TaxTMI 
TaxTMI 
2005 (9) TMI 216
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....O has treated the entire amount as entertainment expenses and has given the deduction of Rs. 65,693 allowable under s. 37(2). Thus, the AO disallowed a total amount of Rs. 10,80,693. The CIT(A) deleted the addition with the observation that the assessee has incurred the expenses of Rs. 10,25,000 for sales promotion and held that the said expenses were bona fide and reasonable. The CIT(A) accordingly deleted the addition of Rs. 10,25,000. 2.2 In respect of disallowance of Rs. 55,693 under s. 37(2), the CIT(A) observed that the AO has not given credit for the sum of Rs. 22,970 which has been disallowed by the assessee's tax auditors on account of entertainment expenses. He accordingly allowed the relief of Rs. 22,970. 2.3 The learned Departmental Representative supported the order of AO and submitted that the assessee has failed to prove the services rendered by the said party against which the payment was made. He further submitted that the assessee has simply explained the narration given in the debit note i.e. "being amount debited or account towards marketing support charges." The learned Departmental Representative submitted that the assessee has to prove the services rend....
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.... 5-11-1993 Bindal Urea Piping 540 lakhs Agro Chem. Ltd 25-4-1992 OswalEngg. Fabrication 90 lakhs & and Projects structural steel work 26-3-1993 R.S. Ammonia -- Engineers storage tank 7-10-1992 Oswal SS Reactor 182 lakhs &n....
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....as also been noticed that the assessee-company is engaged in the business of manufacturing equipments for chemical and other plants as also in the business of construction of chemicals and other plants at various sites throughout the country. In this regard, we find force in the submission of learned Authorised Representative that these expenses have been incurred for commercial expediency as without such expenses the large volume of the assessee's business cannot be achieved. It has also been noticed that M/s Bermaco Valves (P) Ltd., has issued various bills/debit notes for the services rendered. On perusal of order of the CIT(A), we notice that the observation of the AO that the assessee has not produced any evidence for the services rendered by the payee is factually incorrect. In fact, the assessee has got business of above Rs. 12.52 crores from various companies which is an undisputed fact. After considering the totality of the facts of the case, we find that the CIT(A) has correctly deleted the addition. We accordingly confirm the order of the CIT(A) on this issue. 3. The second ground is pertaining to disallowance of deduction under s. 80-I on account of correct apportion....
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....t the AO has simply disallowed the claim of the assessee under s. 80-I on the basis of not correct apportionment of expenses whereas the C1T(A) has accepted the contention of the assessee and allowed the deduction under s. 80-I. The controversy before us is limited in the sense i.e., the proper apportionment of expenses between manufacturing units and others. For this purpose, it is relevant to state that the assessee is a private limited company and its books of account are subject to audit. The auditor is required to certify the P&L a/c as true and correct and in accordance with books of account. We find that in such a case the apportionment of expenses accepted by the auditor prima facie should be the correct apportionment, as the auditor has to examine each and every voucher and basis of apportionment before giving auditor's report and before certifyjng the final statements. Under the circumstances, we find it appropriate that the apportionment made by the technical person, i.e., the auditor is required to be accepted unless and until some contrary material or evidence is available on record or found by the AO. Therefore, we set aside the order of CIT(A) and send back this matt....
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.... by the assessee and the technical consultants to the project were killed/wounded. As a result, the site was unattended for a long time. The assessee at the request of the owners restarted and completed the work. However, the consultants did not return to the site and the final bill raised by the assessee was not certified by the consultants and it does not appear to have been accounted for by the customer. The total amount outstanding in the name of the customer in the books of the assessee is Rs. 53,14,044. This amount is not accepted by customer and no replies to the assessee's communications are received from them. From the oral indications, it appears that the customer is not likely to accept the liability as per the bill raised by the assessee. The assessee is not likely to receive an amount in excess of Rs. 15 lakhs against the amount due. Keeping in mind the ratio of Tribunal's decision in the case of IAC VS. Dredgjng Corporation of India Ltd. (1987) 27 TTJ (Hyd) 226 : (1987) 23 ITD 49 (Hyd), the assessee submits that though accounted for in the books of account, the amount of Rs. 38,14,044 has not accrued to the assessee. The said amount is therefore deleted from the compu....
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....d that the alleged income of Rs. 38,14,044 has not accrued to the appellant during the accounting year relevant to the assessment year under consideration. Therefore, the AO is directed to allow the appellant's claim for deduction of the said sum of Rs. 38,14,044. Therefore, the appellant gets a relief of Rs. 38,14,044 in this regard. " 5.2 The learned Departmental Representative supported the order of AO whereas the learned Authorised Representative supported the order of CIT(A). 5.3 We have heard the learned representatives of the parties and perused the record. The brief facts of the case are that in May, 1990, Indian Acrylics Ltd. awarded a contract to the assessee relating. to the setting up of acrylic plant at Sangrur in Punjab. The estimated value of the said contract was Rs. 2,82,48,938 based on the estimated quantity of work to be done and unit price as indicated in the price schedule attached to the contract. Completion period of the work as per the terms of the contract was 9 months from the date of start of work. The assessee has commenced the said work in August, 1990. The assessee used to raise bills as per the terms of the contract and after adjusting the advan....
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.... upon by the customers. The contention of the assessee that the said claim cannot form the basis of the assessee's income. After considering the facts of the case and after going carefully through the orders of lower authorities, we find that the CIT(A) has elaborately discussed the issue at length. He has also discussed the various judgments cited by the learned Authorised Representative. After considering the facts of the case, we find that the CIT(A) has correctly held that the said income has not been accrued to the assessee during the year under consideration, we find that the CIT(A)' s order is reasonable and we do not find any good reason in interfering it. We accordingly confirm the order of CIT(A) with certain modifications wherein he has deleted the addition of Rs. 38,14,044, subject to the modification that if any amount is received or realised by the assessee in subsequent year that will be subject to tax as per the provisions of the IT Act. 6. The fifth ground is pertaining to deleting the addition of Rs. 2,79,085 made under s. 40A(3) of the Act. 6.1 During the assessment proceedings, the AO noticed that the assessee has made the payments amounting to Rs. 3,47,34....