TaxTMI 
TaxTMI 
2024 (2) TMI 540
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....nd circumstances of the case the Ld. CIT(A) erred in deleting the addition u/s 43B of Rs. 5.56.022 by holding that the assessee made these payments before filing of ITR without appreciating that the disallowance u/s 43B was made as these payments pertained to earlier assessment years and the assessee failed to establish that these payments were disallowed in the earlier assessment years making the order perverse. iii. On the facts and circumstances of the case the Ld. CIT(A) erred in deleting disallowance u/s 14A amounting to Rs. 58.84,990/- on the ground that no exempt income has been claimed by the assessee relying on various judgements of the Hon'ble Delhi High Court without appreciating that the Circular No. 5/2014 by the Board has not been quashed by the Hon'ble Courts in any of the judgements and without appreciating the judgement given by the Hon'ble ITAT Amritsar in case of Lally Motors India Pvt. Ltd. The Principal Commissioner of Income Tax-2. Jalandhar. ITA No. 218(Asr) 2017 wherein it has held after considering the above judgements of the Hon'ble Delhi High Court that disallowance u/s 14A can be made even when there is no exempt income. iv. On the fa....
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....vertisement expenses (Rs. 53,01,600/-). 5. Aggrieved, the assessee carried the matter in appeal. The Ld. CIT(A) deleted the above disallowances made by the Ld. AO except sustaining disallowance of depreciation of Rs. 55,21,000/- on Plant & Machinery giving relief of Rs. 33,05,090/- to the assessee. The Revenue is dissatisfied and is before the Tribunal against deletion of expenses related to Trial Sales; disallowance under section 43B, disallowance under section 14A and disallowance out of advertisement expenses. All the grounds No. (i) to (iv) relate thereto. Ground No. (v) and (vi) are general in nature. 6. We have heard the Ld. Representative of the parties, considered their submissions and perused the records. The impugned disallowances deleted by the Ld. CIT(A) are adjudicated herein below. 7. Ground No. (i) Disallowance of Rs. 2,90,04,000/- being expenses related to Trial Sales. The Ld. AO discussed this issue in para 1 at pages 1 to 3 of the order. He found that in the computation of income the assessee deducted a sum of Rs. 2,90,04,000/- as Expenses related to Trial Sales. Explanation and justification therefor was sought with documentary evidence. The assessee submitte....
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....llowance of the expenditure relating to trial sale and on the other hand consider the revenue from trial sale only in the computation of taxable income. 5.7 The expenditure relating to material purchased for which invoices amounting to Rs. 1.72 Crores were given during the assessment proceedings, the AO has also not given credit for. If the Assessing Officer had any doubt regarding the expenses incurred of project of Ivory Coast he could have issued a show cause notice for the same or could have called for further clarification on the matter or at the best disallowed only that expenditure. Further, there is no adverse finding to the effect that the sales and expenditure were made out of the books. It is also not the case that the AO has rejected books of accounts. 5.7 In the light of the above deliberation, it is however clear that the trial sale as well as expenditure relating to that are disclosed separately in the books of accounts in several places including notes of accounts thereto which are duly audited by a reputed audit firm. The said practice is being followed consistently since the previous years and accepted by the departments and hence a different view can't ....
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....d disallowance for want of supporting documentary evidence. 8.2 Before the Ld. CIT(A) the assessee submitted that the fact that the amount has been disallowed is already on the record of Department in the ITR of the previous years as well as disclosed in the tax audit report of current year. Details thereof were submitted. Page 23 of Ld. CIT(A)'s order refers. It was claimed that the assessee paid the leave encashment during the year and upto the date of filing the return. Reliance was placed on the decision in Euro RSCG Advertising (P) Ltd. vs. ACIT (2012) 23 taxmann.com 187 (Mumbai). 8.3 The Ld. CIT(A) deleted the disallowance recording his findings in para 6.2 at page 25 of the order as under:- "6.2 I have considered the facts of the case, submission of the appellant ans supportings filed in paper book. Based on the above facts and circumstances of the case as there was adequate disclosure in the tax audit report and as details of individuals payments were provided to the Assessing Officer from where it is noted that the payment were made before the filing of Income Tax Return. Further Section 43B clause (f) allows an any sum payable by the assessee as an employer in lieu of....
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....ase of Cheminvest Ltd. vs. CIT (2015) 378 ITR 33 (Del) and CIT vs. Holcim India (P) Ltd.(2015) 57 taxmann.com 28 (Delhi) wherein it is held that section 14A will not apply if no exempt income is received or receivable during the relevant previous year. Relying on decisions (supra) the Ld. CIT(A) deleted the disallowance under section 14A r.w. Rule 8D. 9.3 In our considered opinion, reliance of Revenue on CBDT Circular No. 5/2014 and decision of ITAT Amritsar in Lally Motors India Pvt. Ltd. vs. PCIT (ITA No. 218(Asr) 2017 is of no help to it. The Ld. CIT(A) has recorded finding of fact that the assessee has not claimed any exempt income and therefore impugned disallowance is not called for. Agreeing with the finding of the Ld. CIT(A), this ground is also dismissed. 10. Ground No. (iv) Disallowance of Rs. 53,01,600/- out of advertisement expenses The Ld. AO made the impugned disallowance recording the following observations in para 5 of the assessment order. "5. From the perusal of the Profit and Loss Account, it was observed that the Assessee has Claimed expenditure on account of Advertisement Rs. 66,27,000/-. The assessee was scald upon to justify its claim of expenditure along....
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....c. and amount of Rs.60,000 relates to payment to Digital Empowerment Foundation which for advertisement. None of the expenses above would provide any enduring benefit to the appellant as the payments for the exhibition charges are in recurring nature and done every year for participation and other payments relating to hotel accommodation are in respect of the participation of the fest while the amount paid as advertisement is to an exempt organization is claimed by the appellant. In the factual matrix of these grounds, I am of the considered view that none of the payments would provide any long term benefit to the appellant. Therefore, the expenditure cannot be held to be of capital in nature. Thus, the Assessing officer was unjustified on the facts of the case that the expenses would provided enduring benefit to the appellant company. Accordingly, the impugned disallowance is directed to be deleted. Appellant succeeds in this grounds." 10.2 The grievance of the Revenue is baseless. We do not find any reason to deviate from the above findings of the Ld. CIT(A) in the absence of any adverse material brought on record by the Revenue. This ground is also rejected. 11. We now take up....