TaxTMI 
TaxTMI 
2016 (4) TMI 423
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....er before the ld. CIT(A) who vide order dated 29.11.2010 (in Appeal No. CIT(A)-XIV/315/09-10) granted substantial relief to the assessee. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us and has raised following grounds: "1. The Ld. CIT(A) erred in law and on facts in deleting the disallowance of Rs. 22,56,224/- made u/s.37, u/s.40A(2)(b) and u/s.40(a)(ia) of the I. T. Act. 2. The Ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 12,36,224/- made by the A.O. by disallowing the overhead expenses claimed to have been paid by the sister concern of the assessee i.e. M/s. Harra. 3. The Ld. CIT(A) erred on facts in not considering the household withdrawals of the assessee independently and thereby deleting an addition of Rs. 6,36,000/- made u/s.69C of the I.T. Act for unexplained household expenditure." 4. First ground is with respect to deleting the disallowance of Rs. 22,56,224/-. 4.1 During course of assessment proceedings, on perusing the Profit & Loss Account of the assessee, A.O. noticed that the assessee had debited Rs. 22,72,389/- under the head "Discount" which included discount of Rs. 19,28,232/- to K. Maheshkumar and Rs....
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....iscount paid to above parties were excessive or unreasonable in terms of Sec. 40A(2)(b). The contentions of the appellant are tenable and have force. 3.1.4. Further, the basic nature of the expenditure is cash discount and not a commission on sales. The cash discount granted to the customers on the payments received from them is outside the ambit of tax at source net. In these circumstances, I am of the view that the assessing officer is not justified in making disallowance of Rs. 22,56,224/- on this count. The disallowance made by the A.O. is deleted. This ground of appeal is allowed." 5. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us. 5.1 Before us, ld. D.R. supported the order of A.O., on the other hand, ld. A.R. reiterated the submissions made before the ld. A.O. and ld. CIT(A) and supported the order of ld. CIT(A). 6. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to disallowance of Rs. 22,56,224/-. According to A.O., payment made was excessive in nature and alternatively, it was not in the nature of commission, on which, assessee was liable to deduct TDS u/s.194H of th....
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.... 12,36,224/- have been disallowed only on one ground that the payment has been made by M/s Harra on behalf of the Appellant and the balance in the account of M/s Harra has remained outstanding at the year end. 4.1.3. I find that the expenses aggregating to Rs. 12,36,224/- are genuine and have been incurred wholly and exclusively for the purpose of the business and there is no adverse finding in the assessment order regarding its genuineness. It is well settled law that when the expenses are genuine business expenses and are incurred wholly and exclusively for the purpose of business it is admissible in full without any reservation or restriction including the ground for disallowance adopted by the Id. DCIT that the payment has been made by M/s Harra. 4.1.4. It is further seen that there is nothing unusual about the payment being made to the outside common supplier by a sister concern on behalf of the Appellant to keep good relations with them for better services. Such arrangement between the Appellant and M/s Harra, a sister concern, should not provide a ground for disallowance of the expenses which are incurred by the Appellant wholly and exclusively for the purpose of the b....
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....the year towards household expenses was too meager. He was further of the view that the withdrawals made from Harra and K. Maheshkumar cannot be taken as those were separate proprietary concerns of his brothers. He, accordingly, estimated the annual household expenses at Rs. 7,20,000/- as determined in A.Y. 2006-07 and after giving credit of Rs. 84,000/- shown by the assessee towards household expenses made addition of balance amount of Rs. 6,36,000/- u/s.69 of the Act. 12. Aggrieved by the order of A.O., assessee carried the matter before the ld. CIT(A) who deleted the addition by holding as under: "5.2. I have considered the submissions made by the A. R. of the appellant and the observations of the assessing officer in the assessment order. It is seen that addition of Rs. 6,36,000/- has been made u/s 69. 5.2.1. From the details produced before me by the A. R. it is clearly show that the family's cash withdrawals for house expenses are to the tune of Rs. 8,74,006/- over and above LIC (Rs. 11,10,284/-); Personal Insurance (Rs. 7,513/-); Mediclaim (Rs. 28,846/- ); Income Tax Payment (Rs. 11,60,000/- + Rs. 15,24,227/-); School fees of the children (Rs. 2,38,625/-); Elect....