TaxTMI 
TaxTMI 
2016 (5) TMI 1226
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....als because both the revenue and the assessee had challenged the order of the CIT(A). The appeal preferred by the revenue was dismissed and the appeal preferred by the assessee was partly allowed. The assessee has come up in appeal. The following questions of law were formulated when the matter was admitted by this Court on 7th February, 2008: "1. Whether on a true and proper interpretation of Section 80IB of the Income Tax Act, 1961 the Tribunal was justified in law in holding that income from import and sale of inks, rent and interest recovered from employees, interest on margin money furnished for obtaining banking facilities, interest on short term deposits, interest from debtors and miscellaneous income all aggregating t....
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....come of about Rs. 30 lacs was derived from the manufacturing activities. He submitted that unless a link between the income and the manufacturing activities is established, the same did not become eligible for deduction under Section 80 IB. We find that the assessee has not clearly established that the income was derived from manufacturing activities or that the income is directly relatable to the manufacturing activities. The assessee admittedly had trading activity. It is not clear as to whether the income, as indicated above, aggregating to approximately Rs. 30 lacs arose out of activities relating to manufacturing activity. The question no.1, for lack of appropriate evidence, is answered in the affirmative and in favour of revenue. ....
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....le. We, accordingly, uphold the order of the C.I.T.(A) on this point and reject ground No.3 of the assessee's appeal as well as ground No.2 of the Revenue's appeal. Mr. Agarwal contended that there was clear admission by the learned counsel that the assessee had failed to furnish the details with regard to the names of the parties to whom such articles were distributed. Mr. Khatian disputed this fact. He drew our attention to the order of the CIT(A) appearing at page 77 of the Paper Book and internal page 27 of the order of the CIT(A) in order to show that the nature of expenses, name and address of the party to whom paid and the total amount paid during the year were duly furnished by the assessee. The assessee, it appears, had fi....
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....rged to Profit & Loss account, nor have we been informed of such cases by the management other than those payable under contractual obligations and/or accepted business practices." Mr.Khaitan submitted that the statutory auditors have clearly stated that they did not come across any personal expenses, which were charged to the profit and loss account. The question was also considered by the internal audit and the question raised by them were also duly answered and the views were also considered by the audit committee. The purpose of drawing our attention to the aforesaid pieces of evidence is to show that the learned advocate out of misapprehension of facts may have submitted that the assessee had not been able to furnish the details wit....
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.... the extent of Rs. 50 lakhs by the assessing officer and to the extent of Rs. 25 lakhs by the C.I.T.(A) which subsequently got the seal of approval from the Tribunal was a correct disallowance. If there is no dispute that the amount has been spent wholly and exclusively for the purpose of business, the question of disallowance of a sum of Rs. 50 lakhs or Rs. 25 lakhs should not have been arisen. We are also supported, in our view, by a judgment of the Apex Court in the case of C.I.T., Bombay Vs. Walchand and Co. Pvt. Ltd. reported in (1967) 65 ITR 381 wherein the following views were expressed :- "In paragraph 2 of their order the Tribunal correctly set out the principle applicable to claims for deduction of expenditure incurred....
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.... profits of the assessee and that it appeared that, as compared to the previous years, the business profits disclosed by the assessee had fallen by Rs. 2 lakhs and, therefore, the increase in expenditure could not be justified as laid out wholly and necessarily for the purposes of the business. But an employer in fixing the remuneration of his employees is entitled to consider the extent of his business, the nature of the duties to be performed, and the special aptitude of the employee, future prospects of extension of the business and a host of other related circumstances. The rule that increased remuneration can only be justified if there be corresponding increase in the profits of the employer is, in our judgment, erroneous." Since th....