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2017 (4) TMI 405 - AT - Income TaxMAT computation - Addition of provision of slow moving / obsolete stock to the book profit of the Appellant while computing the tax liability under Section 115JB - Held that:- Keeping in view specific provision in the Statute vide explanation 1(c) and(i) to Section 115JB of 1961 Act, the additions to book profit are required if the nature of said cost of obsolescence and loss on account of obsolete and slow moving inventory as debited in Profit and Loss Account is merely a provision or an unascertained liability for which onus is on the assessee to rebut the same and prove that it is a business loss sustained by the assessee and is not hit by explanation 1(c) and (i) to Section 115JB of 1961 Act. The case laws relied upon by the assessee are not relevant at this stage as the assessee has not discharged its prima onus cast under law as no details of obsolete and slow moving inventory and basis of its working was submitted before the authorities below .In our considered view, the matter need to go back to the file of A.O. for de-novo adjudication of the issue on merits by the AO after considering the claim of the assessee that the said claim was towards cost of obsolescence and loss on account of obsolete and slow moving inventory incurred by the assessee and it is in the nature of an ascertained liability , instead of merely being a provision or unascertained liability as contended by Revenue. CSR expenses dis-allowance - Held that:- The onus lie on the assessee to prove with cogent material to have substantiated its claim that the said expenses is incurred wholly and exclusively for the purposes of business of the assessee as required u/s 37(1) of 1961 as some remote connection with business is not sufficient to claim the expenses as business expenses, which in the instant case the assessee failed to prove the same. Hence, these expenses incurred for CSR by providing ambulance services, paramedical services and medical supplies to villagers in the vicinity of its container terminal cannot be allowed as business expenses and hence, the appellate order of learned CIT(A) is hereby confirmed Business promotion expenses which are added in the CSR expenses and which were claimed by the assessee as business promotion /sponsorship expenses , details were submitted by the assessee which are placed in paper book /page 1-5,18 to 25 filed with tribunal. It is the contention of the authorities below that no details were submitted before them to show that the same was incurred wholly and exclusively for the purposes of business of the assessee . In our considered view, , this matter also need to go back to the file of the A.O. for denovo determination of the issue on merits wherein assessee is directed to produce all relevant evidences to prove before the AO that the said expenses were incurred wholly and exclusively for the purposes of business of the assessee and it satisfy the mandate of section 37(1) of 1961 Act. Add-hoc disallowance of 25% of business promotion expenses - Held that:- The assesssee has prayed that if the matter is restored to the file of the AO, all the details of these expenses along with evidences for having incurred these expenses shall be duly placed before the AO to prove that these expenses were incurred wholly and exclusively for the purposes of business of the assessee and it satisfy the mandate of Section 37(1) of 1961 Act. The learned DR fairly agreed that this matter can be set aside to the file of AO for de-novo adjudication on merits. Thus, we are inclined to set aside and restore this matter to the file of the AO for de-novo determination of the issue on merits and direct the assessee to produce cogent material and evidences in support of its claim before the A.O.to prove that the said expenses towards board meeting and air tickets for Copola Lungi (Benzy Tours and Travels) were incurred wholly and exclusively for the purposes of business as required u/s 37(1) of 1961 Act.
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