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Farmson Pharmaceuticals Gujarat Pvt. Ltd. Versus ACIT

2015 (6) TMI 352 - ITAT AHMEDABAD

Deduction of business loss u/s.28 - CIT(A) rejected the claim - Held that:- AO stated that the amount of ₹ 4,74,404/- consisted of advances given to various parties as well as deposits with the Government departments. Party-wise bifurcation is not available on record. In the absence of the same, it is not clear whether there was any deposit in the capital field. In our considered view, advances which were on revenue field, is allowable as revenue loss, whereas the deposits which were on ca .....

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he nature of punishment, but was by way of compensation, then the amount was allowable as deduction to the assessee. The Hon’ble High Court observed that case of Haji Aziz and Abdul Shakoor Brothers Vs. CIT, [1960 (11) TMI 15 - SUPREME Court] has held that any amount paid, which was in the nature of penalty for breach of law, was not allowable as deduction while computing the income of the assessee, as the payment was not to compensate the loss on account of delay in making the payment, but was .....

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he purpose of visit and the business connection of the above expenditure could not be established by the assessee by producing relevant material. In the absence of the same, we do not find any good reason to interfere with the order of the CIT(A), which is confirmed - Decided against assesse.

Disallowance on account of repairing expenses - Held that:- In the absence of any details of the expenditure, it is not possible on our part to adjudicate the issue completely. In our considered .....

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3-2015 - Shri Shailendra Kumar Yadav And shri N.S. Saini JJ. For the Appellant : Shri Milin Mehta, AR For the Respondent : Shri Roopchand, SR-DR ORDER Per N.S. Saini, Aaccountant Member: this an appeal filed by the assessee against order of the CIT(A)-I, Baroda dated 10.12.2010 for Asstt.Year 2002-03. 2. The ground no.1 of the appeal is directed against the order of the CIT(A) in rejecting the claim of the assessee to allow deduction of ₹ 4,74,407/- as business loss u/s.28 of the Act. 3. B .....

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ness of the assessee. It was also submitted that none of the advances were made for purchase of fixed assets, and therefore, the same was allowable under section 28 as business loss. 5. The CIT(A) after considering the submissions of the assessee held that the amounts claimed as bad debts were not trading debts, but were advances. No details were furnished to show that the loss in respect of these deposits has crystallized during the year, and thus, the claim of business loss of ₹ 4,74,404 .....

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e action of the AO on the ground that no material was brought before him to show that these receivables became bad during the year under consideration. We find that it is not in dispute that the amount in question was actually written off as irrecoverable by the assessee in its books of accounts. The Revenue has brought no material to show that the amounts were not irrecoverable and the assessee actually received the amount at any time. We find that the Hon ble Supreme Court in the case of CIT V .....

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e same was actually written off by the assessee as irrecoverable in its books of accounts. 8. However, in the instant case, it is observed that the AO stated that the amount of ₹ 4,74,404/- consisted of advances given to various parties as well as deposits with the Government departments. Party-wise bifurcation is not available on record. In the absence of the same, it is not clear whether there was any deposit in the capital field. In our considered view, advances which were on revenue fi .....

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to the assessee. Thus, this ground of the appeal of the assessee is allowed for statistical purpose. 9. The ground no.2 of the appeal is directed against the order of the CIT(A) confirming the action of the AO in disallowing an amount of ₹ 2,68,063/- on the ground that it pertains to penalty for infringement of law. 10. We have considered rival submissions and perused the orders of the lower authorities and material available on record. 11. Brief facts of the case that the assessee claime .....

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sales-tax department levying interest and penalty for non-payment of sales-tax. The company requested the Department to consider the financial position of the company, and allow payments in instalments. The Sales-tax Department allowed the plea of the assessee to pay the arrears in instalments. It was submitted that no civil or criminal proceedings were initiated against the assessee. It was, therefore, prayed that the amount did not represent any payment for infringement of law, and the same wa .....

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, wherein it was held that penalty and fine for belated payment of excise duty is compensatory in nature, and disallowance made is required to be deleted. 15. On the other hand, DR supported the orders of the lower authorities. 16. We find that it is not in dispute that the assessee had paid salestax penalty of ₹ 2,68,063/-. We find that the Hon ble Punjab and Haryana High Court in the case of CIT Vs. Hoshiari Lal Kewal Krishnan (supra) has held that where the payment was not in the nature .....

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on account of penalty for breach of law. No material has been brought on record to show that the said amount was paid by the assessee by way of compensation for delay in making the payment of sales-tax. In absence of such material, we do not find any good reason to interfere with the order of the CIT(A), which is hereby confirmed and the ground of the appeal of the assessee is dismissed. 17. The grounds no.3 and 4 of the appeal are directed against the order of the CIT(A) in making disallowance .....

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asked to furnish specific details of expenses relating to visit of Shri K.K. Vithani, failed to furnish the same. Therefore, he held that the expenses were not incurred wholly and exclusively for the purpose of business of the assessee, and disallowed the same. Similarly, the AO observed that the assessee has claimed ₹ 11,208/- incurred on the account of expenses for air-ticket of Shri Vinit Menon, as sales promotion expenses. The assessee was asked to furnish specific details establishin .....

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ee for such purposes. It was submitted that the sales of the company has increased from ₹ 5.16 crores to ₹ 12.61 crores. 21. The CIT(A) after considering the submissions of the assessee held that except for filing the air-tickets, no evidence, like the purpose of visit, tour report etc. were furnished to establish the business purpose of these expenditure. Therefore, CIT(A) confirmed the addition made by the AO. 22. Before us, the AR relied upon the submissions made before the CIT(A) .....

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dismissed. 24. The ground no.5 of the appeal is directed against the order of the CIT(A) in confirming the action of the AO in making disallowance of ₹ 2,19,673/- on account of repairing expenses. 25. We have heard rival submissions and perused the orders of the lower authorities and material available on record. 26. Brief facts of the case are that the AO observed that the assessee has incurred the expenditure of ₹ 2,19,673/- on renovation of plant & machinery. The AO was of th .....

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