TaxTMI 
TaxTMI 
2014 (2) TMI 935
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....duction on account of the said interest expenditure was examined by the A.O. during the course of assessment proceeding. On such examination, he found that the major activities of the assessee were with its group concerns and the substantial amount receivable from them was outstanding for a considerably long period. He noted in this regard that the average funds available in the partner's capital account during the year under consideration were only to the tune of Rs. 14.37 lacs and the average sundry credit outstanding were to the extent of Rs. 17.16 lacs. He found that the average non-interest bearing funds available with the assessee thus were only to the extent of Rs. 35.45 lacs whereas the average amount recoverable from debtors was Rs. 51.81 lacs. Keeping in view the facts and figures, the A.O. was of the opinion that there was no business expediency in providing such substantial credits by the assessee to its group concerns especially when its total turnover for the year under consideration was only Rs. 1.28 crores. When he required the assessee to offer its explanation in the matter, it was submitted on behalf of the assessee that its entire turnover was related to the sist....
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.... business and although the Tribunal vide its order dated 11-10-2013 passed in ITA No. 74 and 408/Mum/2011 has sustained the disallowance made out of interest expenditure to the extent of 10%, no such disallowance can be sustained in the year under consideration. 4. The ld. D.R., on the other hand, submitted that a similar issue involving identical facts and circumstances has been decided by the Tribunal in assessee's own case for A.Y. 2007-08 restricting the disallowance made out of interest expenditure to the extent of 10% and the same needs to be followed in the year under consideration. 5. We have heard the arguments of both the sides and also perused the relevant material available on record. Although the ld. Counsel for the assessee has made an attempt to show that there being no unusual excess credit allowed by the assessee to its sister concerns and that allowing of such credit being norm of the trade, no disallowance out of interest expenditure is warranted/justified, it is observed that a similar issue involved in the case of the assessee has already been decided by the Tribunal for A.Y. 2007-08 vide its order 11-10-2013 (supra) sustaining the disallowance of 25% made ou....
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....e ld. AR has brought our attention to the fact that similar additions were made in the case of the assessee for A.Y. 2005-06 which were further confirmed by the CIT(A). However, in appeal, the ITAT, Mumbai in its order dated 13.07.2010, passed in ITA No.574/M/2010 for A.Y. 2005-06 held that the burden is on the assessee to establish that the expenses claimed were wholly and exclusively for the purpose of business. Since the facts, in the opinion of the ITAT, were subject to verification, the ITAT remitted the matter back to the file of the Assessing Officer with a direction to consider the facts and decide the issue afresh. Another co-ordinate bench of the tribunal vide order dated 15.2.2011 passed in ITA No.3206/M/2010 for Assessment year 2006-07, has again restored the matter on the identical issue raised in the case of assessee to the A.O. for deciding the same following the directions given by the tribunal for AY 2005-06. Since the issue involved in this ground is identical to that involved for A.Y. 2005-06, hence following the similar line, the matter in this issue is remitted back to the file of the AO for deciding a fresh in terms and directions given vide the order of the I....
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....the appellant and materials on record have been considered. The appellant's contention is that in respect of service tax there is no liability to make payment to the credit of government and it is outside the purview of S.43B, and that it is not routed through its P& L account and no amount has been claimed as an expense. The Assessing Officer's order states that the appellant has billed certain amounts and has not substantiated that the amounts billed have been paid, or that the amounts were paid before due date of filing of return. The appellant has not furnished evidence to rebut these findings of the Assessing Officer in appeal proceedings either. The decision of Real Image Media Technologies is inapt as it deals with a case of non-receipt of payment from the receiver of services. In Nobla & Hewit (I) P. Ltd, the assessee had not debited the expenditure to its P&L account. In the present case the appellant has not demonstrated as to which amounts were received and which were not received from their clients, nor has it demonstrated whether the amounts were/were not routed through it P&L account. The appellant has merely furnished statement of service tax giving opening balance, ....
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....We have heard the ld. Representatives of the parties and have also gone through the record. The case of the assessee is that it had been contesting the litigation for protecting its right to display the hoardings on certain prominent sites for the purpose of its business of outdoor advertising. On the other hand the case of the Revenue is that the said expenditure was incurred for acquisition and protection of capital asset, hence capital in nature. In our view, in case of business of outdoor advertising, the expenses incurred in litigation for protection of right to display the hoardings at particular sites can not be said strictly to be of capital in nature. These types of expenditure are so closely related to the outdoor advertising business of the assessee that it would fall in the definition of revenue expenditure. The displaying of hoardings being the business of the assessee, the expenditure incurred for right to display is thus business right of the assessee. Thus the expenditure incurred for protection of business rights, in our view, is revenue in nature. However, the expenditure incurred for acquisition of right to display will fall in the definition of capital expenditu....