ASSOCIATED INSULATION CO.,VADODARA vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(1), VADODARA

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ITA 1567/AHD/2026Status: DisposedITAT Ahmedabad15 October 2026AY 2014-155 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the assessee's counsel stated that all grounds except Ground No. 3 were not pressed. Consequently, all other grounds were dismissed as not pressed. Regarding Ground No. 3, which pertains to the addition of Rs. 43,18,944/- on account of lower profits shown in the revised return, the assessee contended that certain billed amounts to M/s Offshore Infrastructures Ltd. and M/s Toyo Engineering India Ltd. were not recoverable and were settled at lower values. The assessee sought to produce additional evidence to substantiate this claim. The Tribunal, finding that the documents sought to be relied upon had a bearing on the actual determination of income, set aside the order of the Ld. CIT(A) to the extent of confirming the addition of Rs. 43,18,944/-. The matter was restored to the file of the AO with a direction to admit the additional evidence, provide the assessee with an opportunity for further submissions, and then pass a fresh assessment order on this limited issue. Other additions made by the AO and confirmed by the CIT(A) were upheld. The appeal was treated as partly allowed for statistical purposes.

What were the facts?

The assessee, Associated Insulation Co., filed an appeal before the Income Tax Appellate Tribunal (ITAT) against the order of the Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2014-15. The appeal challenged various additions made by the Assessing Officer (AO) and confirmed by the CIT(A). The assessee had revised its return of income, showing lower profits than originally declared. The assessee claimed that certain amounts billed to M/s Offshore Infrastructures Ltd. and M/s Toyo Engineering India Ltd. were not recoverable and were settled at lower amounts, leading to the revised return. The assessee sought to produce additional evidence before the ITAT to support its claim.

What were the issues?

1. Whether the Ld. CIT(A) erred in confirming various additions made by the AO without properly appreciating the facts, evidence, and submissions, and whether such additions are bad in law and need to be deleted? 2. Whether the Ld. CIT(A) erred in sustaining a disallowance of Rs. 38,92,635/- under Section 43B, comprising CST liability, service tax, VAT, and bonus, without appreciating the nature of each liability? 3. Whether the addition of Rs. 43,18,944/- on account of alleged lower profit shown in the revised return is sustainable, given that amounts billed to M/s Offshore Infrastructures Ltd. and M/s Toyo Engineering India Ltd. were substantially not recoverable and settled at lower amounts, as evidenced by additional evidence? 4. Whether, alternatively, the irrecoverable amounts from M/s Offshore Infrastructures Ltd. and M/s Toyo Engineering India Ltd. are allowable as bad debts under Section 36(1)(vii) read with Section 36(2) or as business loss under Section 28/37? 5. Whether the additional evidence relating to the final settlement of bills with M/s Offshore Infrastructures Ltd. and M/s Toyo Engineering India Ltd. is relevant and material, and if so, whether the AO should be directed to verify it and decide the issue afresh? 6. Whether the Ld. CIT(A) erred in confirming the disallowance of Rs. 1,43,014/- being part of site expenses merely on the basis of cash payments, without appreciating practical business difficulties? Assessee's Contentions: - The Ld. Counsel for the assessee stated that all grounds except Ground No. 3 were not pressed. - Regarding Ground No. 3, the assessee argued that the addition of Rs. 43,18,944/- was unsustainable because the amounts billed to M/s Offshore Infrastructures Ltd. and M/s Toyo Engineering India Ltd. were not substantially recoverable and were settled at lower values, necessitating the filing of a revised return showing lower profits. - The assessee sought to rely on additional evidence to demonstrate the irrecoverability and lower settlement of these amounts. - The assessee also argued that these irrecoverable amounts should be allowed as bad debts or business loss. - The assessee requested that the additional evidence be admitted and the matter be remanded to the AO for fresh adjudication. Revenue's Contentions: - The judgment records no specific contentions from the revenue regarding the grounds that were pressed by the assessee.

Which sections of the Income-tax Act were involved?

Section 43B,Section 36(1)(vii),Section 36(2),Section 28,Section 37,Section 139(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI R. GOVINDARAJAN

For Appellant: Shri Jigar Adhyaru, AR, Shri Umesh Kumar Agrawal, Sr.DR
For Respondent: Shri Umesh Kumar Agrawal, Sr.DR
Pronounced: 15/10/2026

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD

BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI R. GOVINDARAJAN, ACCOUNTANT MEMBER

आयकर अपील सं./I.T.A. No. 1567/Ahd/2026 (िनधा�रण वष� / Assessment Year : 2014-15) बनाम Associated Insulation Co. Dy. Commissioner of / 303-304, World Trade Income Tax Vs. Centre, Sayajigunj, Circle1(1)(1), Vadodara Vadodara, Gujarat-390005 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AACFA8033H (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Shri Jigar Adhyaru, AR ��यथ� क� ओर से/Respondent by : Shri Umesh Kumar Agrawal, Sr.DR 14/10/2026 Date of Hearing Date of Pronouncement 15/10/2026

(आदेश)/ORDER Per Sanjay Garg, Judicial Member: The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”), dated 06.02.2026 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2014-15.

ITA No.1567/Ahd/2026 [Associated Insulation Co. vs. DCIT] A.Y. 2014-15 - 2 – 2. The assessee has taken following revised grounds in this appeal:

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has grossly erred in confirming various additions made by the AO without properly appreciating the facts of the case, evidences on record and submissions made by the appellant. The additions confirmed by Ld. CIT(A) are bad in law and needs to be deleted. 2. The Ld. CIT(A) erred in law and on facts in sustaining disallowance u/s 438 amounting to Rs. 38,92,635/-comprising CST liability of Rs. 12,58,305/-, service tax of Rs.21,88,521/-, VAT of Rs. 1,09,450/- and bonus of Rs.3,36,359/-, without properly appreciating the facts and nature of each liability. 3. That on the facts and in the circumstances of the case and in law, the addition of Rs.43,18,944/- made on account of alleged lower profit shown in the revised return is not sustainable, as the amounts of Rs.2,51,66,094/- billed to M/s Offshore Infrastructures Ltd. and M/s Toyo Engineering India Ltd. were substantially not recoverable from the said customers, who settled the final bills of the appellant at amounts materially lower than the amounts claimed, as is evident from the additional evidence sought to be produced before this Hon'ble Tribunal, and such irrecoverable amounts do not represent real income of the appellant. 4. Without prejudice to the above, on the basis of the additional evidence sought to be produced, the appellant submits that the amounts so rendered irrecoverable from M/s Offshore Infrastructures Ltd. and M/s Toyo Engineering India Ltd. are allowable as bad debts u/s 36(1)(vii) r.w.s 36(2) of the Act, or alternatively as business loss u/s 28/37 of the Act, in the year in which the same are allowable, the corresponding sales having been duly offered to tax by the appellant in its original return of income. 5. Without prejudice to the above, the additional evidence relating to the final settlement of the bills with M/s Offshore Infrastructures Ltd. and M/s Toyo Engineering India Ltd. being relevant and material, the Hon'ble Tribunal may be pleased to direct the AO to verify the same and decide the issue afresh after giving the appellant a reasonable opportunity of being heard.

ITA No.1567/Ahd/2026 [Associated Insulation Co. vs. DCIT] A.Y. 2014-15 - 3 – 6. The Ld. CIT(A) erred in law and on facts in confirming disallowance of Rs. 143014/-being part of site expenses merely on the basis that payments were made in cash without appreciating the practical bisiness difficulties and the necessity of incurring such expenses at the site. 7. That the Hon'ble Tribunal may kindly be pleased to admit and consider the additional evidence to be filed under Rule 29B of the Income-tax (Appellate Tribunal) Rules, 1963, as the appellant was unable to produce such evidence before the lower authorities owing to non-availability of the documents at that time as the said additional evidence is relevant and material for the proper adjudication of the issues involved in the appeal and its admission is necessary for rendering substantial justice. That the non-production of such evidence earlier was neither deliberate nor due to any negligence on the part of the appellant, but solely because of its unavailability. 8. The appellant craves leave to add, alter, amend or withdraw any ground of appeal at or before the time of hearing.”

3.

At the outset, Ld. Counsel for the assessee stated at Bar that, except Ground No.3, all other grounds are not pressed. He has also given noting, in this respect, on the revised grounds of appeal itself. In view of this, all other grounds, except Ground No.3, are, hereby, dismissed being not pressed.

4.

Now coming to Ground No.3, the assessee, vide this ground, has contested the addition made by the Assessing Officer (in short, “the AO”) of Rs.43,18,944/- made on account of showing lower profits in the revised return of income as compared to the original return of income filed u/s 139(1) of the Act. Ld. Counsel for the assessee has submitted that certain amounts, which were payable by the customers, namely, M/s Offshore Infrastructures Ltd. and M/s Toyo Engineering India Ltd., were not substantially

ITA No.1567/Ahd/2026 [Associated Insulation Co. vs. DCIT] A.Y. 2014-15 - 4 – recoverable and were settled at lower value than originally billed and, hence, the revised return was filed showing lower profits than earlier. Ld. Counsel for the assessee wants to rely on certain additional evidences in this respect. The assessee also filed an application for admission of additional evidences on file to produce following evidences:

“1. Final claim letter of the appellant dated 19.05.2016 with statement of RA-10 bills and net amount payable of Rs 1,93,72,729/- 2. Conditional claim letter dated 29.04.2017 of OIL to Bank of Baroda for encashment of Bank Guarantee No. 0188IGPERO07513 of Rs 1,29,00,014/- 3. Statement of Final Settlement with the appellant dated 22.05.2017 (Annexure I to MOM dated 22.05.2017) showing balance payable of Rs 9,67,025.62 against the appellant's claim of Rs 1,94,01,569/-. 4. E-mail correspondence dated 29.05.2017 with OIL and notarised affidavit dated 29.05.2017 relating to discharge of the Bank Guarantee 5. Minutes of Meeting dated 06.11.2015 with Toyo Engineering India Ltd. with Annexure-A, recording full and final settlement at Rs 6,50,000/- against the appellant's claim of Rs 36,40,116/-

Since, the documents sought to be relied upon by the assessee have a bearing on the actual determination of the income of the assessee, therefore, order of the Ld. CIT(A) to the extent of confirming the addition of Rs.43,18,944/- is set aside and the matter on this limited issue is restored to the file of the AO with a direction to admit the additional evidences and give proper opportunity to the assessee to make further submissions and,

ITA No.1567/Ahd/2026 [Associated Insulation Co. vs. DCIT] A.Y. 2014-15 - 5 – thereafter, to pass a fresh assessment order on this limited issue in accordance with law. Other additions made by the AO and further confirmed by the Ld. CIT(A), are upheld.

5.

In the result, the appeal of the assessee is treated as partly allowed for statistical purposes.

This Order is pronounced on 15/10/2026

Sd/- Sd/- (R. GOVINDARAJAN) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 15/10/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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