AI Drafter 
TaxTMI 
TaxTMI 
2018 (1) TMI 281
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....d on facts and law, and being a Change of Opinion which is not permissible even further there being misinterpretation of the case laws. 2. Because the action for making proportionate addition of Rs. 1,82,268/- @ 12% by invoking the provisions of section 36(1)(iii) is under challenge on facts & law. Even the Quantum and rate application is being challenged. Date of Hearing 13.09.2017 Date of Pronouncement 09.10.2017 3. Because the action for disallowance of Rs. 3,54,737 towards advertisement Expenses invoking the provisions of Section 40(a)(ia), 194C is being challenged on facts & law." 2. The brief facts of the case are that the assessee company is engaged in manufacturing and sale of Heena Powder, hair dyes and other b....
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....t and loss account. In view of the above facts, I have reasons to believe that due to failure/omission on the part of the assessee to disclose fully and truly material facts, an income of Rs. 3,96,000/- of the assessee for the AY 2006-07 has escaped assessment within the meaning of section 147 of the Income Tax Act on this account. 2. Later on, it has also come to notice that the assessee has purchased mixture machine on 09.07.2005 for Rs. 64,480/- and this expenditure has been claimed as Revenue expenditure in its profit and loss account. Such expenses being of capital nature are not allowable expenditure and these expenses are required to be capitalized and depreciation @ 15% which computes to Rs. 9,672/- is allowable. T....
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.... not capitalization of interest of Rs. 3,96,000/- debited to the profit and loss account, (ii) non-capitalization of Rs. 64,480/- for purchase of Mixer Machine which has been debited to profit and loss account as repair and renovation expenses and (iii) the assessee has claimed exhibition expenses of Rs. 3,54,737/- which are in the nature of advertisement expenses on which no TDS was deducted by the assessee. Based on these reasons, the Assessing Officer reopened the assessment u/s. 147 of the IT Act. 3. In response to this notice, the assessee filed return of income on 25.03.2011. The assessee filed reply which was considered by the AO, and rejecting the contentions of the assessee, made following additions vide reassessment order : ....
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....and vouchers were produced before the Assessing Officer. In respect of capitalization of interest, he submitted that the assessee had sufficient surplus funds which were utilized in the construction activities. No loan had been taken for the construction of property. The Assessing Officer could not establish any nexus that the construction in the flat was made out of any borrowed funds. In respect of exhibition expenses debited of Rs. 3,54,737/-, he reiterated his submissions made before the ld. CIT(A), which is as under : "A sum of Rs. 3,54,737.95 has been debited to Exhibition expenses having being incurred by M/s. Mullar & Phipps India Ltd. on our behalf (Pg.21). The said sum so paid is in fact publicity expense/selling expense,....
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....s not been able to substantiate any nexus between the funds utilized in the construction of flat and the interest debited to the profit and loss account for treating it as capital in nature. It is not the case of the Assessing Officer that the amount utilized in the construction represented interest bearing borrowed funds of the assessee. Per contra, there is no material on record to disbelieve the contention of the assessee that he had sufficient surplus funds which was utilized in the construction. Unless a nexus between the interest debited and the funds utilized is proved, the stand taken by the department regarding capitalization of interest, in our opinion, cannot be accepted. Therefore, the addition made by the authorities below in t....