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2015 (6) TMI 683 - BOMBAY HIGH COURT

2015 (6) TMI 683 - BOMBAY HIGH COURT - TMI - Disallowance of expenditure - Tribunal deleting the disallowance holding that the disallowance intended to be made under Section 40A(2)(b) was apparently made by the Assessing Officer under Section 37(1) - Held that:- It is a common contention of the parties that, it is Section 40A(2)(b) of the Act which was invoked by the Assessing Officer while passing the assessment order and the challenge to the assessment order by the respondent assessee was also .....

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grounds made out by the parties and on examination of the same could have either upheld the order of the Commissioner of Income Tax (Appeals) or set it aside. However, it is not open to the Tribunal to dismiss the appeal without examining the contention of the parties on a ground which is not urged by any of the parties. We also find that the issue raised by the appellant Revenue with regard to allowing the payment of ₹ 13.20 lacs has not been rightly examined by the Tribunal. It merely u .....

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by the Revenue challenges the order dated 6 March 2013 passed by the Income Tax Appellate Tribunal (the Tribunal). 3. The concerned assessment year is 2005-06. 4. The appellant urges the following questions of law for our consideration: (A) Whether the Tribunal was justified in allowing deduction of ₹ 13,20,000/- pertaining to Assessment Year 2004-05 without appreciating that as per the mercantile system of accounting, the said expenditure was even otherwise not allowable as a deduction ag .....

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overriding all the provisions pertaining to computation of income under Chapter, IVD, which includes section 37(1), also and thus there is no contradiction in the Assessing Officer's finding that the expenditure claimed by the assessee under Section 37(1) of the Act on account of the alleged reimbursement of expenses is disallowable in view of the overriding provisions of Section 40A(2) (b) of the Act. 5. The respondent assessee had paid an amount of ₹ 78.19 lacs to its sister company .....

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year relateable to an expenditure incurred in the preceeding assessment year. The Assessing Officer did not accept the contention and disallowed the entire expenditure of ₹ 78.19 lacs (including ₹ 13.20 lacs) under Section 40A(2)(b) of the Act. 6. On appeal, the Commissioner of Income Tax (Appeals), by the impugned order, partly allowed the appeal of respondent assessee. It held that the entire payment of ₹ 13.20 lacs pertains to the preceding assessment year and allowed the ap .....

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wance is as per the issue of expenses not incurred for the purpose of business. 8. Similarly, even the CIT(A) started his decision on 40A(2) (b) but ended up saying that the expenses are vouched and makes an adhoc disallowance of 10% on ₹ 64,99,029/-. Sections 40A(2)(b) and 37, have different roles to play. 9. Since neither of the contending parties are on same issue, as to which provision to be followed, even at the time of hearing the department did not ask for the amendment in the groun .....

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