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2019 (7) TMI 537 - ITAT AHMEDABADDisallowance of discount offered to doctors - allowable business expenditure - HELD THAT:- As decided in assessee's own case [2019 (4) TMI 414 - ITAT AHMEDABAD] the commercial expediency and prudence are inseparable. If the expenditure is incurred to facilitate carrying on of business of the assessee and is supported by the commercial expediency, it does not matter that the payment is in voluntarily or not necessary or that it also enures to the benefit of a third party. If the object is business promotion, the expenditure can be said to be wholly and exclusively for the purposes of the assessee’s business. The assessee in the instant case demonstrated on facts that payment of such discounts are integrally connected to the sales/turn over achieved or has potential to achieve. The discount expenses have thus been incurred with the object of furthering the trade or business interest of the assessee. Therefore, such expense falls within the expression ‘wholly and exclusively’ referred to in Section 37. No hesitation to concur with the conclusion drawn by the CIT(A) for allowability of discounts given to stockiests/distributors etc. However, we are unable to understand the reasoning of the CIT(A) for discarding the claim of discount expenditure paid to the Doctors. When the test of commercial expediency applied in its natural perspective, there is no reason to exclude Doctors purchasing medicines from C&F agents for the purpose of eligibility of discount payments. We thus set aside the action of the CIT(A) to this extent and direct the AO to allow the trade discount paid to all parties including Doctors as ordinary business expenditure. - Decided in favour of assessee. Disallowance of administrative expenditure calculated in terms of Rule 8D(2)(iii) r.w.s. 14A - disallowance of administrative expenses - HELD THAT:- In the identical facts, the issue in the instant assessment year is also remitted back to the file of the AO for re-computation of disallowance under Rule 8D(2)(iii) of the IT Rules with reference to these investments which have actually yielded exempt income instead of gross investments. Eligibility of interest expenditure incurred by the assessee as business expenditure delayed payment of trading liability - HELD THAT:- As decided in assessee's own case [2019 (4) TMI 414 - ITAT AHMEDABAD] we are in agreement with the plea of the assessee that merely because the assessee company is paying huge interest on outstanding credit balance to Sun Pharma while no interest is being charged by the assessee from its debtors cannot be the justifiable reason for resorting to the disallowance of interest. Disallowance u/s 14A with reference to interest expenditure disallowed under Rule 8D - HELD THAT:- No merit in the grievance of the Revenue in the light of the fact that the claim of the assessee towards sufficient interest free funds to carry out investments in excess of the corresponding investments not been rebutted by the Revenue. The investments holding the potential to yield tax free income stands at ₹ 16.42 Crores whereas the own interest free funds by way of share capital and reserves stands at ₹ 116.50 Crores. Therefore, in such a scenario, no disallowance under Rule 8D(2)(ii) is permissible in case of CIT vs. UTI Bank Ltd. [2013 (8) TMI 238 - GUJARAT HIGH COURT] ; CIT vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] and Reliance Utilities & Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] . Hence, we decline to interfere with the decision rendered by the CIT(A) on this score.
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