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2016 (9) TMI 1182 - AT - Income TaxDisallowance of business expenditure - scholarship to the children of members, payment to legal heirs of members and gifts to members - Held that:- The volume of earning of the assessee bank are mainly made through its members. These expenses are incurred by the assessee bank to attract the members confidence and loyalty towards the bank in the prevailing competition so that the members place their deposits with the assessee bank and also continue to borrow funds from the assessee bank in order to improve the profit earning and income of the assessee bank. We have also considered that the amount spent on the aforesaid expenditures is very marginal compared to the amount of interest realized on the advances made to the members by the bank and amount of deposit made by the members with the bank. Under these circumstances the amount spent on scholarship to the children of members, payment to legal heirs of members and gifts to members could be said to be expenditure incurred wholly and exclusively for the purpose of business since the amount was spent for keeping alive its good image amongst its members and ensuring that goodwill and continuity of business with the members. In view of above mentioned facts and circumstances, we find that the assessee had incurred above stated expenditure for promoting the business, even though there is no legal obligation to incur these expenditure but the assessee had incurred it for preserving business connection and goodwill of the business. Therefore, in view of above findings, we allow the aforesaid expenditure as business expenditure under Section 37 of the Act.- Decided in favour of assessee Addition on the basis of Annual Information Return data - AO made this addition on the basis of AIR information pointing that assessee has received interest on securities from the party named “Backbay Reclamation” - Held that:- The assessee had explained before the lower authorities that there cannot be any party such as “Backbay Reclamation” which indicates that details were incomplete and also incorrect. The ld.CIT(A) has not given consideration to the submission of the assessee that the Assessing officer was failed to point out the complete detail of the said transaction because of which the transactions remain unexplained. In view of the above stated facts and circumstances, we consider that the addition was made in absence of complete particulars of the transactions which could not identify any such income earned by the assessee. Because of incomplete information and particulars relating to source of interest payment supplied by the AO to the assessee, the transactions could not be traced out. In view of above stated facts and circumstances, the addition made by the Assessing Officer is not justified. - Decided in favour of assessee
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