Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (7) TMI 1048 - AT - Income TaxAddition u/s 41(1) towards sundry creditors - Held that:- As out of the total sustained addition of ₹ 11,04,549/- a sum of ₹ 7,64,079/- has been offered to tax in Asst. Year 2010-11 and Asst. Year 2011-12 and the remaining amount at ₹ 3,40,452/- are relating to parties having regular business transactions with them and the impugned amounts are only due to non-reconciliation in the books of both the parties but in none of the impugned sundry creditors any addition u/s 41(1) is called for. We, therefore, delete this addition of ₹ 11,04,549/- made u/s 41(1) of the Act - Decided in favour of assessee Addition of travelling expenses - Held that:- Assessing Officer should not have embarked upon the expenditure just because it is a foreign travel expenditure, as a prudent business man has always to look for better and prosperous market to successfully run its business in the highly competitive market and in this process one has to take up call to find best business opportunity. There may be a situation where a businessman does not have a confirmed source of getting an order business deal but just in order to feel the international market visits are made to explore business opportunities so as to sell the goods in the overseas market or to make purchase, at reduced rates if the domestic rates are higher. In these circumstances and looking to the fact about the turnover and the income offered in and no major defect found in the books of account, no disallowance was called for on the part of the Assessing Officer towards the foreign travel expenditure - Decided in favour of assessee Addition of remuneration expenses to Smt. Urvashi Desai by invoking 40A(2) - Held that:- Expertise of the professional gets perfected and polished day by day out of his/her experience throughout its professional career and the worth of this experience gets appreciated more and more so much so that he/she cannot be put at par with the fresh professional having same degree but no experience. This experience and expertise makes a professional desirable for being paid higher remuneration/fees and the same situation is there in the case of assessee in which higher amount of remuneration is being paid to a B.E. (Chemical), Mrs. Urvashi Desai having experience more than 33 years, and therefore, in absence of any specific working no disallowance was called for by ld. Assessing Officer towards excess remuneration paid at ₹ 12 lacs. We delete the same.- Decided in favour of assessee Payment of commission to Shri Girish Desai by invoking 40A(2)- Held that:- Assessee has himself stated in the statement of facts that Mr. Girish Desai has left his work and staying at home whole day due to his old age and his memory power might have become weak. In such a situation when payment is being made to a person towards commission which is in regard to effecting sales of the assessee which involves booking of orders, regular check to the aspect of delivery of goods to the buyers and regular payment against sales so made and after providing all these services commission is received for effecting such sales. Looking to the facts of the case and the old age of Mr. Girish Desai his illness, we are of the view that assessee has been unable to justify the reasonableness of the commission amount of ₹ 6,42,738/- and it seems that benefit in the form of claiming tax benefit on this payment of expenditure has been sought after by the assessee and merely deduction of TDS cannot certify the reasonableness of expenditure. Therefore, we are of the view that assessee has been unable to prove the reasonableness and genuineness of the commission expenditure of ₹ 6,42,738/- paid to Girish Desai and, therefore, ld. Assessing Officer has rightly made the disallowance - Decided against assessee
|