2014 (1) TMI 702

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....ffshoot of the first ground, assails the finding of the Ld. CIT(A) on the premise that the immediate purpose of incurring the expenditure was ignored by him. 3. Briefly stated that the facts of these grounds are that the assessee debited a sum of Rs. 53.86 lacs as professional fees which was in fact, legal expenses relating to narcotics case. The assessee was called upon to explain as to why such expense should not be disallowed. The assessee tendered explanation stating that this amount was spent as legal fees for securing release of the professional Director and the Managing Director of the assessee company on bail. The assessee contended that the very fact that the bail was granted fairly indicated that no offence was committed by it.....

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....al of this provision indicates that incurring of any expenditure for a purpose which is an offence or prohibited by law cannot be allowed as deduction. When we advert to the facts of the instant case, it is noticed that this expenditure was incurred as a professional fees to defend two directors of the assessee company who were arrested under NDPS Act on being found guilty of the offences under the relevant sections of the said Act. The Ld. AR argued that since the two directors were released on bail, it indicated that they were not at fault. On a specific query, it was stated that no final order on their conviction or acquittal was passed so far. It shows that the charge is still continuing, which is otherwise an offence under the NDPS Act....

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....und No.3 was not pressed by the Ld. AR. The same is therefore, dismissed. 7. Last Ground of the appeal is against the confirmation of disallowance of a sum of Rs. 4,23,816/- based on certain discrepancy in the assessee's ledger Account and the AIR Report. The facts apropos this ground are that on verification of the AIR Report and tallying the same with the ledger account of the assessee, the AO found certain discrepancies which have been tabulated on page 3 of the assessment order. A total sum of Rs. 4,23,816/- was found out as an items representing interest income credited by banks but not offered by the assessee for taxation in its return. When the matter came before the Ld. CIT(A), the assessee filed a letter dated 03.09.2011 from HS....