2016 (3) TMI 1229

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....he G.P. rate of 4.18% was declared. The assessee had claimed an amount of Rs. 24,61,505/- as discount allowed to customers. When questioned, the assessee explained that it was their business compulsion to allow discount to its customers. The Assessing Officer further asked to justify the allowance of discount in view of the clear cut guidelines in INS Press Handbook 2008 09. Rejecting the explanation given by the assessee, the Assessing Officer disallowed amount of Rs. 24,61,505/-. 3. Before the learned CIT (Appeals), it was stated that the whole issue before the Assessing Officer arose on a query raised by the Assessing Officer with regard to discount allowed to sister concern M/s Whiteflame Advertisement Private Limited. However, the dis....

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....he learned D.R. stated that the factual inaccuracy pointed out to the Bench has not been raised in the form of specific ground before the learned CIT (Appeals). 6. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The issue to be decided by us is whether the disallowance of discounts given by the assessee is correct or not. The controversy initiated before the Assessing Officer with the issue of discount allowed to the sister concern M/s Whiteflame Advertisement Private Limited, however, as shown to us, no discount has been allowed to this company during the year. However, this is also a fact that the Assessing Officer has disallowed....

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....ing as per the mandate of Income Tax Act, to disallow the said expenses. We also observe that in the same Rule of the INS, in the second part some consequential act in the case of contravention of the Rule has also been prescribed. 8. Further, with regard to learned CIT (Appeals) observation that the assessee is not supposed to give unnecessary discounts, we want to state that it is a businessman's prerogative to run his business the way he wants. The Income Tax Authorities cannot sit in the armchair of the businessman and guide him as to how much of expenditure he should incur. In view of the above, we direct the Assessing Officer to delete the disallowance. The ground No.1 and 2 of the appeal are allowed. 9. The learned counsel for the ....