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2021 (3) TMI 411 - AT - Income TaxDisallowance of interest expenditure u/s 36(1)(3) - A.O. noticed that the assessee has borrowed funds from banks and other entities and paid interest thereon - AO disallowed proportionate interest expenditure of ₹ 24 lakhs in assessment year 2011-12 and ₹ 41.04 lakhs in assessment year 2012-13 - CIT(A) noticed that the assessee could not establish commercial expediency in making the investment in WSIPL. Accordingly, he confirmed interest disallowance in respect of remaining amount of loans - HELD THAT:- Before us, no material was placed by the assessee to contradict the findings recorded by Ld. CIT(A) on this issue. Accordingly, we do not find any reason to interfere with the order passed by Ld. CIT(A) on this issue in both the years under consideration. Disallowance of advertisement expenses - AO noticed that the assessee has incurred huge amount of expenses on these advertisement expenses - HELD THAT:- Assessee has incurred the advertisement expenditure according to its wisdom/strategy from the point of view of the businessman. It is a well settled proposition of law that the tax authorities cannot sit in the arm chair of the businessman and decide the manner of conducting the business of the assessee. We notice from the assessment order that it is not the case of the A.O. that advertisement expenses incurred by the assessee are not genuine/bogus. The AO has formed the view that the advertisement expenses are huge vis-à-vis its Sales revenue. In our view, it should not be the reason for making estimated disallowance. Under these set of facts, we are of the view that the A.O. was not justified in disallowing part of advertisement expenditure on estimated basis and the Ld. CIT(A) was not justified in confirming the same. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue in both the years under consideration and direct the A.O. to delete the disallowance. Disallowance of business promotion expenses - A.O. noticed that the business promotion expenses incurred by the assessee was in the nature of capital expenditure and the same has resulted in creation of an asset of enduring nature - CIT(A) took the view that 25% of the same may be treated as capital in nature - HELD THAT:-Observations of Ld. CIT(A) would show the nature of expenses incurred by the assessee are towards purchase of certain articles, which are for promoting the business of the assessee. In our view, those kind of articles would not give rise to creation of asset of enduring nature. Accordingly, we are of the view that the Ld. CIT(A) was not justified in sustaining addition of part of business promotion expenses. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to delete the disallowance of entire amount of business promotion expenses. Appeals of the assessee are partly allowed.
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