2011 (12) TMI 533

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....me Tax (Appeals) has erred in deleting the addition of Rs. 70,18,518/- made by the Assessing Officer on account of unexplained investment. 2. On the facts and on the circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in deleting the addition of Rs. 4,00,000/- made by Assessing Officer on account of business promotion expenses. 3. On the facts and circumstances of the case the Ld. Commissioner of Income Tax (Appeals) has erred in deleting the addition of Rs. 1,46,334/- made by Assessing Officer on account of disallowance u/s. 14A of the IT Act. 4. The appellant craves leave to add, alter or amend any of the grounds of appeal before or during the course of hearing of the appeal." 3. In this case Asses....

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.....1.2008 UTI 15,00,000/-   Total 70,18,518/- 3.2 Accordingly, Assessing Officer treated Rs. 70,18,518/- as undisclosed investment of the assessee u/s 69 of the IT Act. 3.3 Assessing Officer further observed that on examination of the profit and loss account of the assessee it was revealed that it has received dividend income of Rs. 10,13,388/-. Since this income does not form a part of the total income of the assessee, it was asked to explain why part of the expenses relatable to the earning of this income should not be disallowed u/s 14A of the Act. Assessee showed the computation of disallowance at Rs. 1,46,334/-. Assessing Officer added back this amount to the income of the assessee. 4. Upon assessee's appeal ....

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....of business. Ld. Commissioner of Income Tax (Appeals) observed that there is apparently a direct connection between the assessee's sphere of activity and the item of expenditure and the expenditure so made is not for his personal purposes. Under these circumstances, Ld. Commissioner of Income Tax (Appeals) held that allowability of the claim under section 37(1) cannot be challenged. Accordingly, he directed that the addition be deleted in this regard. (iii) As regards the addition of Rs. 1,46,334/- u/s. 14A. It was explained to the Ld. Commissioner of Income Tax (Appeals) that the auditors of the assessee while computing the total taxable income of the assessee for the year under consideration have already disallowed such expenses. Ho....

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.... any interference on our part. Accordingly, we uphold the same. (ii) Apropos addition of Rs. 4,00,000/- In this regard, we find that the Ld. Commissioner of Income Tax (Appeals) has given a finding that there is a direct connection between the assessee's sphere of activity and the item of expenditure and the expenditure so made is not for his personal purposes. Assessee has explained that the assessee has organized a function of distribution of trophies to Tank Troop for their excellence in Kargil Ward in his pursuit to maintain working relationship with the Defence Forces for the purposes of getting information pertaining to war for journalism purposes. The Assessing Officer has not brought on record any basis that the expenses are n....