2004 (9) TMI 579 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of written-off sum.
2. Disallowance of travel expenses.
3. Disallowance of unclaimed balances written back.
4. Disallowance of provision no longer required written back.
5. Admission of fresh evidence by CIT(A).
6. Disallowance under section 43B read with section 36(1)(va).
7. Disallowance of foreign travel expenses.
8. Disallowance of commission expenses.
9. Disallowance of computer software charges.
10. Disallowance of 100% depreciation on shuttering materials.

Detailed Analysis:

1. Disallowance of Written-Off Sum:
The CIT(A) sustained the disallowance of Rs. 1,59,275 written off in the account of Shri H.C. Kohli, Ex-Director of the assessee company. The amount was an interest-free loan advanced to the Ex-Director, which remained unpaid. The assessee could not establish that this loan was advanced due to business need or employment terms. Consequently, the unrecovered loan was not considered a business loss, and the Tribunal upheld the CIT(A)'s decision.

2. Disallowance of Travel Expenses:
The CIT(A) disallowed travel expenses incurred on the trip of Mrs. Naveen Kohli to Singapore, as the assessee failed to provide evidence that her travel was necessary for business purposes. The Tribunal restored the matter to the Assessing Officer to allow only the expenses incurred on the Managing Director's foreign visit, disallowing those for his wife.

3. Disallowance of Unclaimed Balances Written Back:
The Assessing Officer added Rs. 1,56,669 to the total income, which was written back in the profit and loss account. The CIT(A) upheld this addition, noting that the assessee did not discharge the onus of showing that the write-back should not be treated as income. The Tribunal found that the details furnished by the assessee were not thoroughly examined and restored the issue to the Assessing Officer for fresh adjudication.

4. Disallowance of Provision No Longer Required Written Back:
The assessee opted not to press this ground, and it was dismissed as not pressed.

5. Admission of Fresh Evidence by CIT(A):
The revenue contended that the CIT(A) erred in allowing the assessee to file fresh evidence. The Tribunal examined the findings and found no infirmity in the CIT(A)'s order, confirming it.

6. Disallowance Under Section 43B Read with Section 36(1)(va):
The CIT(A) held that PF dues deposited within 5 grace days after the 15th of the next month would not be disallowable under section 43B read with section 36(1)(va). The Tribunal confirmed this decision, noting that the payment was made within the grace period.

7. Disallowance of Foreign Travel Expenses:
The CIT(A) allowed the expenses incurred on the Managing Director's foreign travel but disallowed those for his wife. The Tribunal restored the issue to the Assessing Officer for fresh examination, consistent with its earlier decision.

8. Disallowance of Commission Expenses:
The CIT(A) allowed the commission expenses of Rs. 29,56,245, which the Assessing Officer had disallowed due to lack of evidence and the deferred revenue expenditure treatment. The Tribunal found that the issue was not properly examined and restored it to the Assessing Officer for fresh adjudication, directing a thorough examination of the evidence.

9. Disallowance of Computer Software Charges:
The CIT(A) allowed the expenditure on computer software charges of Rs. 30,84,500, treating it as a revenue expense. The Tribunal confirmed this decision, noting the rapid obsolescence of software and the necessity for business operations.

10. Disallowance of 100% Depreciation on Shuttering Materials:
The CIT(A) allowed 100% depreciation on shuttering materials, which the Assessing Officer had disallowed due to insufficient evidence of purchase and use. The Tribunal found that the issue required fresh adjudication and restored it to the Assessing Officer for verification of the actual use of the shuttering materials during the relevant financial year.

Conclusion:
The Tribunal's decision involved a mix of confirmations, restorations for fresh adjudication, and dismissals. The key points included the necessity for business-related evidence for deductions, proper examination of evidence, and adherence to statutory provisions for allowable expenses.