TaxTMI 
TaxTMI 
2010 (10) TMI 612
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....eration assessee has shown a total turnover of 1.83 crores referable to purchase and sale of Dental and Medical equipments, devices, instruments, materials etc., and declared a gross profit ratio of 23.84 per cent. Accordingly, assessee-firm declared total income of 19,55,430. The return was accompanied with audited profit and loss account, balance sheet and audit report. The case having been taken-up for scrutiny, the Assessing Officer verified the record and noticed that purchase to the tune of 1,37,77,782 were made from M/s. Essen Medical (P.) Ltd. wherein one of the partners has substantial shareholding. Assessing Officer noted that during the course of assessment proceedings the Authorised Representative of the assessee was asked to justify the said payment under section 40A(2)(b) of the Income-tax Act, 1961. He further noted that the assessee failed to establish that the payments made to M/s. Essen Medical Pvt. Ltd. is reasonable. Since assessee has neither made a single purchase from outside party nor compared with the market rate, the Assessing Officer concluded that the payment made by the assessee was excessive and unreasonable to the extent of 10 lakhs and accordingly, d....
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....he Assessing Officer during the course of remand proceedings as well as assessment proceedings, the learned CIT (A) concluded that the impugned addition made by the Assessing Officer is without any basis and accordingly deleted the addition of 10 lakhs. 6. Aggrieved, Revenue is in appeal before us. Learned DR strongly relied upon the Order passed by the Assessing Officer. Since the findings recorded by the Assessing Officer are at variance with the findings of the learned CIT (A) we have directed the learned DR to furnish the assessment record wherefrom it was noticed that there is no specific query raised by the Assessing Officer doubting the correctness of the purchase rate. Even in the remand report the plea of the assessee that no opportunity was provided to it during the course of assessment proceedings was not controverted by the Assessing Officer and merely refused to comment upon the material forwarded by the learned CIT (A) to the Assessing Officer. It is not out of place to mention here that under Article 265 of the Constitution of India no tax can be collected without the authority of law and in the process of carrying out the statutory mandate the Assessing Of....
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....ist, travelled aboard to study the working of dental implants on patients so that he gets up-to-date and detailed scientific knowledge so as to enable the assessee to sell the products to dentists. In response to the show-cause notice issued by the Assessing Officer the assessee-firm stated that the assessee was trading in dental implants and equipments and in order to sell those products effectively, partner was sent abroad to study the working of dental implants on patients and hence, the expenditure incurred was wholly and exclusively for the purpose of business. 8. The Assessing Officer observed that the partner visited foreign country as a Dentist in his personal capacity in order to gain knowledge but with no out come in the form of business gains and hence, the claim was disallowed. 9. Aggrieved, assessee contended before the CIT (A) that expenditure was incurred to explore the possibilities of alternative/better supplies of dental implants and equipments and to gain firsthand scientific and clinical knowledge about the implantalogy so that, at the time of sale, proper clinical knowledge is passed-on to the buyer. Therefore, the expenditure incurred on th....
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....and Co. (P.) Ltd. v. CIT [1979] 118 ITR 2611 observed that the expression "wholly and exclusively" (and absence of word "necessarily") indicate that in order to claim deduction of an expenditure it is not necessary to show a direct link between the expenditure and the income earned in connection therewith. Considering the nature of the business of the assessee, obtaining the latest information on the technological advancements, concerning dental implants, is necessary for a trader so as to utilise the same in the process of persuading the purchasers to utilise the imported products. It is not the case of the Assessing Officer that the partner Dr. Shahvir S. Nooreyezdan has gone on a pleasure trip. It is also not the case of the Revenue that the travel abroad was not to study the working of dental implants. Under the peculiar circumstances of the case, we are of the view that the learned CIT (A) was justified in accepting the plea of the assessee that the expenditure was incurred wholly and exclusively for the purpose of business. We therefore, uphold the Order of the Assessing Officer and reject the ground urged by the Revenue. Regarding Sales Promotion Expenses and Commi....
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....icer has not pointed out any specific failure after the appellant was confronted on these issues. I therefore, find that no opportunity on these issues has been given to the appellant. This addition of 91,562 is therefore deleted." Ground No. 4 "7. The ground of appeal No. 4 relates to disallowance of 75,000 under the head commission. The Assessing Officer has observed that the total payment under this head is excessive (at the rate of 5 per cent shown by the appellant). He has also given the instances of the percentage of the commission payments to various other parties. Here again, no opportunity has been recorded having been given to the appellant. I therefore, hold that this addition is without any basis whatsoever and the same is deleted. The appellant gets a relief of 75,000." 18. Aggrieved, Revenue is in appeal before us. Though the learned DR strongly relied upon the Order of the Assessing Officer, no material whatsoever was furnished to highlight that the Assessing Officer has made specific enquiry on this issue and has given the assessee a reasonable opportunity of being heard. Considering the nature and extent of claim we are of the view tha....