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TMI Blog2015 (10) TMI 1508X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal are without prejudice to one another. 1.a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 25,04,210/- made by the AO to the income of the Appellant by way of disallowing expenses incurred under the head "Pre-operative expenses." b)The ld. CIT(A) failed to appreciate that the nature of these expenses was revenue and are incurred wholly and exclusively for the purposes of business carried out by the Appellant. c)In reaching to the conclusion and confirming such addition the ld. CIT(A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s any excess or unreasonable payment because reimbursement pertained to the expenses actually incurred by M/s. Cargoways India Pvt.Ltd., and (ii) the payments are not covered by the provisions of section 40(a)(ia). c) In reaching to the conclusion and confirming such addition the ld. CIT(A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors." 2. Ground no.1 deals with the action of Ld. CIT(A) in confirming the disallowance of Rs. 25,04,210/- made by the AO under the head "Pre-operative expenses". 3. The brief facts culled out from the order of the authorities below are that during the year the assessee company was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning nature of the impugned expenses and relied upon various judgments in support of his contention that the allowance of the expenditure does not depend upon the manner the assessee makes entries in his books of account, but on the basis of provisions of law relating to the claim. The assessee relied upon the land mark judgment of Hon'ble Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. vs. CIT(central), 82 ITR 363 and Empire Jute Co. Ltd. vs. CIT 124 ITR 151. On the other hand, Ld. DR relied upon the orders of the authorities below and submitted that the impugned expenses being pre-operative expenses, these were disallowable in nature and Ld. CIT(A) has rightly confirmed the disallowance made by the AO. 5. We have gone through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with this issue in para 5 to 7 of the assessment order, whereas Ld. CIT(A) has dealt with this issue in para 7 & 8 of the appellate order. In the assessment proceedings the AO observed that the expenses of the assessee included payments to M/s. Cargoways India Pvt. Ltd. The AO noticed certain discrepancies in the copies of account submitted with regard to the said party and accordingly disallowance was made for Rs. 20,37,162/- on account of payments covered by section 40A(2)(b) for Rs. 12,66,643/- on account of some variation in the books of account. 7. Before us, both the parties made detailed arguments. It is seen by us that in addition to the reasoning given by the AO, the Ld. CIT(A) has further held that the assessee has default ..... X X X X Extracts X X X X X X X X Extracts X X X X
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