Brief of the case:
The ITAT Bangalore in the case of M/ s Sigma Aldrich Chemicals P. Ltd. held that when short landing of goods is common having regard to the nature of goods and such loss is negligible , then it has to be allowed deduction as business expenditure.
Facts of the case:
- The assessee company is a wholly owned subsidiary of Sigma Aldrich Foreign Holdings Co. Inc. It is engaged in the manufacture and trading of chemicals and distribution of a broad range of bio-chemicals, organic and inorganic chemicals and related products.
- The assessee claimed deduction of Rs.3, 81,583/- on account short receipt of goods. Such goods were purchased from overseas group company and while receiving these goods, there is shortage of goods in weight physically received and such shortage is claimed as business expenditure by the assessee.
- As per AO, the assessee should have recovered this amount from its principal companies which supplied the goods to it short either through raising debit notes or reducing the bills amount.It was assessee’s policy that in respect of amounts less than USD 2500, no credit/debit note is issued.
- AO disallowed the entire amount and added it back to the assessee’s returned income. The CIT(A) confirmed this addition.
Contention of the Revenue:
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