TMI Blog2014 (2) TMI 1163X X X X Extracts X X X X X X X X Extracts X X X X ..... iture can be allowed as deduction under Income Tax Act as provided under Sections 32 & 37 of the IT Act. Such expenditures are required to be proved as having been incurred wholly and exclusively for the purpose of business dully supported by bills and vouchers. Mere provision of expenses cannot be allowed unless same is ascertained and quantified with reference to the bills of expenses. Since assessee is required to follow mercantile system of accounting, only the expenditure accrued and pertaining to the year under consideration can be allowed. The AO has also disallowed 50% of expenditure on ad-hoc basis. These expenditures were in the nature of staff welfare, conveyance and travelling. The ad-hoc disallowance was made on the plea th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iabilities-(Rs.1,60,22,503/-) On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in disallowing a sum of ₹ 1,60,22,503/- claimed by the Appellant representing year end provisions of various expenses made in the books of accounts as at 31st March, 2006. The learned CIT has not accepted the contention of the Appellant with regard to the provisions and disallowed the same as unascertained liability. 2. Expenses disallowed u/s.37(1)-(Rs.11,85,893/-) On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in disallowing a sum of ₹ 11,85,893/- incurred by the Appellant in travelling, staff welfare, conveyance etc in the month of March 2006 and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such expenditure. By the impugned order the CIT(A) confirmed both the additions and, therefore, the assessee is in further appeal before us. 4. We have considered rival contentions and carefully gone through the orders of the authorities below and found from the record that in addition to the regular expenditure the assessee has claimed following expenditures under the head provisions for expenses :- Sl.No. Particulars Amount 1. Advertisement Expenses 6,15,093 2. Commission Brokerage 77,80,759 3. Refurbishment Expenses 57, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose of business dully supported by bills and vouchers. Mere provision of expenses cannot be allowed unless same is ascertained and quantified with reference to the bills of expenses. Since assessee is required to follow mercantile system of accounting, only the expenditure accrued and pertaining to the year under consideration can be allowed. As per the contention of the learned AR these expenditures were pertaining to the year under consideration but alleged to be paid in the subsequent year, however, this fact was not verified by the lower authorities so as to find out actual incurring and crystallization of expenditure. In the interest of justice and fair play, we restore this issue to the file of the AO with a direction to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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