https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=68491 https://www.taxtmi.com/caselaws?id=68491 Disallowance out of hamali, miscellaneous and office expenses - Addition under s. 40A(2)(b) - Interest income - Income from other sources - Disallowance in respect of the fee paid to the Registrar of Companies HELD THAT:- On perusal of copy of account of the aforesaid party, it would be clear that it was the first transaction. Therefore, there is some force in the contention of the learned counsel for the assessee that the party was new to the assessee and insisted for cash payment. This explanation of the assessee that there was no bank account where the supplier was located, had not been doubted. Therefore, these payments were covered under r. 6DD(j). As regards the payment of Rs. 18,000, it was the claim of the assessee that this payment was against the contract which subsequently was cancelled and the amount received back. Therefore, this payment cannot be said to be covered under the provisions of s. 40A(3). In view of the above discussion, we delete the addition of Rs. 60,500 made by the AO and confirmed by the learned CIT(A) by invoking the provisions of s. 40A(3) of the IT Act. Addition under s. 40A(2)(b) - In the instant case, the AO disallowed the whole of the claim. However, he has not pointed out excessiveness of the payment. The learned CIT(A) also confirmed the action of the AO in slipshod manner. He has not given any concrete finding in respect of his action. In view of the aforesaid facts, we are of the view that the disallowance made by the AO and confirmed by the CIT(A) are without any basis. We, therefore, delete the same. Income from other sources - Interest income - In the instant case, as regards to the facts, there is no controversy. The assessee had gone for public issue to collect shares so as to finance the expansion of its existing business. For that purpose, the assessee incurred certain expenses on public issue and received share application money which was kept in banks on which interest was earned. The assessee set off that interest income against the public issue expenses incurred. It is relevant to point out that the Hon ble Supreme Court while deciding the case of Coromandal Cements Ltd. [ 1997 (12) TMI 107 - SC ORDER] followed its own judgment in the case of Tuticorin Alkali Chemicals Fertilisers Ltd., had also been made in the case of Bokaro Steel Ltd.[ 1998 (12) TMI 4 - SUPREME COURT] . We, therefore, keeping in view the ratio laid down by the Hon ble Supreme Court in the case of Bokaro Steel Ltd. are of the opinion that the assessee is entitled to set off interest earned on deposits out of the public issue money against the expenses incurred for the public issue. In that view of the matter, we reverse the finding of the CIT(A) and direct the AO to set off the interest earned by the assessee against the public issue expenses. Disallowance in respect of the fee paid to the Registrar of Companies - It is noticed that full details of the expenses had not been discussed either by the AO or the CIT(A). From the orders of the authorities below, it is not clear as to what was the nature of the payments made to the Registrar of Companies. The claim of the assessee is that the payments had been made for normal filing fee of various Company Law returns and documents except the payment of Rs. 1,91,820, which was related to the increase of capital. Since the clear facts are not available on record. We, therefore, to meet the ends of justice, deem it appropriate to remand the issue to the file of the AO and direct him to decide the same afresh in accordance with law, after affording due and reasonable opportunity of being heard to the assessee. In the result, the appeal is partly allowed. Case-Laws Income Tax Thu, 18 Mar 2004 00:00:00 +0530