TMI Blog2015 (5) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. CIT(A) found the business purpose of advertisement, or business advantage in general, as missing. However, we observe no opportunity by him to exhibit so to the assessee, who pleaded its case before him toward the sums as being not exigible to deduction of tax at source. It could, for example, well be that the T-shirts given to the participants of the marathon run bear the assessee’s name or insignia or the like, for it to have advertisement value, and which also defines its business purpose. Similarly, payment to IAAPI, which, besides ₹ 73,315/-, also includes two other payments of ₹ 26,292/- and ₹ 25,000/-, as sponsorship, would need to be explained and, therefore, their business purpose shown. Coming to the second limb of the matter, i.e., of the same being exigible for deduction of tax at source, so that the deduction would only follow the same, in our view, our consideration of the same could only follow an adjudication by the first appellate authority, and which could only be after his definite findings as to the allowability or otherwise of the same on the anvil of section 37(1) after allowance of due opportunity to state its case to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding year - Held that:- disallowance by the A.O. stood made in the absence of any evidence being led by the assessee towards its claim, and which position continues even before us. The Revenue, however, is not in appeal. The allowance for the immediately preceding year, as it appears to us, in-as-much as there is no claim for assessment u/s.143(3) for that year, is per the summary procedure under the Act, and which cannot be said to be either an assessment or an ‘acceptance’ thereof by the Revenue. The ld. CIT(A) has allowed the assessee’s claim to that extent in view of the explanation of she being an educated lady attending to the business activities, even as no evidence toward the same has been furnished at any stage, so that there is no proof of the services rendered by her. We, accordingly, have no hesitation in confirming his order. - Decided against assessee Disallowance u/s.14A - Held that:- Investment decisions are complex in nature, requiring time and effort, i.e., in terms of market research and continuing analysis of the developments, so as to enable decision making with regard to the acquisition or retention or sale. The assessee’s claim, therefore, that it had not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1000/- per employee, on the occasion of the annual day of the park, so that section 40A(3), proscribing allowance of expenditure in the sum of ₹ 20,000/- or more, otherwise allowable, where paid otherwise by an account payee cheque or account payee draft, is not attracted. The same did not find favour with the Assessing officer (A.O.) as no bills/vouchers in support of the claim were produced by the assessee. The same found endorsement with the ld. CIT(A) in appeal. The expenditure had been booked by way of a singly entry of ₹ 47,050/- on 29.05.2007. No evidence had been produced to exhibit that the purchases were less than ₹ 20,000/- each, so that section 40A(3) shall not apply. Aggrieved, the assessee is in appeal. 3. We have heard the parties, and perused the material on record. Without doubt, section 40A(3), a non obstante clause, would apply to an expenditure incurred in a sum in excess of ₹ 20,000/-, where it is paid for otherwise than by the stated mode of account payee cheque/bank draft. The disallowance is attracted with reference to the mode of payment, and not for the expenditure per se. In the instant case, however, the assessee claims to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of hoardings/publicity material, so as to qualify as advertisement expenditure. The same was only in the nature of donation, which could not be allowed as an expense. He, accordingly, directed for the same being treated as such and, further, to be allowed deduction u/s.80-G, where applicable. 5. We have heard the parties, and perused the material on record. Our first observation is that the payment could be said to be a donation where it is for an altruistic or charitable purpose. In the present case there is no alluding to any public cause, but only toward the promotion of its business by the assessee. Whether the same, i.e., the business purpose, is proved or not, so that, where not, the consequence of disallowance shall follow, is another matter. Further, even where the expenditure is otherwise deductible, i.e., its business purpose is proved, the same, where the expenditure is one to which the provisions of Chapter XVII-B are applicable, its deduction shall be subject to deduction and payment of tax at source thereon by the defined period. Breach thereof would defer the allowability to the year where so deducted and paid. The ld. CIT(A) found the business purpose of adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a receipt of ₹ 1,944/-. The assessee was accordingly show caused for the adoption of the rate of ₹ 200/- per person. In explanation, it was submitted that the same was only an advance/part receipt. This did not find acceptance by the A.O., as the same, in that case, ought to have been reflected as a liability. The claim was even otherwise not supported by any details/evidence. The balance sum of ₹ 19,656/- was, accordingly, included as the assessee s income. The same found confirmation at the first appellate stage for the same reason/s. 7. We have heard the parties, and perused the material on record. The assessee s explanation of the same being an advance is, firstly, in contradiction to its treatment of the same as a receipt (income). When, if so, was the balance payment of ₹ 19,656/-; the rate of ₹ 200/- per person being admitted, received, even as observed by the ld. CIT(A)? In fact, there would be similar instances as well, and which would reflect and exhibit both the validity of the assessee s claims as well as the modus operandi being followed by the assessee in such cases. For which date was the booking? Did it materialize? Were tickets i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties, and perused the material on record. In our considered opinion, the matter should go back to the file of the A.O. for necessary verification and adjudication in accordance with the law. True, the impugned expenditure is abnormally large in relation to the monthly average, which works to ₹ 2.92 lacs, i.e., upon excluding the impugned sum from the total claim of ₹ 45.84 lacs for the year. However, it is not the case that the assessee has not furnished any explanation, or one which is not plausible. The account heads of garden maintenance, transport, octroi and electricity are in the nature of regular maintenance expenses. It is also not the case that the said expenditure stands incurred under any other account. The total expenditure for the immediately preceding year, for which the assessee had a lower turnover, is at ₹ 62.82 lacs, i.e., as against ₹ 45.84 lacs for the current year. Non furnishing of the relevant evidence, thus, should not prove fatal to its case the sole purpose of procedural law being to promote justice. Reference in this context is made to the case of Smt. Prabhavati S. Shah vs. CIT [1998] 231 ITR 1 (Bom). The matter, therefore, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 25 lacs during the relevant previous year. Investment decisions are complex in nature, requiring time and effort, i.e., in terms of market research and continuing analysis of the developments, so as to enable decision making with regard to the acquisition or retention or sale. The assessee s claim, therefore, that it had not incurred any administrative expenditure, could not be accepted. Section 14A includes within its sweep both direct and indirect expenditure. The latter was thus estimated following the prescription of Rule 8D, following the decisions in Godrej Boyce Mfg. Co. Ltd. v. Dy. CIT [2010] 328 ITR 81 (Bom) and Cheminvest Ltd. vs. ITO [2009] 317 ITR (AT) 86 (Del)(SB). The same found confirmation in appeal for the same reasons. 13. We have heard the parties, and perused the material on record. Rule 8D has to be resorted to where the assessee cannot substantiate its claim with reference to its accounts, as in the present case, of having not incurred any expenditure in relation to the exempt income. Its claim for expenditure would thus stand to be disallowed, i.e., in part, irrespective of whether the income not forming part of the total income has actually ensued or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee submitting no more than the ledger account of the said expenditure (refer para 15 of the assessment order). In appeal, it was submitted that the said expenditure, again, though apparently incurred in the month of March, was actually not so, being in fact transferred from different account heads to a general account. The same did not find favour with the ld. CIT(A), who following his decision qua ground no. 6 before him, i.e., in respect of repair and maintenance expenditure (disallowed at ₹ 13.69 lacs), confirmed the disallowance. 17. We have heard the parties, and perused the material on record. The Ground (before us) corresponding to Gd. 6 before the ld. CIT(A), is Gd. 5, and which stands adjudicated by us by restoring the matter back to the file of the A.O. for consideration of the assessee s case on merits, and a decision as per law, after allowing the assessee an opportunity for being heard. We find no reason, on account of parity of facts, to take any different view in the matter, so that our decision vide para 9 of this order shall mutatis mutandis apply to this ground as well. We decide accordingly. 18. In the result, the assessee s appeal is partly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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