SHELTER PHARMA LIMITED,SABARKANTHA vs. DCIT SABARKANTHA CIRCLE HIMATNAGAR NOW DCIT CIRCLE 2(1)(1) AHMEDABAD, AHMEDABAD

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ITA 965/AHD/2026Status: DisposedITAT Ahmedabad26 October 2026AY 2014-1517 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the return filed on 20.05.2015 was not a valid rectification under Section 139(9) as it materially altered the declared income, going beyond the scope of curing the defect. The CIT(A) was justified in upholding the AO's decision to treat it as invalid and proceed with assessment based on the original return. Therefore, the disallowance of Rs. 2,38,95,862 (differential amount) was upheld. Regarding the addition of Rs. 17,55,058 under Section 40(a)(ia), the Tribunal found no justification for the addition and ordered its deletion. For the addition of Rs. 27,09,330 on account of estimated expenses, the Tribunal found merit in the assessee's submissions that all details were provided, books were audited, and no discrepancies were noted. The ad-hoc disallowance of 20% was deleted. Regarding the disallowance of Rs. 2,70,026 for depreciation, the Tribunal found that the assessee had furnished sufficient details and satisfied the conditions under Section 32(1). The disallowance was deleted. Grounds 6 and 7 were considered consequential and required no specific adjudication. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Shelter Pharma Limited, filed its return of income for Assessment Year 2014-15 on January 17, 2015, declaring a total income of Rs. 2,38,95,862. The CPC, Bangalore, issued a notice under Section 139(9) of the Income Tax Act, 1961, stating the return was defective due to unpaid self-assessment tax. The assessee, instead of rectifying the defect, filed a 'revised' return on May 20, 2015, declaring a total income of Rs. 36,765. The Assessing Officer (AO) rejected this 'revised' return as invalid, deeming it an attempt to materially alter the declared income beyond the scope of Section 139(9) and proceeded to assess income based on the original return. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's action. The assessee appealed to the ITAT against this order, along with other grounds related to disallowances.

What were the issues?

1. Whether the Tribunal had to decide if the return filed on 20.05.2015, in response to a defect notice under Section 139(9), was a valid rectification or an invalid revised return, and if the assessment should be based on the original return or the 'rectified' return, as per Section 139(1), 139(5), and 139(9) of the Income Tax Act, 1961. - Assessee argued that the return filed in response to the Section 139(9) notice was within the prescribed time and rectified the defect, thus having legal sanctity. - Revenue argued that the 'rectified' return materially altered the declared income, exceeding the scope of Section 139(9) and that Section 139(5) was not invoked, making it invalid. 2. Whether the Tribunal had to decide if the disallowance of Rs. 17,55,058 under Section 40(a)(ia) of the Act was justified. - Assessee argued there was no justification for the addition. - Revenue's arguments are not recorded. 3. Whether the Tribunal had to decide if the addition of Rs. 27,09,330 on account of estimated expenses was justified. - Assessee argued that all relevant evidence was produced, books were audited, and expenses were petty, with no cash payments exceeding Rs. 20,000 to a single payee. - Revenue's arguments are not recorded. 4. Whether the Tribunal had to decide if the disallowance of Rs. 2,70,026 on account of depreciation on fixed assets was justified. - Assessee argued that all details, bills, and vouchers were furnished, assets were from business funds, used for business, and reflected in the audited balance sheet, satisfying Section 32(1) conditions. - Revenue's arguments are not recorded. 5. Whether the Tribunal had to decide if penalty proceedings under Section 271(1)(c) were justified. - Assessee argued no default was committed. - Revenue's arguments are not recorded. 6. Whether the Tribunal had to decide if interest under Sections 234A, 234B, and 234C was warranted. - Assessee argued it was unwarranted. - Revenue's arguments are not recorded.

Which sections of the Income-tax Act were involved?

Section 139(1),Section 139(9),Section 139(5),Section 40(a)(ia),Section 271(1)(c),Section 234A,Section 234B,Section 234C,Section 32(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI R. GOVINDARAJAN

For Appellant: Shri Anil Kshatriya, AR, Shri Babasaheb Punappa Bhosale, Sr
For Respondent: Shri Babasaheb Punappa Bhosale, Sr
Pronounced: 26/10/2026

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI R. GOVINDARAJAN, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 965/Ahd/2026 (िनधा�रण वष� / Assessment Year : 2014-15) बनाम Shelter Pharma Limited DCIT / 1 Shelter Nagar, Opp. Bus Sabarkantha Circle Vs. Stand, Himmatnagar, Dist. Himatnagar Sabarkantha, Himatnagar, Gujarat-383001 Now DCIT Circle 2(1)(1), Ahmedabad �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AALCS3158D (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Shri Anil Kshatriya, AR. ��यथ� क� ओर से/Respondent by : Shri Babasaheb Punappa Bhosale, Sr. D.R. 04/08/2026 Date of Hearing Date of Pronouncement 26/10/2026 (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 23.02.2026 passed under Section 250 of the Income Tax Act, 1961 (hereinafter

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 2 –

referred to as the “Act”) and relates to Assessment Year (A.Y.) 2014-15.

2.

Assessee has raised following Grounds in this appeal:

“1. On the peculiar facts and circumstances of the case and in law, the Ld.CIT(A) has grossly erred in sustaining the AO’s impugned assessment order ignoring the appellant’s valid return of income u/s.139(4) of the Act and computing assessment on the basis of invalid and non-est return of income being bad in law, illegal and without valid jurisdiction. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has grossly erred in sustaining the AO’s action in adopting the income of Rs.2,38,95,862/- as against the return income u/s.139(4) of the Act, declaring total income of Rs.36,765/-, the differential amount between the two liable to be deleted. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has grossly erred in sustaining addition of Rs.17,55,058/- so made by the AO 2 u/s.40(a)(ia) of the Act when there is no justification for impugned addition, the same deserves to be deleted. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) has grossly erred in sustaining addition of Rs.27,09,330/- so made by the AO on account of estimated expenses, when there is no justification for impugned addition, the same deserves to be deleted. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) has grossly erred in sustaining disallowance of Rs.2,70,026/- so made by the AO on account of rejecting claim of depreciation on fixed assets, the same deserves to be deleted. 6. On the facts and circumstances of the case and in law, the ld.CIT(A) has grossly erred in justifying initiation of penalty proceedings u/s.271(1)(c) of the Act, when the appellant has not committed any such default, the same may kindly be deleted. 7. On the facts and circumstances of the case and in law, the ld.CIT(A) has grossly erred in dismissing the ground relating to charging of interest u/s.234A, 234B and 234C of the Act, when it is wholly unwarranted. The same may kindly be deleted.”

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 3 – Ground Nos. 1 & 2 - Validity of assessment and rejection of rectified return- Disallowances of expenses on account of changes in inventories:

3.

The assessee is a domestic public company engaged in the business in manufacturing and trading of pharmaceutical products. The assessee maintains regular books of account on mercantile basis which are got audited both under the Companies Act as well as u/s 44AB of the IT Act. The assessee submitted its e-return of income on 17-1-2015 declaring total income of Rs.2,38,95,862/-. The said return of income filed u/s 139(1) of the Act, came under process for the purpose of Section 143(1) of the Act and the CPC, Bangalore issued a notice u/s 139 (9) of the Act dated 13-4-2015 stating that the return so filed is found defective u/s 139(9), under error code 38 i.e. tax payable in the return has not been paid and the assessee was afforded an opportunity to rectify the above mentioned defect within a period of 15 days from the receipt of the notice by providing the required corrections / information through on-line mode. The assessee instead of removing the defect, filed a revised return of income dated 20.05.2015 showing total income of Rs. 36,765/- only.

4.

During the course of the assessment proceedings, the A.O. issued a show-cause notice dated 8-12-2016, requiring the assessee to show cause as to why the revised return of income filed by the assessee company should not be rejected as per provision of the Act? In response to the same, the assessee filed a reply dated 13-

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 4 – 12-2016 stating that the assessee has not filed revised return of income for the year under consideration, rather the assessee has filed return in response to notice u/s139(9) from the CPC and therefore, in the instant case no provision u/s 139(5) shall attract. The assessee further stated that the return in response to notice u/s 139(9) having been within the time limit prescribed under the Act and having uploaded through on-line mode with the CPC, the original return filed stood rectified u/s139(9) and the return uploaded on 20-5-2015 proves legal sanctity under the provisions of the IT Act, 1961.

5.

However, the A.O. observed that the original return of income was filed on 17/01/2015 by the assessee company, whereas, the due date for return of income was 30/11/2014 and the assessee company has not paid the taxes. In view of these facts, the return of income filed by the assessee company was belated and defective one. As the assessee company has filed return of income after specified due date which was also invalid, the company is not eligible for revising its return of income as per provisions of section 139(5) of the I.T. Act, 1961. He therefore treated the revised return of income filed by the assessee on 20-5- 2015 as invalid and income declared therein was not considered for the computation of income and proceeded to assess the income as per the originally filed return of income. He therefore, made the disallowance claimed as loss in the revised return of

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 5 – income on account of change in the value of the inventories of finished goods, WIP & stock in trade.

6.

In first appeal, the Ld. CIT(A) observed that the scope of section 139(9) is confined to removal of defects as intimated in the notice issued by the Assessing Officer (in short, “the AO”) / CPC in this respect, and does not authorize substitution of the original return by filing a fresh computation materially altering the declared income. He observed that in the present case, it was evident from the record that the so-called rectified return did not merely cure the defect relating to non-payment of self-assessment tax, but resulted in a drastic reduction of returned income from Rs. 2,38,95,862/- to Rs. 36,765/-. He held that such substantial variation cannot be regarded as a mere curing of a defect; rather, it constitutes a fundamental alteration of the return itself. He further held that where an assessee seeks to modify the income originally declared, the only permissible course is to file a revised return within the parameters of section 139(5). He observed that in the case in hand the assessee did not file the return dated 20.05.2015 invoking section 139(5) nor did it establish compliance with the conditions prescribed therein. Instead, it sought to treat the return as rectification under section 139(9), though the alteration went far beyond the defect pointed out in the notice. He held that though, a validly filed revised return under section 139(5), substitutes the original return, however, a return filed under the guise of rectification under section 139(9) cannot validly

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 6 – substitute the original return when it travels beyond removal of the defect intimated. He held that where an assessee seeks to revise income materially, recourse must be taken to section 139(5), subject to its time limitations and conditions. He, therefore, held that that the Assessing Officer was justified in treating the return filed on 20.05.2015 as not constituting a valid rectification under section 139(9) and in proceeding to frame the assessment on the basis of the original return filed under section 139(1). He, therefore, upheld the disallowance so made by the AO.

7.

Before us, the Ld. AR of the assessee submitted that there were arithmetical mistakes in inventories as on the 31-3-2014, in as much as some of the stock of goods which were very perishable in nature and some of the stock being damaged and certain goods were lying which were expiry-dated medicines and did not have realizable value in the said stock and also the stock values were shown on higher side because of calculation mistake. The Ld. Counsel has submitted that as per the certificate from laboratory experts produced before the AO, there were in all 161 products which had not been found viable due to un-controlled temperature, humidity and hygroscopic conditions. All liquid products found fungus growth and bad smells, all tablets, capsules and powder found highly hygroscopic. All ointments were liquidified due to high temperature and the assessee company was asked to take immediate action and destroyed all material appropriately. Acting under the said analysis report dated 23-1-2015 the assessee

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 7 – company made necessary arrangement to destroy such unviable / un-serviceable products. This resulted into decrease in quantity as well as value of pharma products, and the assessee had, under such peculiar facts and circumstances, thought it prudent to make revision in value of inventories as on 31-3- 2014. Except the revision in value of closing stock, there has been no change in sales, purchases and / or expenses charged to trading account and profit & loss account. Thus, the assessee categorically explained the reasons for variation in valuation of inventories as on 31-3- 2014 and demonstrated with the help of audited books of account that rest of the financial details were unchanged in conformity with the original audit report. The loss arose on 31-3-2014 only but due to difference of opinion on such valuation, the management of the company could not conclude the value of closing stock till end of January 2015. It is stated that such kind of losses do arise in big pharmaceutical companies, the product of the pharmaceutical company are perishable in nature and also the product get expired / damaged / loss due to its perishable nature. The Ld. Counsel has further submitted that during the course of assessment proceedings the assessee produced audited books of account before the AO for necessary verification. That the AO did not pin-pointedly detect any deficiency / defects in the books of account so produced and the AO ultimately dropped his proposed action of carrying out special audit u/s 142(2A) of the Act through his notice dated 12-9-2016, on the basis of material evidences submitted by the assessee. Not only this but the AO also dropped

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 8 – his proposed action of disallowance of expenses of Rs.1,39,90,604 as noted in para 5 of the assessment order. The Ld. Counsel has further submitted that the assessee is a public company whose accounts are open to the general public. That the assessee has furnished a bonafide and plausible explanation in respect of material fact, that the error or mistake in original return of income were bonafide and the assessee discovered them only after filing the original ROI and immediately on receipt of notice u/s 139(9) from the CPC, the assessee prepared and submitted that revised return of income after getting the revised audit report and the difference in valuation of inventories / closing stock as on 31-3- 2014 worked out accordingly. Rest of the financial details were the same as in the original audit undertaken. Thus, the revision of return was only because of change in valuation of closing stock. When the valuation took place in respect of the inventories as on 31-3-2014, then it has a corresponding effect to the opening stock in the next year i.e. as on 1-4-2014 and it would not result in any advantage to the assessee nor any revenue loss to the department.

8.

The Ld. DR on the other hand has relied upon the findings of the lower authorities on this issue.

9.

We have considered the rival contentions of both the Ld. Representatives of the parties and gone through the record. So far as the finding of the AO that since the original return of income was filed on 17/01/2015 by the assessee company whereas, the due

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 9 –

date for return of income was 30/11/2014 and the assessee company has not paid the taxes, hence, the return of income filed by the assessee company being belated and defective was invalid. The company, therefore, was not eligible for revising its return of income as per provisions of section 139(5) of the I.T. Act, 1961. There is also merit in the findings of the Ld. CIT(A) to the effect that the second return filed by the assessee can also not be treated as a rectification of return of income u/s 139(9) of the Act is also held to be justified as the only defect pointed out by the AO was that the assessee had not paid the due taxes as per its return of income and under that garb, the assessee cannot be allowed section 139(9) to substitute the original return by filing a fresh computation materially altering the declared income. from Rs. 2,38,95,862/- to Rs. 36,765/-. Both the lower authorities having held so, the question before us at this stage is as to what will be the status of the second return filed by the assessee. At this stage, we deem it relevant to reproduce the provisions of Section 139(4) of the Act as per in operation for assessment year under consideration i.e. A.Y. 2014-15.

Section 139 (4) “Any person who has not furnished a return within the time allowed to him under sub- section (1), or within the time allowed under a notice issued under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier : Provided that where the return relates to a previous year relevant to the assessment year……….” 10. Admittedly, the first return of income filed by the assessee u/s 139(1) of the Act was not within the prescribed time period

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 10 – and no taxes were paid by the assessee as per the said return of income. The AO held the said return of income as an invalid return u/s 139(1) of the Act and also held that the assessee was not even allowed to either revise the same u/s 139(5) or to rectify the same u/s 139(9) of the Act. Under such circumstances, the first return filed by the assessee is to be treated as nonest. Therefore, the second return filed by the assessee was a valid return filed u/s 139(4) of the Act and the same was within the time prescribed as per the statute. Both the lower authorities, otherwise, have not pointed out any defect in the audited account and revaluation of the inventory and also the reasons given by the assessee for the same. The Ld. AR has also explained that the assessee being in the business of manufacturing of pharmaceutical products is under legal obligation for obtaining a license under the Drugs & Cosmetic Act, 1940 and the assessee company holds such licence bearing no. GA/2/12, dated 30.01.2008. It has been further explained that as per the Drug & Cosmetic Act, 1940 and the relevant Rules made thereunder, the assessee is supposed to destroy the stock which does not comply with the standard tests in such way that it would not spread any decease / infection by way of proper disinfection method. The assessee adhering to the said rules and as per the Laboratory Tests & Reports had destroyed the stock which did not conform with the prescribed standards. In this manner, the assessee suffered huge loss as explained above, which has not been disputed by the lower authorities. Therefore, the addition made by the AO by assessing the income of the

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 11 – assessee on the basis of original return of income, which the AO, himself, has held as an invalid return, is not sustainable and the same is, accordingly, ordered to be deleted.

11.

Ground Nos. 1 & 2 of the appeal of the assessee stand allowed.

Ground No.3 :

12.

Vide Ground No.3, the assessee has agitated against the disallowance of Rs.17,55,05,8/- made by the AO u/s 40(a)(ia) of the Act by observing that though, the assessee had deducted the TDS on the aforesaid amount, however, has not deposited the same with the Government on or before the specified date u/s 139(1) of the Act. The Ld. Counsel for the assessee, however, has submitted that the assessee had already produced 3 challans amounting to Rs.88,804/- in the course of assessment proceedings and the fourth challan of Rs.4,412/- which inadvertently remained to be deposited has been already paid on 31.08.2016. He has further submitted that the TDS details were available in Annexure-V to the Tax Audit Report at page-45 thereof. He has submitted that the AO, however, did not make any effort to cross verify the facts on record. The Ld. Counsel has further submitted that even the persons to whom payments have been made are regular tax payers and they have included the payments made by the assessee company to them in their accounts. He, therefore, has submitted that even otherwise, since, the recipients having filed their returns

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 12 –

and offered the sums received to tax, no disallowance could be made u/s 40(a)(ia) of the Act. The Ld. AR has also relied upon the following chart depicting the payments made to various persons with details of TDS deducted and date of payment thereof.

Sr. Name & Address PAN Nature of Amount Amount of Date of No. Of payee Payment / (Rs) TDS (Rs.) Payment Section 1. Shri Nishar AINPS8183K Director's 6,96,000/- 47,500/- 9/12/2016 Sabugar Bandu Remuneration Bhavan Nav Section 192B garm fali Himmatnagar. 2. Mustaqim ADRPS4192B Director's 4,48,000 12,292/- -do- Sabugar Nav Remuneration Gari Stree Navi Section 192B Vohra Vaw Himmatnagar. 3. Shakeel Sabugar AQHPS1201L Director's 4,01,400 13,200/- -do- Bandu Bhavan, Remuneration Nav garm fali, Section 192B Himmatnagar. 4. M/s Group M AACCM7365 Commission 88,242 4,412/- 31/8/2016 Media Ind Ltd., Section 194H Dheej Kawal, LBS Marg, 4,412/- 9/12/2016 Vikroli (W), Mum 400079 5. Masoom K. Shah BXOPS6821F Professional 31,500 5,400/- 9/12/2016 62, Sharda Fees Mandir, Paldi Section 194J Ahmedabad-7 6. M/s. D.A. AATPR7200A Professional 67,416 6,000/- 9/12/2016 Rupavala, CA Fees 705, Mahakant Section 194J Complex, Opp: V.S. Hospital, Ahmedabad- 38006. Total 17,55,050/- 93,216/-

13.

The Ld. Counsel, therefore, has submitted that the assessee cannot be held to be assessee in default u/s 201(1) of the Act. After hearing the Ld. Representative of the parties, since, we are of the view that both the lower authorities have not properly

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 13 – examined this issue, we, therefore, restore this issue to the file of the AO for decision afresh on this issue. All the grounds both legal and factual will be available to the assessee and the AO after duly considering the submissions of the assessee will decide this issue afresh in accordance with law.

Ground No.4:

14.

Vide Ground No.4, the assessee has agitated against the action of the Ld. CIT(A) in sustaining disallowance of Rs.27,09,330/- made by the AO out of sales promotions expenses on adhoc basis. During the assessment proceedings, the AO noted that the assessee had booked various expenses, such as, Sales Promotion expenses, Sales Team Travelling Expense, Product Development charges, Taxi Tour Expenses, Transportation expenses, Printing & Stationery Expenses etc. The AO noted that the assessee had paid various expenses in cash for which self made vouchers were produced. On perusal of the said vouchers, the AO noted certain discrepancies, detailed as under: (a) On perusal of the vouchers in support of Sales Team travelling expenses, it is noticed that tickets, bills are not supported. Voucher does not mentions bill no., ticket no. (b) On perusal of the vouchers in support of Sales Team travelling expenses, it is noticed that the distance or place of visit, period of stay does not have any effect on the amount of expenses. (c) On perusal of the vouchers in support of the transportation expenses, it is noticed that Voucher does not mentions bill no.,

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 14 – vehicle no. Further, it is also noticed that most of the vouchers are unsigned & unstamped. Not even a single voucher contains the signature of the receiver. (d) On perusal of the vouchers in support of the R & D expenses, other expenses & Product Development expenses, it is noticed that not even a single voucher contains the signature of the receiver and signature of the person preparing the voucher. The AO, therefore, disallowed, 20% of the above expense, which comes of Rs.27,09,330/-, and added back the same to the total income of the assessee company. The Ld. CIT(A) confirmed the addition so made by the AO.

15.

We have heard the rival contentions and perused the material on record. The Ld. AR of the assessee has submitted that the assessee had produced all the relevant evidences to prove the genuineness of the expenses. He has further submitted that the books of accounts of the assessee were duly audited and that the Auditors have not pointed out any defect and discrepancy in the same. The Ld. Counsel referring to the various pages of the paper book has submitted that the assessee had furnished the detailed ledger accounts under each heads giving date-wise amounts debited with voucher / bill numbers and narration against each of the entries. That the expenses were petty expenses and on none of the occasions cash payment in excess of Rs.20,000/- was made to a single payee. That the ledger account alongwith supporting vouchers very well contained names of payees, purpose of incurring expenses and signatures of payees on proper revenue

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 15 – stamps. Not only this but the vouchers contained signatures of persons who have checked such vouchers, who have approved for payment and signatures of the accountant who have actually made payment against such vouchers. He has further submitted that the assessee is a public company whose accounts are open to the general public. Besides the accounts were got audited under Companies Act as well as u/s 44AB of the Act and such audit reports are placed on record. That the AO has not made any effort to cross verify the facts on record with reference to submission of the assessee. We find merit in the submissions of the Ld. AR. We do not find any justification on the part of the AO in making the impugned disallowance @20% of the expenses on adhoc basis, especially when, the assessee had produced all the details as required by the AO and the books of accounts of the assessee were duly audited and no discrepancy in this respect was noted by the auditors. This addition made by the AO is ordered to be deleted.

Ground No.5

16.

Vide Ground No.5, the assessee has agitated against the action of the Ld. CIT(A) in sustaining disallowance of Rs.2,70,026/- made by the AO on account of rejecting claim of depreciation on fixed assets/plant and machinery. The AO noted that the assessee had made addition to the fixed asset/plant and machinery and claimed depreciation on the same. He asked the assessee to furnish the copies of bills and vouchers regarding the purchase of asset and explained the source of such investment. He

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 16 – noted that the assessee had not furnished the requisite bills and that only self made vouchers were submitted. He, therefore, disallowed the deprecation claimed of Rs.2,70,026/-. The Ld. CIT(A) confirmed the addition so made by the AO.

17.

We have heard the rival contentions on this issue and gone through the record. The Ld. AR of the assessee has submitted that the assessee had duly furnished all the details relating to the purchase of equipment and addition to the building. That, so far as addition in plant & machinery was concerned, the assessee furnished a bill of Rs.12,600/-, from Premier Industries Corporation for purchase of machinery on 29-9-2013. Similarly for addition of Rs.3,200/-, the assessee submitted supporting voucher for purchase of fax machine on 27.3.2014. It was submitted that both the equipment were sourced from the business funds available with the assessee and used for the purpose of business. So far as addition to the building account was concerned, the assessee furnished reply dated 19-12-2016 giving particulars of building materials purchased, labor payments etc. were debited to the account for additional construction to the factory building. The assessee also furnished complete ledger account giving date-wise amount incurred /debited along with voucher number and names of payees under a separate letter 2-12-2016. The Ld. AR further submitted that the assets were duly reflected in the assessee’s audited balance sheet on the asset side, and the same were used for the purpose of business. He submitted that the assessee company duly satisfied the conditions laid down u/s 32 (1) of the Act i.e.

ITA No.965/Ahd/2026 [Shelter Pharma Ltd. vs. DCIT] A.Y. 2014-15 - 17 –

(a) the assets were owned wholly by the assessee company and (b) the assets were actually used for the purpose of business. He, therefore, has submitted that there was no justification for disallowance of depreciation. We find merit in the above submission of the Ld. AR. We do not find any justification on the part of the lower authorities in making the impugned disallowance and the same is, accordingly, ordered to be deleted.

Ground Nos. 6 & 7:

18.

Ground Nos. 6 & 7 are consequential in nature and no specific adjudication is required.

19.

In view of our findings given above, the appeal of the assessee is treated as allowed for statistical purposes.

This Order is pronounced on 26/10/2026

Sd/- Sd/- (R. GOVINDARAJAN) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 26/10/2026 S. K. SINHA True Copy Digitally signed by JEETENDRA आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : DEVENDRABHAI UPADHYAY JEETENDRA DN: c=IN, o=PERSONAL, 1. अपीलाथ� / The Appellant title=6087, DEVENDRA 2.5.4.20=7e5568a89b633f174b28 ��यथ� / The Respondent. a80f5e63c638da40b7313fb47eba 2. efda841cf59d1703, BHAI postalCode=380059, st=Gujarat, 3. संबंिधत आयकर आयु� / Concerned CIT serialNumber=816dc56e896211a 1a21ccc4abc94ddc94458f4a1b37 आयकर आयु�(अपील) / The CIT(A)- 4. UPADHYAY be8e1854e9399295106d4, cn=JEETENDRA DEVENDRABHAI 5. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad UPADHYAY Date: 2026.10.30 17:12:46 +05'30' 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

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

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