ACIT, NEW DELHI vs. M/S ALNOOR EXPORTS, NEW DELHI

per chamber per month in the per month immediately preceding year. The assessee firm has also taken on rent an additional small chamber at Meerut @ Rs.1 lac per month. The reasons and justification of additional chambers required is as under: Comparative details of total meat processed and closing stock for two years:-

A. Y. 2011-12 A. Y. 2010-11 Meat Processed Muzaffarnagar 1.13.36,007 1,31,98,066 Mumbai Rs.62,02,264/- Rs.40,87,488/- Total 1,75,38,271 1,72,85,554 Closing Stock 20,00,890 11,66,115

It can be seen that the processing of meat has from Kg. in the immediately preceding year to 62,02,264 Kg. in the current year at Mumbai. Moreover, the closing stock of meat has also almost doubled in comparison to the immediately preceding year. The meat which has been processed at Mumbai had to be preserved and stored in Mumbai only. For preserving the additional quantity of meat, extra space was required for which additional chamber was taken on hire. The processing of meat has slightly decreased at Muzaffarnagar but the firm had to maintain an adequate level of storage facilities depending on the peak level of stock. Due to inadequate supply of meat, additional storage facility was taken on rent at Meerut @ Rs.1 lac per month. The meat is processed as per the availability of animals and is exported as per the requirements of the customers. There is a time lag between the processing and actual export, between which the processed meat is preserved in cold storage. The export needs custom and other clearances and 16

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there may be delays on account of non- availability of space in ships to the required destinations. The turnover cannot form the basis of requirement of preservation facilities. There may be times when there are continuous orders supported by ready availability of animals and space on ships then preservation facilities may not be required. Similarly when there is disproportionate supply of animals vis a vis export orders the processed meat may have to be refrigerated for a longer period of time. The manufacturing activity cannot be closed in case the inventory is piled up. The plant has to run at the appropriate capacity at all times. The premises required for storage does not depend on the quantity sold but the level of stock maintained as per the availability of stocks and requirement of business. Also the space at the cold storage may not be readily available on a short notice and has to be booked in advance. The amount of preservation charges have increased because of increase in the storage space taken on rent during the year. The requirement of preservation facilities is the prerogative of the assessee and the assessing officer cannot step into the shoes of the assessee to judge the business expediency of incurring an expenditure i.e. hiring additional chambers. Had additional chambers not been hire it would have resulted in loss of production resulting in more loss the additional cost of chambers. In view of the above submissions supported by the submissions and documentary evidence filed on the last date of hearing the addition of Rs.72,00,000/- deserves to be deleted." 4.4.3 I have considered the facts of the case, written submissions of the appellant and the findings of the Assessing Officer. The Assessing Officer made the impugned addition invoking the provisions of Section 40A(2)(b) by treating the increase in expenditure as excessive payments. The submissions by the appellant that the storage capacity is to be maintained keeping in view the peak requirement and not on the basis of total sales is justified. Ultimately it is a business decision and does not call for the Assessing Officer to sit in judgment over this. The increase in expenditure is apparently due to increase in chambers taken on rent. The need for more 17

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storage space in Mumbai is also justified with the increase in processing at Mumbai 4.4.4 Considering the above facts, the written submissions and documentary evidence filed, I am of the view that the genuineness of the extra expenditure of Rs.72,00,000/- is for the purposes of business hence the addition is deleted.” 19. On careful reading of the observations of the ld. CIT (Appeals) we do not find any valid reason to interfere with the findings of the ld. CIT (Appeals) in deleting the preservation charges disallowed by the Assessing Officer. Ground raised by the Revenue is rejected. 20. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on : 25/07/2023.

Sd/- Sd/- ( B. R. R. KUMAR ) ( C. N. PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 25/07/2023. *MEHTA* Copy forwarded to :- 1. Appellant; 2. Respondent; 3. CIT 4. CIT (Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, New Delhi.

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07.07.2023 Date of dictation Date on which the typed draft is placed before the dictating 12.07.2023 member Date on which the typed draft is placed before the other 25.07.2023 member Date on which the approved draft comes to the Sr. PS/ PS 25.07.2023 Date on which the fair order is placed before the dictating 25.07.2023 member for pronouncement Date on which the fair order comes back to the Sr. PS/ PS 25.07.2023 Date on which the final order is uploaded on the website of ITAT 25.07.2023 Date on which the file goes to the Bench Clerk 25.07.2023 Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the order