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2015 (9) TMI 848 - MADRAS HIGH COURT

2015 (9) TMI 848 - MADRAS HIGH COURT - TMI - Disallowance made on account of business promotion expenses u/s 37(1) - ITAT deleted the addition - Held that:- The Tribunal has recorded a factual finding that most of the items were found from the books of accounts not to be personal expenditure, but to be business promotion expenses. Therefore, the first question of law raised by the Revenue does not arise for consideration in the light of the factual finding that the expenses were found to be busi .....

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l found that the only reason as to why the Assessing Officer came to a conclusion about the excessive or unreasonable nature of the expenditure was on the basis that the net profit amounted to only 0.13% of a massive turnover of about ₹ 103 crores. On such a premise, the conclusion that the expenses incurred were excessive or unreasonable could not have been arrived at. This is why, the Tribunal pointed out there are no materials to come to the conclusion that any particular item of expend .....

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of the case, the Tribunal was right in deleting the disallowance made on account of business promotion expenses when most of the items of expenses were personal expenditure spent by the Director and therefore not allowable under Section 37(1) of the Income Tax Act? 2. Is not the finding of the Tribunal bad by deleting the entire additional ₹ 50 lakhs when the raw material supplied to sister concern were at a lower rate when compared to others thus diverting its profit to its sister concer .....

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iny through CASS and a notice under Section 143(2) was issued. 4. Subsequently, a notice under Section 142(1) was issued on 05.11.2009 calling for details in proof of the claim of expenditure made under depreciation. The assessee appeared and produced the details along with books of accounts. Since the Department was not satisfied, yet another notice was issued and a substantial portion of the records were thereafter produced. 5. The Income Tax Officer invoked the provisions of Section 40A(2)(b) .....

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nst the disallowed portion, the assessee filed a further appeal. As against the allowed portion, the Revenue filed further appeal. Both the appeals were disposed of by a common order dated 18.02.2015 by the Income Tax Appellate Tribunal. By the said order, the Tribunal allowed the appeal of the assessee and dismissed the appeal of the Revenue. Hence the Revenue is on appeal. 7. On the first question of law, which relates to business promotion expenses, the Tribunal has recorded a factual finding .....

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