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Before: MS SUCHITRA KAMBLE & SH. PRASHANT MAHARISHI
ORDER PER SUCHITRA KAMBLE, JM Thee two appeals are filed by the assessee against the order dated 21.06.2016 & 27.06.2016 passed by CIT (A) - Muzaffarnagar for assessment year 2012-13.
The grounds of appeal
are as under:- (A.Y 2012-13)
1. The Ld.CIT(A) has erred in confirming the disallowance of RS. 27,24,675/- as against addition of Rs.32,28,723/- made by Assessing Officer on account of Repair and Maintenance of Plant and Machinery on estimate basis.
2. The order of the Ld.CIT(A) is against law and facts of the case.” (A.Y 2012-13)
“1. The Ld.CIT(A) has erred in confirming the disallowance of RS. 27,24,675/- as against addition of Rs.32,28,723/- made by Assessing Officer on account of Repair and Maintenance of Plant and Machinery on estimate basis. 2. The order of the Ld.CIT(A) is against law and facts of the case.”
Both the appeals are on identical issue, therefore, we are taking up the appeal being ITA No. 4485/Del/2016. The return of income was filed on 27-09- 2012 at the loss of Rs.57,48,86,686/-. The same has been assessed u/s 143(1). Later on notices u/s 143(2) on 07.08.2013 and u/s 142(1). The Assessing Officer has disallowed Rs. 3,22,8,723/- being 10% of total expenses on Repair and maintenance amounting to Rs. 32287236 on estimate basis being scrap generated and not shown as a part of stock or sale.
Being aggrieved by the Assessment order, the assessee filed appeal before the CIT(A). The CIT (A) partly allowed the appeal of the assessee.
The Ld. AR submitted that the District Magistrate of the area is a Chairman of the society and any scrap can be sold with his approval and by tenders. Since scrap is generated in small quantity hence the same is accumulated and sold after two or three years by following the procedure laid down and as per the approval of District Magistrate.
The Ld. DR relied upon the assessment order and the order of the CIT(A).
We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the Assessing Officer has disallowed these expenses only on the basis of estimated value of scrap at 10% without any proper finding and on proper basis. The addition is merely on a presumption basis. Therefore, the same is not sustainable in eyes of law. The CIT(A) also has observed that the District Magistrate’s approval/sanction is necessary for making sale of scrap. Thus, the Assessing Officer as well as the CIT(A) was not correct in making the said addition on account of repair and maintenance of plant and machinery. The appeal of the assessee being is allowed.
As regards to and no distinguishing facts are pointed out by the Ld. DR. Hence, appeal being ITA No. 4606/Del/2016 is allowed.