TaxTMI 
TaxTMI 
2024 (7) TMI 775
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.... in the circumstances of the case, the Ld. CIT(A) has erred in while allowing expenses of Rs. 18,50,000/- disallowed by the Assessing Officer under various heads in simply following the decision of the earlier year without appreciating the facts of this year and without appreciating the fact that no bills were produced to support the expenditure and failed to show the purposes for which the expenditure were incurred." 2. i. On the facts and in the circumstances of the case and in law, the Ld. CST(A) has erred in deleting the disallowance of Rs. 16,21,955/- made by the Assessing Officer on account of interest paid to banks ignoring the fact that assessee's own funds reflected in balance sheet stand deployed in certain assets and cannot be said that assets and funds were available with the assessee for making advances to the sister concerns." ii. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the interest bearing loans were raised and interest free loans were advanced to sister concerns as established by the Assessing Officer in the assessment order." 3. i. On the facts and in the circumstances of ....
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....s for the assessment years 2004-05, 2005-06 & 2009-10. In the AY 2009-10 the Tribunal sustained the order of the Ld.CIT(A) and deleting the ad hoc disallowance observing as under: "12.4 Ground No.5 & 6 relate to disallowance of expenses under various heads amounting in all to Rs. 10,00,000/- which stands deleted by the Ld.CIT(A). The Ld. AO disallowed Rs. 2,00,000/- each out of (i) sales promotion (ii) marketing (iii) general expenses (iv) repair and maintenance and (v) vehicle repair and maintenance aggregating to Rs. 10,00,000/- for the reason that the assessee has not produced complete books of account; that it was not proved that expenses incurred were wholly and exclusively for the purpose of business and that these were not supported by bills. 12.5 On appeal, the Ld. CIT(A) noted that similar disallowance was made in preceding last five years which were deleted by the Ld. CIT(A) as the additions were made on ad-hoc basis and nothing adverse was brought on record by the Ld.AO. In AY 2009-10 also similar disallowance has been made by the Ld. AO without bringing on record any specific adverse material which cannot be sustained. He deleted the impugned disallowance. 12.6 We ....
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.... the assessee and from the balance sheet and details of loans and advances it is obvious that no loan or advance was made to any relative or sister concern. In the absence of any instance of utilization of borrowed fund for purposes other than business brought on record by the Ld. AO, the Ld. CIT(A) deleted the impugned addition. 12.9 Similar disallowance came up for our consideration in AY 2004-05 and AY 2006-07 and for the reasons recorded in our order of date, we have concurred with the findings of the Ld. CIT(A). Since the facts are similar, following our order for the AY 2004-05 and AY 2006-07, we agree with the view of the Ld. CIT(A) and reject ground No. 7 and 8 of the Revenue." 8. Facts being identical. Following the said order, we sustain the order of the Ld.CIT(A) and reject ground no.2 of Revenue. 9. Ground no.3 is in respect of deletion of salary received from Ozone Pharmaceuticals Ltd. It is observed from the assessment order that this disallowance was made stating that in the absence of any details filed by the assessee the salary received by the assessee is calculated on the basis of earlier year. Ld. CIT(Appeals) deleted this disallowance for the reason that t....
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....s eligible for 100% deduction u/s 80IC of the Act, provided, profits and gains are derived from manufacture or production of gnu article or thing and other conditions specified therein are fulfilled. 4.1.5 Under the new provision of sec 80IC, there is no restriction regarding number of workers to be engaged in the industrial undertaking. Therefore, disallowance of deduction u/s 80IC by the AO on the ground that required number of workers were not engaged in Guwahati unit, is erroneous and disallowance on this ground cannot be sustained. Although the number of workers being engaged is not a requirement, however, from the daily attendance register, Provident Fund, & ESI contribution forms, it is observed that more than 100 workers were engaged in Guwahati Unit in the relevant previous year. It is also note worthy that the appellant by its submission dt. 30.11.2011 produced the wages register of the writs at Guwahati along with certificates of EPF and Inspector of factories as an evidence of workers engaged in the Guwahati Unit. 4.1.6 On the issue whether the industrial undertaking is engaged in production of any article or thing during the relevant previous year, AO called for ....
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....the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in holding that the jurisdiction was assumed in accordance with law and has erred that notice u/s 143(2) dated 07.08.2013 was served on the assessee. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in not quashing the impugned assessment order due to non-service of notice u/s 143(2) is bad in law and against the facts and circumstances of the case. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO for making disallowance of Rs. 5,08,43,220/- on account of selling & distribution expenses u/s 37 of the Income Tax Act, 1961 and that too without appreciating facts and circumstances of the case and that too by recording incorrect facts and findings. 4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the disallowance of Rs. 5,08,43,220/- out of Rs. 20,33,72,877/- made by Ld. AO on account of sales and distribution expenses is bad in law and against the facts and circumstances of the case." 14. At the outset, the Ld. Counsel for the assessee submits....
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....Ld. DR submits that the assessee has not produced all the books of account before the Assessing Officer. Ld. DR strongly supported the orders of the Ld.CIT(A). 18. Heard rival submissions, perused the orders of the authorities below. 19. On perusal of the assessment order, it is noticed that the Assessing Officer disallowed 25% of selling and distribution expenses on ad hoc basis are primarily on the ground that these expenses are excessive in comparison to total turnover of the assessee and the observation of the Assessing Officer is as under: "3.2 While exploring the reasons for loss from business activities of the assessee, apart from other reasons it is noted that the assessee has incurred Rs. 20,33,72,877/- on account of selling & distribution expenses" and claimed deductions u/s 37 of the Act. As per the provisions of section 37 of the I.T. Act for claiming a deduction under this section following conditions must be satisfied:- (a) Such expenditure should not be covered under the specific sections i.e. sections 30 to 36. (b) Expenditure should not be of capital nature. (c) The expenditure should have been incurred during the previous year. (d) The expenditure ....
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....63 ITR 57, Lakshmiratan Cotton Mills Co. Ltd. Vs. CIT (SC) 73 ITR 634. * Income tax authorities can examine reasonableness and genuineness of any pay merit like royalty even if such payment CIT Vs Nestle India Ltd. (Del) 199 Taxman (Mag)321 * The doctrine that the businessman is the best judge of business expediency does not affect the right, any duty, of the assessing authorities to know whether it was incurred for business purposes and not for other extraneous consideration. Jaipur Electro Pi Ltd, Vs. (Raj.) 134 CTR 237 * The adverb 'wholly' in the phrase 'laid out or expended .... For business' refers to the quantum of expenditure - The adverb 'exclusively has reference to the object or motive of the act behind the expenditure. Unless such motive is solely for promoting the business, the expenditure will not qualify for deduction. CIT Vs. T.S. Hajee Moosa & Co. (Mad.) 153 ITR 422, Mysore Kirloskar Ltd. Vs. CIT (Kar) 166 ITR 836, Siddho Mai & Sons Vs ITO (Del) 122 ITR 839. * Burden on assessee to prove that expenses were laid out wholly and exclusively for purposes of business. Goodlas Nerolac Paints Ltd. Vs. CIT (Bom) 137 ITR 58, Assamm Pesticides....
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....sheet has recorded as under: "Sh H.P.S Gujral, CA/AR present for hearing and produced books of account, which test checked. ON examination of the details it is noticed that during the year assessee has claimed expenses on account of marking and sale promotion which approximately of 47% of total turnover. Previous year it was 31%. On examination the further details bills/vouchers and ledger related to these expenses, some bill book found not properly maintained, some found unsigned, some found not documented properly, unvouched. According the AR show cause on this issue that why not disallowance be made as assessee has failed to substantiate its claim and failed to produce enough evidences. Case adjourned for 18/03/2015 for explanation as well we complete books of accounts, bills vouchers for support of its claim as only vouchers/bills produce partly. " On 18/03/2015 again the appellant failed to produce complete books. The Assessing Officer in the order sheet recorded as under: - "Sh. H.P.S. Gujral, CA/AR attended and filed reply on account of show cause, which found not acceptable. Further as the assessee failed to substantiate its claim and failed to produce enough evide....
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.... before the appellate authorities. The argument of the appellant that no businessman can be compelled to maximize his profit, is well taken. However, it is also true that no expenditure can be allowed without cogent evidence. The appellant has been not able to bring on record the "cogent evidence" which could have enabled the assessing officer to allow such expenditure. Considering all the facts and circumstances, I am of the opinion that the Assessing Officer was not provided with sufficient details and evidence and therefore he had no option available with him but to estimate a disallowance. There could be an argument with regard to the quantum of disallowance but there should not be any hesitation in holding that such estimation was justified. In the light of discussion above, I find no reason to interfere with the order of the Assessing Officer and the same stands confirmed." 22. It could be seen from the above, the Ld.CIT(A) sustained the addition taking note of the order sheet noting, where the AO noted that the complete books, bills, vouchers are not produced the bills, vouchers, ledger related to these expenses, bill book found not properly maintained, some found un....