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2014 (9) TMI 622 - AT - Income TaxAddition u/s 41(1) – Sundry creditors – Held that:- The matter needs re-examination at the end of the AO - the amount had become time barred and moreover, the assessee had transferred the amount to profit & loss account - no amount is transferred to the profit & loss account - there is no finding by the AO that the amount has become barred by limitation – relying upon Commissioner of Income-Tax Versus TV Sundaram Iyengar And Sons Limited [1996 (9) TMI 1 - SUPREME Court] - obtaining by the assessee of a benefit by virtue of remission or cessation is the sine qua non for the application of this Section - the AO needs to examine the case of each and every creditor and has to ascertain whether the assessee has obtained any benefit by virtue of remission or cessation of any credit liability in respect of any creditor - Section 41(1) would be applicable only where there is a remission or cessation of any liability – thus, the matter is remitted back to the AO for reexamination – decided in favour of assessee. Expenses incurred on pooja expenses on which FBT was paid – Held that:- During the accounting year relevant to the assessment year under consideration, the assessee incurred expenditure under the head 'Pooja Expenses' - keeping in view the prevailing Indian customs and traditions some expenditure on pooja is necessary for smooth business operations and making employees happy to boost their productivity" - the turnover of the assessee is more than ₹ 92 crores and the Pooja expenses are only ₹ 2,81,113 - The business of the assessee is labour intensive because it is in the business of civil construction - the expenditure incurred by the assessee is quite reasonable and the disallowance of 50% of the expenditure on the presumption that the same was incurred for non-business purposes is not justified – Decided partly in favour of assessee. Building material expenses and consumable expenses disallowed – Held that:- The AO considered all the bills and vouchers and then he found only few mistakes - the AO has mentioned, the assessee has submitted the bills of all the parties for building material purchased and consumables along with copy of some ledger accounts and bank statements - when during remand proceedings, all bills and vouchers have been produced and have been examined by the AO and total discrepancy was found only in respect of two bills, there was no justification for adhoc disallowance at 1% - the AO himself has written to the CIT(A) that the quantum of disallowance should not be less than the mistake detected in the remand proceedings – the amount is restricted at ₹ 5,17,540 – Decided partly in favour of assessee. Vehicle Running & Maintenance expenses disallowed – Held that:- The company and the directors are separate legal entities and even if there is some personal use of vehicles by the directors, it cannot be said as personal use of vehicles by the assessee which is a company – relying upon Deputy Commissioner Of Income-Tax Versus Haryana Oxygen Ltd. [1999 (12) TMI 107 - ITAT DELHI-D] - the Government has brought in FBT and assessee has already paid tax under the FBT which will take care of personal use of vehicles, if any, by the directors/employees – thus, the order of the CIT(A) is upheld – Decided against revenue.
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