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2016 (7) TMI 536 - AT - Income TaxGenuineness of expenditure - Disallowance of business promotion expenses as revenue expenditure - Held that:- The manner in which the transactions has been executed in a regular interval over a period of time clearly gives an impression that these payments were made as well as received back as a part of accommodation to the sister concern. The CIT(A) has demonstrated in its order that the building permission was granted by the HMDA on 25.09.2012 i.e., much later to the MOU giving raise to the purported obligation of sales promotion expenses. We do not find any answer to the purport of incurring such huge expenses as claimed at the stage when the project itself is yet to make any serious headway. The facts do not coincide. The assessee could not support the need for such exorbitant expenditure at the stage when no permission for construction was available at its disposal. Some meager expenditure of ₹ 7.7 lakhs and ₹ 6.06 lakhs have been stated to be actually incurred in the subsequent years. In the circumstances, a mere journal entry and MOU with sister concern to convert advance already lying with the sister concern into revenue expenditure of this magnitude is highly unpalatable. We find ourselves in complete agreement with the observations and findings of the CIT(A) for dismissal of the claim of the assessee. The assessee has neither demonstrated the necessity to incur this expenditure to establish bonafide nor has demonstrated the actual expenditure incurred. Notwithstanding, the aforesaid claim in the nature of revenue expenditure when the project itself has apparently not commenced cannot be approved. - Decided against assessee
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