TaxTMI 
TaxTMI 
2015 (12) TMI 193
X X X X Extracts X X X X
X X X X Extracts X X X X
....aised the following two Grounds of appeal:- 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in disallowing the addition made on account of sampling expenses by holding it that the Aa did not bring anything on record to prove that the expenses are bogus, inflated and not laid out for business purpose and Ld. CIT(A) ignored the fact that assessee failed to give any evidence or any details of the sampling expenses at the time of framing of assessment. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting disallowance of Rs. 16,44,647/- for interest attributable for investment . in shares and failed to appreciate that above disallowance is almost in the natur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e expenses to 2.58% of the total sales (which was the ratio of sampling expenses in the immediately preceding year) and accordingly, a sum of Rs. 35,04,272/- was disallowed. 4. Before CIT(A), the assessee pointed out that 99% of its total sales were by way of exports and the sales were not made to any related party. Therefore, the expenditure on sampling could not be disallowed and it was also pointed out that no such disallowance was made in the past or in the subsequent years. The CIT(A) noted the submissions putforth by the assessee and has deleted the addition on the ground that there was no material brought on record by the Assessing Officer to prove that the expenses under the head 'sampling' were either bogus or inflated or were not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er was not convinced with the level of sampling expense incurred vis-a-vis the amount incurred in the preceding assessment year. In our considered opinion, the variation in the level of expenses, vis-a-vis an earlier year can be a ground to further investigate the matter, but the same by itself cannot be a ground to disallow any expenditure, specially, without bringing on record any infirmity or falsity in the claim made by the assessee. In the present case, in our view, the CIT(A) made no mistake in deleting the disallowance of Rs. 35,04,272/- made by the Assessing Officer , which was essentially an adhoc disallowance bereft of any factual support. Thus, on this aspect we affirm the order of CIT(A) and Revenue fails. 8. The next ground in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ourt in the case of CIT vs. Reliance Utilities & Power Ltd., 313 ITR 340(Bom). Against such decision of the CIT(A), the Revenue is in appeal before us. 10. Before us, Ld. Departmental Representative appearing for the Revenue has assailed the order of the CIT(A) by merely reiterating the stand of the Assessing Officer to the effect that the assessee-company was having a common kitty of funds, both interest free as well as interest bearing, and therefore, interest expenditure proportionate to the impugned amount was liable to be disallowed under section 36(1)(iii) of the Act. 11. On the other hand, Ld. Representative for the assessee has defended the order of the CIT(A). At the outset Ld. Representative for the assessee referred to the Grou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r supplying to the assessee. It was also pointed out that the said concern was providing dyeing services to the assessee. It was pointed out that due to such arrangement, assessee's job orders got priority from M/s. Premier Knit Processors Pvt. Ltd. and, therefore, there was a measure of commercial expediency in making such advances. Further, with regard to the advance of Rs. 83,41,385/- to M/s. Kaytee Apex Ltd., it was explained that the amount was advanced for setting-up stitching facility at Tirupur, which was exclusively provided to the assessee. Therefore, such loan was for the ultimate advancement of the assessee's business operations as it facilitated timely delivery and quality of products, which was crucial for meeting the export o....