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2017 (5) TMI 363 - AT - Income TaxAddition on leave encashment - addition u/s 43B - Held that:- As the assessee is not able to file any material to show that the liability is a crystallized. We find that the Assessing Officer and the ld. CIT(A) have observed that it is only a contingent liability and the assessee is not able to substantiate that the liability has been crystallized. Therefore, we are of the opinion that the claim made by the assessee cannot be allowed, hence, ground raised by the assessee is dismissed. Disallowance of legal & professional fee - pre-bidding expenses - Held that:- CIT(A) is not correct in observing that the expenses incurred are not for the assessee’s business. The assessee’s business is to identify the project and study the feasibility of the project and participate in the bidding/tender. After successful in bidding for project, it will be allotted to the subsidiaries or keep the project alone with the assessee and therefore, the assessee has to incur expenditure, whether it may succeed or may not succeed in the bid. On the basis of assumption and presumptions, it cannot be said that the expenditure incurred by the assessee is not for the purpose of business. The assessee after participating in the bidding, if the bid is successful, it allotted the work to the subsidiaries and receives fee from the subsidiaries such as rendering services, reimbursement of expenses, payment for services rendered. We find that the matching principles referred by the ld.CIT(A) have no application. Therefore, we are of the opinion that the assessee has incurred these expenditure towards bid/tender documentation wholly and exclusively for the purpose of assessee’s business, therefore it has to be allowed under section 37 - Decided in favour of assessee. Disallowance of miscellaneous expenses - Held that:- The assessee is not able to file any details and it is not able to substantiate its claim to prove that impugned expenditure comes under the purview of section 37 of the Act. In view of the above, we find that the estimation made by the ld. CIT(A) scaling down the disallowance from 25% to 10%, is fair and reasonable, hence, no interference is called for. Thus, this ground of appeal raised by the assessee is dismissed. Addition of interest - amount advanced to the trust - Held that:- CIT(A) after considering the explanation of the assessee and after perusal of the bank statement, he has observed that assessee has invested in the QIP proceeds in mutual funds after few months, some of the mutual funds have been redeemed and the proceeds of which was utilized to make the advance to the Trust and gave a finding that interest bearing funds are not utilized to make the impugned advance to the GVK Employees Welfare Trust. Thus, we find no infirmity in the order of the ld. CIT(A), hence, this ground of appeal raised by the Revenue is dismissed. Addition of business loss - Held that:- Assessee has entered into agreement with M/s. Pluto Software Pvt. Ltd. for relocation of the liaison office. As per the agreement, it has paid advance. Since the relocation was not materialized, advance amount paid as per the agreement has been written off as the party M/s. Pluto Software Pvt. Ltd. has forfeited advance because the transaction does not pass through as agreed. Therefore, the amount forfeited would take the character of business loss and is allowable under section 37 of the Act. We find that there is no infirmity in the order passed by the ld.CIT(A). The Departmental Representative has not brought any material to show that the expenses incurred by the assessee are not connected with the business of the assessee - Decided against revenue
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