TaxTMI 
TaxTMI 
2023 (10) TMI 1060
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....f separate assessments framed by the Ld. Assessing Officer [AO] u/s 143(3) of the Act. The facts as well as issues are common. The grounds raised by revenue in AY 2013-14 read as under:- 1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2. The Ld.CIT(A) erred in deleting the addition of Rs. 2,04,45,076/- made towards disallowance of interest on borrowed capital u/s. 36(1)(iii) proportional to amount advanced to sister concerns. 2.1 The Ld.CIT(A) relied on the Supreme court decision in the case of S.A.Builders Ltd Vs CIT and another 288 ITR 1(SC) in deleting the disallowance of interest made u/s. 36(1)(iii) , in which it was held that the interest on amou....
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....ote book & stationery and 50% of expenditure on other expenses incurred by the trust out of sponsorship fee paid by the assessee in the hands of the assessee. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored. As is evident, two issues fall for our consideration viz. i) Interest disallowance u/s. 36(1)(iii); (ii) Disallowance of business expenses u/s. 37(1). 2. The Ld. Sr. DR assailed the findings given in the impugned order and pleaded for restoration of assessment as framed by Ld. AO. The Ld. Sr. DR submitted that the assessee could not demonstra....
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....usiness and the business expediency of the same could not be established by the assessee. Accordingly, Ld. AO computed proportionate disallowance u/s 36(1)(iii) for Rs. 204.45 Lacs. 3.2 During appellate proceedings, the assessee, inter-alia, submitted that the advances were out of commercial expediency and relied on the case of Hon'ble High Court of Madras in CIT Vs. M. Ethurajan (273 ITR 95) and also on the decision of Hon'ble Apex Court in the case of S.A. Builders Ltd. (288 ITR 1). Considering these judicial decisions, Ld. CIT(A) deleted interest disallowance for both the years against which the revenue is in further appeal before us. 3.3 Before us, Ld. AR has drawn our attention to the financial statements of the assessee and subm....
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.... of commercial expediency. The said finding remains uncontroverted before us. The Hon'ble Supreme Court in the case of S.A. Builders Ltd. (288 ITR 1) held that once nexus was established between the expenditure and the purpose of the business, which need not necessarily be the business of the assessee itself, revenue could not disallow the claim assuming what was reasonable. Therefore, on the facts and circumstances, we concur with the adjudication of Ld. CIT(A) and dismiss the ground raised by the revenue, in both the years. 4. Disallowance u/s 37(1) 4.1 The assessee claimed sponsorship expenses of Rs. 280 Lacs. It was submitted that M/s Vels Srinivasa College of Engineering and Technology had proposed for rebranding of its name. The....
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.... sponsorship expense for printing logo on its books. With respect to the other items also, it could not be properly adduced that the entire amount was spent towards promoting the assessee company, which has a distinctly different business line with that of the college. 4.3 The requirements of Sec.37(1) were that the expenditure is incurred wholly and exclusively for the purposes of the business and this condition was not satisfied in the present case. The expenses of record note and other stationery item was merely an after-thought which was evidenced by the post-dated agreement with retrospective effect. Therefore, this expenditure was disallowed in full. 4.4 In respect of the other three heads of expenditure also, there was no concl....
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.... note as per the agreement. Therefore, the expenses were related to business promotion of the assessee company and hence, allowable expenditure. Regarding 50% disallowance of other expenditure, Ld. CIT(A) observed that all these expenditures were part of assessee's business activities. The Ld. AO did not corroborate that the expenses was not incurred or not paid. The only reason for disallowance was on the ground that there was no conclusive proof that the expenditure was wholly spent for the purpose of assessee's business However, the assessee paid the amount to the trust college who incurred the same as per the agreement. Therefore, the assessee would be eligible to claim the deduction of the same. Finally, the impugned disallowance was d....