ACIT Vs ACC India Pvt. Ltd. (ITAT Delhi)
ITAT Delhi Deletes Additions & Penalty in ACC India Pvt. Ltd. Vs. ACIT: Rule 46A & Revenue Loss Clarified; Adhoc Bogus Expense Addition & WIP Disallowance Quashed
The case originated from an assessment framed u/s 143(3) wherein the AO had made several disallowances & assessed income at ₹12.19 crores as against returned income of ₹6.50 crores. CIT(A) deleted major additions but confirmed disallowances relating to amortization expenses & increase in work-in-progress. Both parties carried the matter before Tribunal.
Revenue challenged deletion of additions on the ground that CIT(A) wrongly admitted additional evidence in contravention of Rule 46A. Tribunal noted that details such as confirmations, invoices, bank entries & TDS certificates had been filed & even remand report of AO did not find any infirmity. Consequently, Tribunal upheld CIT(A)’s deletion of ₹4.05 crores on account of alleged bogus expenses, ₹6.39 lakhs on account of difference in balances, ₹17.74 lakhs on account of temporary site installation, ₹60.16 lakhs on account of provisional expenses & ₹13.90 lakhs disallowance u/s 40A(3). Tribunal held that these additions were adhoc & unsustainable once supporting evidence stood verified. Thus, Revenue’s appeal in ITA No.650/Del/2020 was dismissed in entirety.
On the other hand, in Cross Objection No.72/Del/2023, Assessee contested disallowance of ₹38.82 lakhs amortization expenses & ₹26.78 lakhs increase in work-in-progress confirmed by CIT(A). Tribunal examined the paper book & found that amortization claim related to write-off of dormant & unusable assets like tools, porta cabins, bar bending machines & other equipment on closure of project sites. Though wrongly described under the head “amortization”, the loss was genuine & incidental to business. Tribunal held it to be a revenue loss deductible from business profits. Similarly, addition on account of increase in work-in-progress was deleted after Tribunal accepted that Assessee was consistently following a recognised accounting policy whereby net change in WIP was adjusted to profit & loss account. Hence, both disallowances were deleted & cross-objection of Assessee was allowed.
