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2011 (1) TMI 55 - ITAT, AHMEDABADBusiness expenditure - AO disallowed the claim for expenditure incurred on foreign visit of the partner of the firm on the ground that expenses incurred by the partner towards DRUPA 2004 fair for printing and packing industry in Germany was in no way related to the assessee's own business - CIT(A) deleted the disallowance on the ground that printing and packing was an integral part of business activity of the assessee and that the visit to the DRUPA Trade Fair by its partner was certainly of an advantage to the business of the firm - CIT(A) also found, that the expenditure incurred, was separately debited to the partner's capital account as personal expenditure - CIT(A) was not justified in deleting the entire disallowance - expenditure on visit to trade fair in Germany having been incurred for the business activities of the assessee is allowable, no material to take a different view in the matter - expenses incurred by the partner at places other than Germany, not allowable , no evidence that expenditure incurred at such places has any connection with the business of the assessee. Regarding disallowance u/s 40A(3) - There is nothing to suggest that the AO ever brought any material on record on this aspect in respect of the fair market value of the facilities, for which the payment had been made, before concluding that expenditure was excessive or unreasonable. We are of the opinion that disallowance under section 40A(2) is to be considered vis-a-vis the market value of the services or facilities or on fulfilment of any of the other ingredients mentioned hereinbefore and not the individual action of the assessee in charging or paying interest. Regarding Addition on account of suppressed GP - Since the AO had not recorded any findings for rejecting the book results and applying the gross profit rate of 26% in the year under consideration, we are of the opinion that the ld. CIT(A) was justified in deleting the addition. Even the Revenue have not placed before us any material controverting the aforesaid findings of facts recorded by the ld. CIT(A). If there was no challenge to the transactions represented in the books, then it is not open to revenue to contend that what is shown by the entries is not the real state of affairs.
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