3. 179 25-03-2007 Rs. 35/- per cft
4. 185 28-03-2007 Rs. 35/- per cft
(ii) On examination of books of account and details filed, it is noticed
that the assessee has made valuation of stock of finished goods during the year at Rs. 170/- per sq. mtr. However, the cost of production comes to Rs. 179.86 per sq. mtr. As such, the assessee has under valued its stock of finished goods during the year to Rs. 7.86/- per sq. mtr as the cost of production comes to Rs. 179.86 per sq. mtr and the assessee has made valuation of closing stock of finished gods at Rs. 170/- per sq. mtr.
(iii) Stock registers of raw material, stores, spares and consumables have not been maintained by the company and not produced for verification. In the absence of the same, it is not possible to verify that how much quantity of above stock were used and out of those how much quantity of above stock were available at the end of the accounting year with the company.'' 2.3 In view of the above defects, the Assessing Officer considered the trading results declared by the assessee as not reliable. On being asked , the assessee stated that the reasons for decrease in gross profit in this year was due to slack in the market, high manufacturing cost due to lower production and decrease in sale price and increase in raw 3 material consumption but the Assessing Officer did not find any merit in the submissions of the assessee and worked out the gross profit by applying the G.P. Rate at 22.74% as declared by the assessee in the preceding year. Accordingly , the gross profit was worked out at Rs. 18,39,695/- instead of Rs. 65,813/- declared by the assessee. Thus the addition of Rs. 17,73,882/- was made by the Assessing Officer.
2.4 The assessee carried the matter to the ld. CIT(A) and the submissions made by the assessee as incorporated in para 3.2 of the impugned order are reproduced verbatim as under:-
"0.79 % to 22.74 % without there found existence of any evidence suggesting suppression of sales or inflation of expenses in the trading account. Mere rejection of books u/s 145 does not necessarily mean to addition to the returned income or assessment at a different period unless there is proved some deviation. In result addition u/s 145 is not automatic. The reliance is placed on the following case laws:
(2002) 256ITR (Raj.) 243 CIT vs Gottan Kaniz Udyog (2006) 99 TTJ (Jdp.) 538 Madan Lai vs ITO The Ld. A.O. made trading addition on the strength of observation that G.P. rate reduced from 22.74% to 0.79%, sawing charges income has been suppressed by issuing sawing bills at lesser rates, closing stock of marble slabs has been undervalued and stock register for raw material not maintained and in result books of accounts do not give clear picture of its trading result. The Ld. A.O. therefore applied 145(3) in the reliance of 38 ITR 579 (SC) and applied G.P. @ 22.74% and made trading addition of Rs. 1773882/-.
On fact, books of accounts of the company viz. cash book, ledger, bank book & journal, sales bills, Purchase bills voucher for expenses, salary & wages register and stock register for finished goods are maintained and these have been audited under the Company Act and u/s 44AB of the income tax Act. The business income of company was determined on the basis of these audited accounts. During survey financial records have been found maintained up to date subject to posting the vouchers of expenses of the last two months and stock register for the finished goods was found maintained up to 03,01.2007 and it was signed by the survey team. These facts are verified by the Ld. A.O. in the Assessment proceedings. In the course of assessment preceding these have been produced before the Ld. A. 0. for verification time to time and these have been examined. Various details / information's required in the course of assessment proceeding in support of books of accounts were submitted. He did not come across any evidence to prove the suppression of sales and/ or inflation of expenses to suppress business income. He however at pg. No. 2 of the assessment order made 4 some observation to justify his hypothetical findings and these are explained as under:
The Ld.A.O. erroneously compared manufacturing cost of production per cft Rs.80.58 with certain sawing bills related with job work @ Rs.35.00 & held that sawing income is suppressed. It is humbly submitted that major activity of the company was manufacturing and trading of marble slabs and tiles and as on the date of survey 2/3rd of total production of 42709.16 Sq mtr of which 28893.42 was own production of marble slabs and spare capacity of the company was utilized in doing the job work of Moonlight Marble(P) Ltd of their product from Banswara Mines widely known to be the soft marble block for sawing and also to maintain edge of sawing blades between hardness of own material which was comparatively more to increase the life of blade segment with sawing of soft material. It was therefore sawing of marble blocks of Moonlight Marbles (P) Ltd the appellant not only could utilize the spare machine capacity but helped in increasing the productivity of machine by sawing of marble blocks in due proposition. Not only this even manufacturing cost, referred by the Ld. A.O has wrongly calculated by dividing cost per Smtr. Rs.68.58 by 0.851 formula (whereas accepted norms by excise department, one Smtr production is equal to 0.851 cft and in result conversion from Smtr. to Cft it requires multiplication and not division). He thus wrongly arrived at Rs.80.58 per cft instead of Rs.57.00 per Sq ft as per chart as on 11.01.2007 enclosed and compared the same with sawing bills issued @ Rs.35.00 per cft and alleged suppression of income. It is further stated that allegation of the Ld. A.O. is not backed by any evidence in survey or in the assessment proceeding suggesting the under billing of sawing bills in any form. The Ld. A.O. jumped on adhoc conclusion on the basis of absolute comparison without going into the relative impact on the working and ultimate profitability of the company. The Ld. A.O. even did not show-cause for the same. It is thus imaginary and hypothetical to assume that under billing of the sawing charges has taken place.
Secondly the Ld. A.O. has objected the valuation of stock of marble slabs @ Rs.170/- instead of Rs.179.86 per Sqmtr. Factually the company valued the stock of marble slabs @ Rs.179.86 per Sqmtr only. It may even be referred with the working provided along with audited balance sheet gives cost of marble slabs @ Rs.179.86 per Smtr. Copy of extract of the balance sheet enclosed, (pg no. ). It is further submitted that even as on the date of survey cost of marble slabs on the basis of trading and profit & loss account submitted in assessment proceeding comes to 180.04 per Sqmtr. And therefore allegation by the Ld. A.O. that the assessee has undervalued the finished goods is on the basis of wrong references and citation and therefore has no credence to the opinion framed by the Ld. A.O. Thirdly, with respect to non-maintenance of stock register for raw material marble blocks, it is undisputed fact that in view of nature of business to be sawing of marble block excavated from mining lease areas comprising of natural stone in the form of rock by deploying different mechanical process and therefore marble blocks and sawing there from in the form of marble slabs & tiles can neither be predicted 5 nor measured. Marble blocks in the odd sizes are many time ruptured inside and also consistency in the rock makes the product variable. It is not the company but the entire trade in the marble does measure the product after it is sawn and therefore raw material register for marble block is not maintained. Purchase vouchers in respect of marble blocks are therefore never containing the quantity in terms of square feet/square meter but these are always in lump-sum called Mukarda. In the course of assessment preceding for the AY 2006-07 going on simultaneously this fact was submitted before the Ld. A.O. In contrast the Ld. A.O. did not consider the factual aspect connected with the subject matter and has made it an issue for rejection of books. It is in conclusion, the discrepancies discussed by the d. A.O. to discard the authenticity of trading results are hypothetical and imaginary and these are far from the facts available on the records and the Ld. A.O. has rather reached such conclusion on the basis of incorrect working and baseless comparison. It is further submitted that the Ld. A.O. did not raise any further query in this regard. He simply placed reliance on 38 ITR 579(SC) to justify the application of section 145(3). Finding in this case is based on different fact, where GP have been estimated by estimating the turnover as there were no voucher, quantitative tally, huge investments and outside cheques in the account have been pointed out. Whereas in the present case ROI have been filed on the basis of audited books and there is not found any discrepancies requiring estimation and therefore not applicable.
On face of the case the provision of section 145 (3) are not applicable and even if the books are rejected there was no justification for increasing G.P. It is further on the basis of finding of Hon'ble Rajasthan High Court in CIT vs Modi Enterprises (2008) 2 DTR (Raj )47 & (2007)108 TTJ(Delhi) 912 in Yashraj Soni vs ACIT where the A.O. did not find account of the assessee to be incorrect or incomplete or that income cannot be deduced or no method of accounting is regularly employed, books of accounts cannot be rejected for low G.P. It is submitted that assessment u/s 145 is to be made after taking into account all relevant material which the Ld. A.O. has gathered after giving opportunity to the assessee of being heard. In the present circumstance there was no relatable evidence / material to indicate suppression of sales or inflation of expenses, the Ld. A.O. was arbitrary and hypothetical to exercise section 145(3) for want of the reason cited above. It has been held provision of section 145(3) cannot be applied on the mere ground that stock register for purchase and consumption of raw material is not maintained unless some specific mistake / deficiency in the books is pointed out. In support, the reliance is placed on the following case laws:-
(2000) 18DTR (Raj) 118 CIT v/s Suresh Marbles (P) Ltd. 6
(2003) 78 TTJ (JD) 736 - Ganesh Foundry v/s ACIT (2000)73 ITD (NAG) 73- S.Gurlal Singh v/s ACIT (2006)99 TTJ (Ahd) 390- Surat District Milk Union v/s JCIT .
Under the above circumstance addition made be deleted.'' 2.5 The ld. CIT(A) after considering the submissions of the assessee observed that the Assessing Officer made trading addition by invoking the provision of Section 145(3) of the Act on account of alleged suppression of sawing income and non-maintenance of stock registers of raw material, stores, spares and consumables etc. He further observed that survey u/s 133A of the Act was conducted at the business premises and during the course of survey, stock register for marble slabs and tiles was found and the same had been initialled by the survey team. He also observed that the Assessing Officer admitted that the assessee had maintained complete set of books of account which were produced before him alongwith details asked for and the same had been test checked and the Assessing Officer had not found any major defect in maintaining the books of account due to which he was not in a position to deduce the actual income earned by the assessee during the year under consideration.
2.6 As regards the suppression of sawing income, the ld. CIT(A) observed that there was a mistake in comparison of manufacturing cost of marble sawing in converting rate of marble slabs per sq. mtr into per cubic ft i.e. the Assessing Officer had divided by .851 instead of multiplication. The ld. CIT(A) also pointed out that the quantum of job work upto the date of survey was hardly 1/3rd of the total production and all those facts were taken into consideration and there was no suppression of income from job work as alleged by the Assessing Officer. The ld. CIT(A) was of the view that plea of suppression of job income taken by the Assessing Officer for invoking the provision of Section 145(3) of the Act could not be upheld.
72.7 As regards low G.P. Rate, the ld. CIT(A) observed that during the course of survey, the Department could not find any material/ evidence to suggest that the assessee had indulged in under-billing or inflation of expenses and once the books of account had been found maintained including quantitative records, trading addition could not be made simply on the basis of comparison of G.P. Rate with preceding year as every year is independent year for taxation and the Assessing Officer was bound to consider the facts prevailing in each year separately because it is a common fact that fixed rate of gross profit cannot be consistently maintained in every year as the gross profit is bound to be differ depending on the prevailing market trend in each year. The ld. CIT(A) accordingly deleted the trading addition made by the Assessing Officer by applying the higher gross profit rate. 2.8 Now the Department is in appeal.
2.9 The Ld. D.R. for the Revenue supported the order of the Assessing Officer and reiterated the observations made by the Assessing Officer in the assessment order dated 16- 12-2009 2.10 In his rival submissions, the ld. counsel for the assessee reiterated the submissions made before the authorities below and strongly supported the impugned order passed by the ld. CIT(A). It was further stated that the assessee maintained the regular books of account in the form of cash book, ledger, bank book etc. which were supported by regular sale bills, purchase bills, vouchers for expenses, salary & wages register and stock register. It was contended that the books of account were audited u/s 44AB of the Act and the income shown by the assessee was fully verifiable from such audited accounts. It was further stated that till the date of survey out of total production of 42,709.16 sq. mtr, 28,893.42 sq. mtr was on account of production which was about 2/3rd of the total production. It was contended that the assessee had done job work of M/s Moolight Marble Works Ltd. for their product from Banswara Mines which was soft marble and such job was being carried out to utilize the spare capacity of the assessee. It was also stated that conversion from sq. 8 meter to cubic ft was wrongly made which resulted into incorrect conclusion. It was also stated that the objection of the Assessing Officer with regard to finished goods was factually incorrect. It was further submitted that the ld. CIT(A) had rightly deleted the addition made by the Assessing Officer.
2.11 We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, the Assessing Officer made trading addition by presuming that the assessee ought to have earned the same G.P. Rate as was in earlier years. However, he did not bring any material on record to substantiate that all the conditions prevailing in earlier years were the same as in the year under consideration. In the present case, the Assessing Officer did not point out any suppressed sale or inflation in the expenses. He also did not point out any major defects in the books of account. The difference in quantity pointed out by the Assessing Officer was on account of wrong conversion from sq. meter to cubic ft. It is also well settled that G.P. Rate for every year cannot be consistent. Therefore, the addition made by the Assessing Officer by presuming that the assessee might have achieved the same G.P. Rate as was in earlier years, was not justified. In our opinion, the ld. CIT(A) was fully justified in deleting the addition made by the Assessing Officer. Accordingly , we do not see any merit in this ground of departmental appeal. Thus this ground of the Revenue is dismissed. 3.1 The next issue vide Ground No. 2 relates to deletion of addition made by the Assessing Officer on account of excess stock.
3.2 The facts related to this issue in brief are that during the course of survey conducted at the business premises of the assessee on 11-01-2007, excess stock of marble slabs measuring 9007.69 cft was found. The same was valued at the average cost price of finished goods @ 167 per cft at Rs. 15,06,284/- and the same was surrendered as unexplained investment out of income from undisclosed sources. However, at the time of filing of return, the assessee declared surrendered income at Rs. 8,43,578/- in the return 9 filed. Therefore, the Assessing Officer asked the assessee to show cause as to why the remaining surrendered income at Rs. 6,60,708/- (Rs. 15,04,287 - 8,43,578) should not be added to the total income. In response, it was submitted that the assessee declared in its return 9007.69 cft (7665.54 Sq. mtr ) as excess stock surrendered at the time of survey as under:-
5511.39 cft equal to 46590.19 sq. mtr @ 179.86 = 843578
3490.30 cft equal to 2975.35 sq. mtr @ 52/- = 154718
Total 7665.54 sq. mtr = 998296
It was stated that at the time of survey, the excess stock was due to stock of job work of outsiders parties available in factory premises as well as own production and that the assessee was doing the job work @ 52 /- per cft. So the stock of 3496.30 cft was not the stock of the assessee as this stock belonged to job work debtors in respect of which only income could be booked. It was also stated that at the time of survey, the total quantity of 9007.69 cft was surrendered out of which 5511.39 cft was of assesee's own production. Therefore, the value of the same was taken as income from other sources while other quantity 3496.69 cft was valued as per sawing rates and booked as accrued sawing income through purchases. It was stated that the assessee in verbal discussions with the Assessing Officer surrendered this quantity also, however, it was liable only to book sawing charges in respect of this stock. The Assessing Officer did not find merit in the above submissions of the assessee by observing that the valuation of the excess stock was made on the basis of working of valuation of stock of finished goods given by the assessee at the time of survey and that in the statement recorded on 12-01-2007, the director of the company namely Shri Kailash Choudhary had stated that marble slabs found at the premises of the assessee belonged to the assessee itself and in the stock of Marble Blocks, some blocks were of M/s Moon Light. The Assessing Officer also pointed out that the above statement was confirmed by the Accountant of the assessee company in the statement recorded during the course of survey. The Assessing Officer on the basis of the above statements valued excess 10 stock measuring 9007.69 cft at Rs. 14,50,238/- and since the assessee had declared the excess stock to the extent of Rs. 8,43,578/-, the remaining amount of Rs. 6,06,660/- (Rs. 14,50,238 - 8,43,578) was added to the income of the assessee. 3.3 The assessee carried the matter to the ld. CIT(A) who summarised the submissions of the assessee in para 4.2 of the impugned order which read as under:-
''At the out set it is stated that excess stock determined by the survey team of 9007.69 cft is not disputed however it consists of 4690.19 Sqmtr (5511.39 cft.). Marbles slabs (own) and 2975.35 Sq mtr (3496.30 cft) (job work). At the time of recording of the statement, Shri Kailash Choudhary stated the entire stock was belonging to the company for want of verification with stock register maintained by the company. Whereas 2975.35 Sqmtr marble slabs related to job work was carried forward since 2005 however sawing income accruing there from was credited in to income and taxed in the respective ROI of the company and the same was appearing under the head Sundry Debtors in the name sawing receivables.
In the course of assessment proceeding, vide letter dated 06.11.2009, this fact was brought to the notice of the Ld. A.O. along with evidences for verification. Factually, stock of job work admeasuring 2975.35 Smtr. (3496.30 cft.) pertains to FY 04-05 appearing in balance sheet for the FY 05-06 & 06-07 showing closing stock towards job work. And the same is appearing in stock register for the job in the year 05-06, 06-07 and for the period from 1.4.2006 to 11.1.2007 showing the old stock 2975.35 Smtr. found in survey and has been initialed by the survey team, copy of the relevant abstract of balance sheet and stock register enclosed for your kind perusal, (pg. no ).
The company in result reworked out the amount of surrender on the basis of cost of finished goods and cost of sawing charges @ Rs.179.86 and Rs.52.00 respectively. The rate per unit was worked out on the basis of trading and profit & loss account as prepared as on the date of survey on 11.01.2007. Copy of trading account and working of cost of production and cost of finished goods per Smtr. as on 11.01.2007 and 31.03.2007 enclosed for your kind perusal, (pg no ). These working tallies with calculation of valuation of closing stock submitted in the assessment proceeding. In disregard of these factual, the Ld.A.O. erroneously relied on an unsigned rough working of calculation of cost of production and cost of finished goods is grossly incorrect on account of following mistakes :-
• Amount of freight charges Rs.401252/- included in total cost of Rs.3241771/- in the sheet as included in cost of raw material also and hence duplicity involved.
• Purchase of consumable purchases Rs.938652/- are wrongly considered consumed in calculating cost of production whereas segment purchased of Rs, 180000/-on 11 5.1.2007 and 3/4 of unused blades purchased on 18.08.2006 of Rs.260514/- represents stock were not considered. Copy of ledger account of consumable goods alongwith evidences enclosed.(Pg.
15-20) • Electricity charges for the month of December 2006 of Rs.
157246/- not considered. Copy of ledger account and electricity bill enclosed. (Pg.21-22) With above correction & amendments cost of finished goods comes @ Rs.180/- per Smtr, tallies with the cost disclosed in the Balance Sheet. Similarly cost of production for the valuation of cost of job work (sawing) comes to Rs.68/- per cft. Since sawing charges receivables Rs.154718/- appearing in the balance sheet under the head sundry debtors already been taxed in the year of accrual, could not be taxed once again in the assessment year under consideration on its written off and converting into own stock of the company and more to it the same has been considered and valued at cost @ 180/- as on 31.03.2007.
In result, the company offered additional income of Rs.843578/-on account of 4690.19 Sqmtr marble slabs excess stock on the basis of working and verification from the record against the surrender recorded in survey in adhoc manner without any verification be given credence and be accepted. As for the remaining part of surrender of income arising out of stock of Job Work parties wrongly considered own stock of the company in the course of statements, once these are explained by bringing cogent evidences no addition can be made. It is settled law that section 133A does not empower the Assessing Officer to examine any person on oath and therefore statement recorded in survey has no evidentiary value. The reliance is placed on the following case laws:-
(2003) 263 ITR (Ker) 101 Paul Mathew & Sons vs CIT (2008) 300 ITR Mds 157 CT vs S.KhaderKhan & Sons (2010) 231 CTR (Chatt.) 165ITO vs Vijay Kumar and therefore addition of RS.606660/- made be deleted.
Without prejudice to the arguments put forth with respect to ground No. 1 & 2 before your goodself, submitting but without admitting it is humbly submitted that trading addition made on account of application of G.P. rates as income of Rs.1773882/-, further addition made on account of excess investment in stock cannot be made to the extent of addition under the head income for want of set off.'' 3.4 The ld. CIT(A) after considering the submissions of the assessee observed that the assessee submitted the reasons for declaration of the surrendered stock at Rs. 8,43,578/- in 12 place of Rs. 14,50,238/- and the main reason given was that some stock of marble slabs belonging to other parties on job work was wrongly considered as stock of the assessee but the Assessing Officer did not accept the said submission purely on the basis of the statement of one of the directors recorded on 12-01-2007. The ld. CIT(A) categorically stated that at the time of survey, it was verifiable from the record that excess stock measuring 9007.69 cft included marble slabs measuring 3496.30 cft belonged to third party pertaining to job work and in support of above, the assessee filed the copy of stock register for the year under consideration and for the preceding year which revealed that impugned income on account of sawing charges of marble measuring 3496.30 cft i.e. 2975.35 sq. mtr have been considered for taxation in the earlier year, but found lying in the stock which was verifiable from the stock register found at the time of survey. The ld. CIT(A) accordingly held that the assessee had rightly declared the value of excess stock at Rs. 8,43,578/-. Therefore, the addition made by the Assessing Officer amounting to Rs. 6,06,660/- was deleted 3.5 Now the Department is in appeal.
3.6 The Ld. D.R. for the Revenue supported the order of the Assessing Officer and reiterated the observations made in the assessment order dated 16-12-2009. 3.7 In his rival submissions, the ld. counsel for the assessee supported the impugned order passed by the ld. CIT(A).
3.8 We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, it appears that the stock found at the time of survey included the stock of third parties received by the assessee for job work and it was lying in the premises of the assessee. During the course of survey, while working out the valuation of the stock, this stock of third parties was also included. However, this mistake was corrected at the time of filing of return of income and only the stock which belonged to the assessee was offered for taxation. The ld. CIT(A) in the impugned order 13 categorically stated that he found from the stock register of the assessee that marble measuring 3496.30 sft belonged to third parties and the income accrued on account of sawing was considered for taxation in earlier year. The said observation of the ld. CIT(A) had not been rebutted. We therefore, do not see any valid ground to interfere with the findings of the ld. CIT(A) on this issue. In that view of the matter, we do not see any merit in this ground of the departmental appeal.
4.1 The last issue vide Ground No. 3 relates to disallowance on account of directors remuneration.
4.2 The facts related to this issue in brief are that the Assessing Officer during the course of assessment proceedings noticed that the assessee had paid Rs. 96,000/- towards director's remuneration to Smt. Shashi Devi Choudhary by observing that she was not produced for examination, therefore, this claim was not subject to verification. The Assessing Officer also did not find merit, in the contention of the assessee that Smt. Shashi Devi Choudhary was out of station due to death of her relatives, by observing that the assessee had not mentioned which relative had expired and the place where she had to go. Accordingly, the disallowance of Rs. 96,000/- was made. 4.3 The assessee carried the matter to the ld. CIT(A) who allowed the claim of the assessee by stating that similar disallowance was deleted in earlier years vide order dated 03-06-2010 in ITA No. 187/IT/UDR/2008-09 for the assessment year 2008-09. 4.4 Now the Depreciation is in appeal.
4.5 We have considered the submissions of both the parties and carefully gone through the material available on record. During the course of hearing, nothing was brought on record that the aforesaid referred to order of the ld. CIT(A) had been reversed. We therefore, do not see any merit in this ground of the departmental appeal. 14 5.0 In the result, the appeal filed by the Revenue is dismissed (Order Pronounced in the Open Court on this 24-06-2013.) Sd/- Sd-
(HARI OM MARATHA) (N.K. SAINI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 24th June, 2013
Mishra
Copy to:-
1.The Appellant
2. The Respondent
3. The ld. CIT
4. The ld. CIT(A)
5. The DR
6. The Guard File
Assistant Registrar
ITAT, Jodhpur