TaxTMI 
TaxTMI 
2019 (11) TMI 645
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....le - 2(1)(1), Baroda under section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to "the Act") for the Assessment Year (A.Y.) 2014-15 with the following grounds: 1) "The learned found that the assessee has not made the Employee's Contribution payments towards ESIC before due date specified under section 36(1)(va) of the Act and hence made the addition of Rs. 3,79,404/- to the total income of the assessee. And commissioner of the income tax upheld the decision of the AO. Your Appellant submits that same is not justified and therefore be deleted 2) The learned AO observed that the expenditure amounting to Rs. 19,45,443/- was incurred for the purposes like distributing gifts, providing hospitality t....
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....ior to filing of return u/s 139(1) of the Act which according to us is just and proper, without any infirmity. Hence, we find no merit in this ground of appeal preferred by the assessee. The same is thus, dismissed. 3. The second ground relates to disallowance of expenditure amounting to Rs. 19,45,443/-, which was incurred for the purpose of distributing gifts, providing hospitality to the doctors and/or medical practitioners; out of which Rs. 14,45,443/- was incurred towards the purchase of laptop, mobile, watches, AC Machines, treadmill machines etc in the nature of gifts for doctors and practitioners and the remaining balance of Rs. 5,00,000/- has been disallowed on ad hoc basis on account of having been incurred on the lodging, board....
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....sales promotion expenses. Therefore, the same cannot be allowed as deduction as per the CBDT Circular and Medical Council of India. 5.5. The AO also observed that the assessee has not furnished the necessary details depicting the benefits in monetary/non-monetary benefit extended to the doctors/medical practitioners. The Assessing Officer also noted that there were not sufficient details furnished in support of traveling expenses to justify that the doctors and medical practitioners did not incur these expenses. In the absence of necessary evidence, the Assessing Officer made the disallowance of Rs. 5,00,000/- for benefit extended to the doctors/medical practitioners in contravention to the provisions of CBDT Circular/Medical Counc....
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....us. 8. The Ld.AR before us filed a paper book running from pages 1 to 25 and submitted that there was no benefit extended to the doctors/medical practitioners. All these expenses on the gift items were incurred to provide the benefit to the medical stores and chemist shops. 9. On the other hand, The Ld. DR submitted that the disallowance made by the lower authorities represent less than 1% of the total sales promotion expenses. The Ld. DR vehemently supported the orders of the authorities below. 10. We have heard the rival contentions and perused the materials available on record. In the instant case, the AO has made the addition to the total income of the assessee for two counts as discussed below. i. Th....
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.... "Shri Vishal Mohan, Advocate, on behalf of the petitioner contends that the circular goes beyond the section itself. We are not in agreement with this submission. The explanation to Section 37(1) makes it clear that any expenditure incurred by an assessee for any purpose which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession. The sum and substance of the circulars also the same. In case the assessing authorities are not properly understanding the circular then the remedy lies for each individual assessee to file appeals under the Income-tax Act but the circular which is totally in line with Section 37(1) cannot be said to be illegal. In fact paragraph 4 of the circular quoted he....
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....addition was made by the AO. 10.4. Even before us the Ld. Counsel for the assessee has not produced any evidence to prove that there was no benefit extended to the doctors/medical practitioners out of the purchases of laptops, wrist watches, mobile phones, cameras, etc. In the absence of any documentary evidence, we are not inclined to disturb the finding of the lower authorities. 10.5. Similarly, we also note that the assessee duly admitted the disallowance of Rs. 5 lacs made by the AO on an ad-hoc basis during the assessment proceedings. The AO made the addition by observing that the assessee failed to furnish the details of the actual recipient of these gift articles. The assessee has also incurred traveling expenses wh....