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2019 (1) TMI 216 - AT - Income TaxDeduction u/s. 35D - eligibility - Share Issue Expenditure - whether the expenditure incurred in increasing the Share capital is not deductible u/s 35D? - Held that:- For its claim that there was substantial expansion of the industrial undertaking, assessee has relied on its audited accounts for the year ended 31st December, 2006. Assessee for its accounting purpose was following calendar year as its financial year - AR was unable to clarify whether the expansion claimed by the assessee had happened before 1st April, 2006 or after the said date. Once the assessee is claiming that there was an expansion of industrial undertaking, onus lies on the assessee to prove such claim. Assessee having failed to do so, we are of the opinion that lower authorities were justified in denying the claim u/s.35D - Decided against assessee Disallowance of excise duty element on warranty - Held that:- It might be true that warranty goods manufactured by the assessee, on which it had claimed excise duty as allowable u/s.43B of the Act, remained with the assessee till the warranties were invoked by the customers. However, it is not disputed that warranty goods stood manufactured by the assessee. Assessee had also paid the excise duty thereon to the exchequer. Once the assessee had effected payment of the excise tax, in our opinion assessee could not have been denied the claim u/s.43B. Disallowance of Prior period Items - Held that:- Assessee did not provide any details. Now the claim before us is that part of the expenditure was sales tax dues actually paid during the previous year relevant to the impugned assessment year. Considering the facts and circumstances, we are of the opinion that the issue can be verified afresh by the ld. Assessing Officer. We set aside the orders of the authorities on the issue of allowability of the claim of prior period expenditure of C3,92,473/- and remit it back to the file of AO for consideration afresh in accordance with law. Appeal of assessee is allowed for statistical purposes. Disallowance of expenditure towards gift - Held that:- CIT(Appeals) has specifically noted that except for the list of the debit entries, assessee did not produce any evidence to show that the expenditure was incurred wholly and exclusively for the purpose of business. In other words assessee could not show the business expediency of the gifts, nor could identify the recipients. In such circumstances, the claim was rightly disallowed by the AO. - decided against assessee.
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