9911796707
TMI Blog2012 (6) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... dings, the A.O. noted that the assessee has incurred various revenue expenses such as salary, communication expenses, rent, office expenses and other administrative expenses at the newly established branches, Regional Offices, Corporate Offices to stabilize and support the newly set-up network of its branches. The said expenses were classified under the head "network Development Expenses" and the amount comes to Rs. 93,22,773/-. The assessee, however, has not debited this amount to the P&L Account but has preferred to make a claim of this amount as a revenue expenditure u/s 30 and/or Section 37(1) of the Act in the computation of income. In view of the above, the A.O. asked the assessee to show cause as to why the claim should not be disallowed and held to form part of the preliminary expenditure to be amortised over five years as decided by the assessee. 2.2 The assessee in response to the above furnished detailed submission and cited a series of decisions to the proposition that if the nature of expenses are allowable as incurred for business purposes, it should be allowed in toto irrespective of the fact that it was claimed to be deferred revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; "I have carefully considered the appellant's submission, details of expenses incurred and AO's contention as well. From the details, it can be seen that the business was already set up in the earlier years and the expenditure had been incurred for expanding its existing business by setting up collection centers branches at various locations and for this purpose, the company has incurred various expenses such as salaries, communication expenses, rent, travelling, etc. there is merits in the appellant's contention that the appellant's claim is to be allowed irrespective of accounting treatment given by the company. The appellant's contention is also supported by the Hon'ble Supreme Court judgment in the case of Kedarnath Jute Manufacturing Co. Ltd. (supra). A perusal of the nature of expenses clearly shows that the assessee has not started a new line of business, but expenses were incurred for the purpose of extending the business by opening up new branches and in the process, certain expenses were incurred. Therefore, the expenditure incurred cannot be treated as capital expenditure. The appellant's contention is supported by judgments delive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring both the sides, we find the A.O. disallowed the following expenses on adhoc basis holding the same to be expenses incurred to be for non-business purpose or for personal purpose. (a) Conveyance expenses of Rs. 56,810/- (b) Telephone expenses of ` Rs. 62,735/- (c) Miscellaneous expenses of Rs. 75,150/- (d) Printing and stationery expenses of Rs. 1,56,066 (e) Repairs and maintenance expenses of Rs. 52,198/ (f) Depreciation on vehicle of Rs. 39,416/- 5.1 Before the ld. CIT(A), it was submitted that the A.O. has not granted any specific opportunity before making the above disallowance. It was submitted that each and every expenses has been incurred for the purpose of business, large part of the expenses were by account payee cheques, statutory and tax auditors have not pointed out any mistake or reservation and there cannot be an element of personal use in a corporate entity. It was further submitted that no such disallowances were made in the order passed u/s 143(3) for A.Y. 2003- 04. 5.2 Based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produce the said party with the books of account and reconcile the said expenditure. It was explained by the assessee that the said party is not cooperating and requested the A.O. to issue summons to the party. Summons u/s 131 was issued to the party. However, there was no response even after lapse of more than two months. It was explained by the assessee that Airbrone Express (India) P. Ltd. is shying away from Government Authorities. However, the A.O. was not convinced with the explanation given by the assessee. According to him assessee's corporate status have to deal with not only income-tax Department but with several other Government and semi Government authorities. Since the assessee failed to substantiate the claim of expenditure made in this regard, the A.O. relying on the decision of Hon'ble Supreme Court in the case of Durgaprasad More disallowed the courier charges of Rs. 7,58,898/- paid to Airbrone Express India P. Ltd. 7.2 Before the ld. CIT(A) it was submitted that party-wise details were filed before the A.O., and all the payments were made by A/c payee cheques. The PAN and Ward with which Income-tax Return of the party is filed was given t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
