TaxTMI 
TaxTMI 
2015 (3) TMI 768
X X X X Extracts X X X X
X X X X Extracts X X X X
....ners in accepting the gifts, travel facility, hospitality, cash or monetary grant from the pharmaceutical companies w.e.f. 10.12.2009 and CBDT's Circular No.5/2012 dated 01.08.2012 which is applicable to A.Y. 2010-11 in allowing the relief to the assessee. 2. The CIT(A) erred in deleting the addition on account of closing stock due to discrepancy on account of stock statement given to the bank and shown in the P&L Account by ignoring the Karnataka High Court decision in the case of Recon Machine Tools (P) Ltd., vs. CIT(Kar) 286 ITR 637." 3. The first ground of appeal relates to disallowance of sales promotion expenses amounting to Rs. 87,62,377....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... expenses were verified and the same were discussed with the ARs of the appellant company. During verification of sales promotion expenses Shri Pradeep Kulkarni, FCA, AR and Shri. R.S. Kholkar, company Secretary of the appellant company, on the basis of the facts, requested that disallowance be enhanced to 10% of total sales promotion expenses in place of 5%; which was found to be acceptable. The total sales promotion expenses claimed are Rs. 1,93,37,578/-. Therefore, the disallowance offered @ 10% works out to Rs. 19,33,758/-. The A.O. is directed to restrict the disallowance at Rs. 19,33,758/- and balance addition is deleted. This Ground of Appeal of the appellant is partly allowed." 3.3. We have heard the rival contention of both the pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd therefore the same stand dismissed as not pressed. Coming to the ground taken by the revenue, we have gone through the breakup of the sales promotion expenses. From the breakup it is apparent that the expenses have been incurred for the promotion of the product of the assessee. None of the expenditure incurred, in our opinion, is hit by explanation to section 37, The expenditure has been incurred for the purpose of the business and are not the capital expenditure or the personal expenses. The nature of the business in our opinion demands that the assessee must have incurred such expenditure otherwise the assessee would not be able to dispose off his product; medicine manufacture by the assessee is a consumer oriented industry having vast....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... travelling and conveyance, selling and distribution expenses, conference expenses incurred on the doctors for promoting the sales. The Assessing Officer has not pointed out any expenses which is directly incurred which prohibited by law and the AO has not brought out any evidence that assessee has incurred this expenditure which is prohibited by CBDT's Circular No. 5/2012. We find that the CIT(A) has disallowed the sales promotion expenses @ 10% of the total expenditure. We find that the Assessing Officer did not point out which expenditure is prohibited by law, therefore, in assessee's own case in Assessment Year 2007-08 and in 2008-09 the Tribunal has dismissed the appeal of the revenue and CIT(A) has followed the decision of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ellant stated that the difference arose as the statements submitted to bank on 15/04/2010 were only provisional and estimates. It is only at the time of audit that the figures are finalised and provision is made for obsolete stock/write-off/valuation etc. due to which there is bound to be some differences. The appellant also submitted a reconciliation statement of closing stock as submitted to Bank and as per their books. Apart from the above, they placed reliance on the decision in the case of CIT V/s Riddhi steel and Tubes Pvt. Ltd. 8.4. I have gone through the assessment order and the submission of the appellant. The assessee showed a stock of Rs. 8,75.59 lakhs at the year end....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fference in the instant case is negligible. In view of the above facts, I am of the opinion that the A.O. was not justified in making an addition of Rs. 16,98,000/- on account of difference in value of stock shown to the Bank and as declared in the audited Balance-Sheet, and therefore addition amounting to Rs. 16,98,000/- is hereby deleted. This ground of appeal of the appellant is allowed accordingly." 4.3. We have heard the rival contention of both the parties. Looking to the facts and circumstances of the case, we find that assessee showed stock of Rs. 8,75.59 lakhs at the year end to the Bank, whereas subsequent to tax audit, the assessee disclosed closing stock valued at 858.48 lakhs difference being 17.11 lakhs. We find that the asse....