Amin Silk Mills Pvt.Ltd.,, Surat vs Assessee

1. आयकर अपील सं./I.T.A. No.3157/Ahd/2011 - A.Y.2008-09 2. आयकर अपील सं./I.T.A. No.916/Ahd/2012 - A.Y.2009-10 M/s.Amin Silk Mills बनाम/ The Addl.CIT Pvt.Ltd. Vs. Range-I, Plot No.83/84/85, GIDC Surat Pandesara, Surat थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. AACCA 3420 H (अपीलाथ% /Appellant) .. (&'यथ% / Respondent)

अपीलाथ% ओर से / Appellant by : Shri K.N. Bhatt, AR &'यथ% क) ओर से/Respondent by : Shri Nimesh Yadav, Sr.DR

ु वाई क) तार ख / सन Date of Hearing 15/06/2015 घोषणा क) तार ख /Date of Pronounce ment 19/06/2015

आदे श / O R D E R

PER SHRI KUL BHARAT, JUDICIAL MEMBER :

Both these appeals by the Assessee are directed against the separate orders of the Ld.Commissioner of Income Tax(Appeals)-I, Surat ('CIT(A)' in short) dated 30/09/2011 and 20/03/2012 pertaining to Assessment Years (AYs) 2008-09 and 2009-10. Since identical grounds have been raised in both these appeals by the assessee, therefore these ITA Nos.3157/Ahd/2011 & 916/Ahd/2012 Amin Silk Mills P.Ltd. vs. The Addl.CIT Asst.Years - 2008-09 & 2009-10 respectively -2-

appeals were heard together and are being disposed of by this consolidated order for the sake of convenience.

2. First, we take up the Assessee's appeal in ITA No.3157/Ahd/2011 for AY 2008-09 as a lead case. The Assessee has raised the following grounds of appeal:-

1. In view of the facts and circumstances of the case, the Ld.CIT(A) ought to have held that the Ld.A.O. has erred in law and in facts in adding the sum of Rs.5,98,461 as difference in the opening and closing stock of work-in-progress and hence Your Appellant most humbly Prays that the impugned addition be deleted.

2. In view of the facts and circumstances of the case, the Ld.CIT(A) ought to have held that the Ld.A.O. has erred in law and in facts in disallowing on ad-hoc basis 10% of the expenditure on repairs and maintenance of plant and machinery which amounted to Rs.2,83,028 and hence Your Appellant most humbly Prays that the impugned addition be deleted.

3. Such other relief(s) to which the appellant may be lawfully entitled to.

2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 10/12/2010, thereby the Assessing Officer (AO in short) made addition of Rs.5,98,461/- as difference in the opening and closing stock of work-in-progress. The AO further made disallowance of expenditure of Rs.2,83,028/- being 10% of the plant & machinery repairs & maintenance expenses of Rs.28,30,276/-. Against the said assessment ITA Nos.3157/Ahd/2011 & 916/Ahd/2012 Amin Silk Mills P.Ltd. vs. The Addl.CIT Asst.Years - 2008-09 & 2009-10 respectively -3-

order, the assessee preferred an appeal before the ld.CIT(A) and the ld.CIT(A) after considering the submissions of the assessee, dismissed the appeal. Aggrieved by the order of the ld.CIT(A), now the assessee is further in appeal before us.

3. Ground No.1 of assessee's appeal is against confirming the addition of Rs.5,98,461/- made on account of difference in the opening and closing stock of work-in-progress. The ld.counsel for the assessee submitted that an identical ground was raised before the Tribunal (ITAT "D" Bench Ahmedabad) in assessee's own case in ITA No.976/Ahd/2010 for AY 2007-08 and the Tribunal vide its order dated 31/08/2012 was pleased to direct the Assessing Officer to treat the closing stock of last year as opening stock of current year.

3.1. On the other hand, ld.Sr.DR supported the orders of the authorities below, however fairly conceded that in assessee's own case in AY 2007- 08, the Tribunal has directed the AO to allow the closing stock of preceding year as opening stock of current year.

4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the Coordinate Bench of this Tribunal in assessee's own case bearing ITA No.976/Ahd/2010 for AY 2007-08 was pleased to ITA Nos.3157/Ahd/2011 & 916/Ahd/2012 Amin Silk Mills P.Ltd. vs. The Addl.CIT Asst.Years - 2008-09 & 2009-10 respectively -4-

decide the issue of difference in the opening and closing stock of work- in-progress in para-7 of its order dated 31/08/2012, by observing as under:-

"7. We have heard the rival submissions and perused the material available on records. It is not disputed by Revenue that in AY 2005-06 the assessee was allowed to treat the closing stock of earlier year as opening stock of next year. It is well settled that the closing stock of earlier becomes the opening stock of succeeding year. In this view of matter and examining all aspects, it would be in the interest of justice if the assessing officer is directed to allow the closing stock of last year as the opening stock of current year. We accordingly, hereby direct the assessing officer to allow the closing stock of last year as the opening stock or current year. This ground of appeal is allowed for statistical purposes."

4.1. No material has been placed before us by the respective parties suggesting that there is a change into the facts and circumstances of the case in the year under appeal. Therefore, taking a consistent view, we hereby direct the AO to allow closing stock of preceding year as opening stock of current year. With this direction, this ground of assessee's appeal is allowed for statistical purposes.

5. Ground No.2 is assessee's appeal is against adhoc disallowance of 10% of the expenditure on repairs and maintenance of plant and machinery. The ld.counsel for the assessee submitted that the authorities below were not justified in making the adhoc disallowance and confirming the same.

ITA Nos.3157/Ahd/2011 & 916/Ahd/2012 Amin Silk Mills P.Ltd. vs. The Addl.CIT Asst.Years - 2008-09 & 2009-10 respectively -5-

5.1. On the other hand, ld.Sr.DR supported the orders of the authorities below and submitted that before the AO the assessee failed to furnish the requisite details in support of the expenditure.

6. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the AO in his assessment order in para-5 has observed that in the instant case, the assessee has simply furnished copy of ledger account of the plant & machinery repairs and maintenance expenses claimed during the year. Mere furnishing of the copy of the ledger account would not prove that the expenditure has been incurred wholly and exclusively for the purpose of the business. It is observed by the AO that no other supporting evidence has been produced for verification. It is transpired from the records that the assessee has not filed any supporting evidence in the form of bills or vouchers either before the AO or before the ld.CIT(A) and even before this Tribunal also no material has been placed suggesting that the assessee has incurred the said expenditure. Under these facts, we do not see any reason to interfere with the orders of the authorities below on this issue. Thus, this ground of assessee's appeal is dismissed.

ITA Nos.3157/Ahd/2011 & 916/Ahd/2012 Amin Silk Mills P.Ltd. vs. The Addl.CIT Asst.Years - 2008-09 & 2009-10 respectively -6-

7. Ground No.3 is general in nature which requires no independent adjudication. As a result, assessee's appeal in ITA No.3157/Ahd/2011 for AY 2008-09 is partly allowed for statistical purposes.

8. Now, we take up the Assessee's appeal in ITA No.916/Ahd/2012 for AY 2009-10. The assessee has raised the following grounds of appeal:-

1. In view of the facts and circumstances of the case, the Ld.CIT(A) ought to have held that the Ld.A.O. has erred in law and in facts in adding the sum of Rs.21,26,942 as difference in the opening and closing stock of work-in-progress and hence Your Appellant most humbly Prays that the impugned addition be deleted.

2. In view of the facts and circumstances of the case, the Ld.CIT(A) ought to have held that the Ld.A.O. has erred in law and in facts in disallowing on ad-hoc basis 10% of the expenditure on repairs and maintenance of plant and machinery which amounted to Rs.2,83,028 and hence Your Appellant most humbly Prays that the impugned addition be deleted.

3.Such other relief(s) to which the appellant may be lawfully entitled to.

9. In this appeal, the facts are identical to the facts of assessee's own case in ITA No.3157/Ahd/2011 for AY 2008-09(supra). The respective representatives of the parties adopted their arguments as were advanced in ITA No.3157/Ahd/2011(supra), wherein we have allowed the ground No.1 for statistical purposes with a direction to AO to allow the closing stock of preceding year as opening stock of current year. Accordingly, ground No.1 of assessee's appeal in ITA No.916/Ahd/2012 for AY 2009- 10, is allowed for statistical purposes. The AO is directed to allow the ITA Nos.3157/Ahd/2011 & 916/Ahd/2012 Amin Silk Mills P.Ltd. vs. The Addl.CIT Asst.Years - 2008-09 & 2009-10 respectively -7-

closing stock of the preceding year as opening stock of the current year as no change into facts has been pointed out in the year under appeal. 9.2. Apropos to ground No.2, both the parties have adopted their arguments as were advanced in assessee's own case in ITA No.3157/Ahd/2011 for AY 2008-09. Since the facts are identical to the facts of assessee's own case in AY 2008-09(supra) and assessee has not placed any material in support of its claim for expenditure towards repair and maintenance of plant and machinery, therefore this ground of assessee's appeal is rejected.

9.3. Ground No.3 is general in nature which requires no independent adjudication. As a result, this appeal of the assessee for AY 2009-10 is also partly allowed for statistical purposes.

10. In the combined result, both the appeals of the assessee, i.e. ITA No.3157/Ahd/2011 for AY 2008-09 & ITA No.916/Ahd/2012 for AY 2009-10, are partly allowed for statistical purposes. Order pronounced in the Court on Friday, the 19th day of June, 2015 at Ahmedabad.

Sd/- Sd/- (अ नल चतव ु द ) (कुल भारत) लेखा सद य या यक सद य ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 19 / 06 /2015 ट .सी.नायर, व. न.स./T.C. NAIR, Sr. PS ITA Nos.3157/Ahd/2011 & 916/Ahd/2012 Amin Silk Mills P.Ltd. vs. The Addl.CIT

Asst.Years - 2008-09 & 2009-10 respectively -8-

आदे श क त"ल#प अ$े#षत/Copy of the Order forwarded to :

1. अपीलाथ% / The Appellant

2. &'यथ% / The Respondent.

3. संबं4धत आयकर आयु6त / Concerned CIT

4. आयकर आयु6त(अपील) / The CIT(A)-I, Surat

5. 7वभागीय & त न4ध, आयकर अपील य अ4धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड; फाईल / Guard file.

आदे शानुसार/ BY ORDER,

स'या7पत & त //True Copy//

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad

1. Date of dictation .. 15.6.15 (dictation-pad 9+ pages attached at the end of this File)

2. Date on which the typed draft is placed before the Dictating Member ...15.6.15

3. Other Member...

4. Date on which the approved draft comes to the Sr.P.S./P.S.................

5. Date on which the fair order is placed before the Dictating Member for pronouncement......

6. Date on which the fair order comes back to the Sr.P.S./P.S.......19.6.15

7. Date on which the file goes to the Bench Clerk.....................19.6.15

8. Date on which the file goes to the Head Clerk..........................................

9. The date on which the file goes to the Assistant Registrar for signature on the order..........................

10. Date of Despatch of the Order..................