Appeal partly allowed on expenses including rebate and trade discount, but set aside on freight and cartage.

The appeal was partly allowed with the findings upheld on rebate and trade discount expenses, but set aside on freight and cartage expenses. The Tribunal found the disallowance of freight and cartage expenses under Section 40(a)(ia) unwarranted as it involved reimbursement of expenses. The CIT(A)'s decision was set aside, and the assessee succeeded on this ground. The judgment was pronounced on 17th October 2011 by ITAT Chandigarh.

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Issues involved: Appeal against order u/s 143(3) of the Income-tax Act,1961 regarding disallowance of rebate and trade discount expenses, disallowance of freight and cartage expenses u/s 40(a)(ia).

Grounds of Appeal:
1. Challenge to the order of the ld. CIT(A).
2. Disallowance of rebate and trade discount expenses.
3. Disallowance of freight and cartage expenses u/s 40(a)(ia).
4. Request for leave to add, alter, amend, or withdraw any grounds of appeal.

Dispute on Rebate and Trade Discount Expenses:
- Assessee contended that rebate and discounts were allowable due to sales to sister concerns.
- Lack of specific amount passed on to dealers for discount received.
- Disallowance justified as discounts to sister concern lacked business consideration.
- AO found special rebate excessive and without business consideration.
- CIT(A) upheld AO's findings, emphasizing lack of business expediency.

Dispute on Freight and Cartage Expenses:
- Assessee argued that disallowance u/s 40(a)(ia) was unwarranted as it involved reimbursement of expenses.
- Tribunal found it to be a case of reimbursement, not falling under Section 40(a)(ia).
- CIT(A)'s decision set aside, and assessee succeeded in this ground.

Conclusion:
- Appeal partly allowed, with findings upheld on rebate and trade discount expenses, but set aside on freight and cartage expenses.
- Judgment pronounced on 17th October, 2011 by ITAT Chandigarh.

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