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2012 (12) TMI 593 - AT - Income TaxDisallowance of 50% unmarked sales promotion expenses – AO made addition due to absence of bills and vouchers - Expenditure includes commission on number of cases sold and lifted - Incentive to increase sales by the depots located at various parts of the country – Held that:- As the assessee rightly contended the fact that such expenses are necessary and part of the business. The only factor which goes against the assessee is the absence of bills and vouchers. In the given facts and circumstances, restrict the disallowance of sales promotion expenses to 25% of unmarked sales promotion expenses. Issue partly allowed in favour of assessee Disallowance of the employees contribution to ESI and PF – Deposit beyond the due date but before filling of ROI – Held that:- Following the decision in case of AIMIL Limited (2009 (12) TMI 38 - DELHI HIGH COURT) that Sec.43B extended to employees’ contribution as well which are paid after the due date under the PF law but before the due date for filing the return. Allow deduction. In favour of assessee Disallowance of interest u/s 14A – Expense in relation to earn exempt income - Whether interest expenses relatable to borrowed funds which are used for making investment in the share capital of a firm can be said to be expenditure incurred for earning income not includible in the total income – Held that:- The intend of the assessee not to earn tax free income in the form of share of profits from the firm. Once it is found that the provisions of Sec.14-A are applicable then irrespective of the fact that there was no receipt of share of profits from the firm in the present year or the argument that the disallowance cannot exceed the amount of share of profits received from the firm, cannot be accepted. Therefore, disallowance has to be sustained. In favour of revenue
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