TaxTMI 
TaxTMI 
2017 (4) TMI 1674
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....ners and let them out as service apartments. In the assessment made for A. Y. 2009-10, the AO inter alia disallowed Rs. 53,48,842/-, on which the assessee filed an appeal before the CIT(A)-I, Bengaluru. 03. The CIT(A) in his order, upheld the addition made by the AO. Against such order of the CIT(A), assessee has filed this appeal before the Tribunal, with the following grounds : "2. The learned CIT(A) is not justified in upholding the disallowance of Rs. 53,48,852/- being the expenses incurred towards business promotion under the facts and in the circumstances of the appellant's case. 2.1. The learned AO failed to appreciate that the expenses were incurred wholly and exclusively for the purposes of the business and the....
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....nt establishments but pure business houses. The disallowance is unsustainable and deserves to be deleted." 4.3. I have carefully considered the appellant's submissions and the reasons given by the AO in the assessment order. Before an expenditure can be claimed u/s 37, the following essential conditions will have to be satisfied i) It must be an expenditure in the nature of revenue expenditure and not in the nature of capital expenditure. ii) It must be laid out or expended wholly and exclusively for the purpose of the business or profession. iii) It must not be of the nature described in sections 30 to 36 and section 80W (which is enforced with effect from 1/4/1976). 4 4. In this context, it....
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....s. (3) The expenditure incurred is on the around of commercial expediency and in order, indirectly, to facilitate the carrying on of the business. (4) The fact that there was no compelling necessity to incur the expenditure on which deduction is claimed is irrelevant to constitute expenditure under section 37(1) of the Act. (5) Even an expenditure incurred by an assessee in the course of his or its business voluntarily and without necessity can be allowed as a deduction if it is incurred for promoting the business and to earn profits even though there was no compelling necessity to incur such expenditure. (6) If the payment of expenditure is incurred for the purpose of the trade of the assessee it does no....
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....sessee. In the present case, admittedly, no evidence is in the possession of the appellant for the deduction claim. The appellant has not furnished the basic information i.e. name and address of the party to whom the alleged commission was paid, date and mode of payments, etc. neither during the course of assessment proceedings nor during the appellate proceedings. In the absence of these primary details and also documentary evidence, I am constrained to uphold the AO's action. Therefore, the disallowance of Rs. 53,48,852/- is confirmed." 05. This being so, the AR argued that the AO has without understanding the nature of expenditure, characterised it as bribes and held that it is not allowable u/s 37(1). These payments are at best a....