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2013 (10) TMI 379 - HC - Income TaxAllowability of expenditure on estimate basis - Agreement between the assessee company and M/s. Sahara India dated 01.01.1991, M/s. Sahara India shall works as agent to the assessee company for collecting money, leading money, supply of receipts and documents and communicating various schemes and proposals launched by the assessee company from time to time. M/s. Sahara India was also authorized to collect the requisite amount from the members for its savings schemes and the so collected amount through its branches shall be send it to the assessee company. M/s. Sahara India shall submit to the assessee company, the statement of account or such other information as the company may require. For this purpose, the expenses were paid – Held that:- The expenditure are genuine. These expenditure were likely to be incurred by the assessee company, or to be paid to the M/s. Sahara India. The expenses so claimed pertains to the establishment, travelling, stationery and printing, advertisement and publicity and business development and these expenses were related to the business of the assessee. The said expenses were duly supported by the vouchers as observed by the CIT(A) in his order. But since these expenses were incurred by M/s. Sahara India, so the vouchers were in possession of that firm and that the assessee after having satisfied itself about the correctness of these expenses had accepted the debit note of M/s. Sahara India and credited in their account the amount by issuing debit vouchers - No doubt was raised about the genuineness of the said expenditure. When the expenses were incurred wholly and exclusively for the purpose of the business, the same are allowable - AO made the addition on estimate basis. The first appellate authority as well as Tribunal restricted the same on estimate basis. The estimation is a question of law, as per the ratio laid down in the following cases s.a. New Plaza Restaurant vs. ITO, [2008 (7) TMI 260 - HIMACHAL PRADESH HIGH COURT] and Sanjay Oil Cake vs. CIT, [2008 (3) TMI 323 - GUJARAT HIGH COURT]- Decided against the Revenue. Addition of Notional Interest – Held that:- M/s. Sahara India is the collecting agent not only of the assessee but also of various other companies. As per MoU, the assessee charges interest from M/s. Sahara India where delay in transmission of funds exceeds two months. From the record, it appears that the assessee has charged interest on the balance of Rs.13,80,08,484/- and no interest was paid on the balance of Rs.6,49,86,400/-, as the same did not exceed two months. When the parties have agreed not to charge the interest, as per the condition laid down in the MoU i.e. "if the remittance is within the less than two months", then the AO cannot compel to do so – Decided against the Revenue.
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