TMI Blog2015 (10) TMI 1508X X X X Extracts X X X X X X X X Extracts X X X X ..... f account be decisive or conclusive in the matter. In view of the given facts and well settled position of law, we hold that these expenses are allowable to the assessee and therefore, disallowance made by the AO is directed to be deleted. - Decided in favour of assessee. Disallowance of certain expenses, reimbursed to M/s. Cargoways India Pvt. Ltd., invoking the provisions of section 40A(2)(b) - Held that:- In addition to the reasoning given by the AO, the Ld. CIT(A) has further held that the assessee has defaulted in terms of provision of section 40(a)(ia) by not deducting TDS and therefore for these reasons also these expenses are not allowable. In addition to the above the Ld. CIT(A) has also given some observations with regard to so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds of appeal:- The ground or grounds 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 ₹ 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, influence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to them by the Appellant and as such there is no variation in the books of account nor there is 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 ₹ 25,04,210/- made by the AO under the head Pre-operative expenses . 3. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied and the disallowance made by the AO was confirmed. 4. Before us, the Ld. AR has taken us, through the details showning 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 we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , reimbursed to M/s. Cargoways India Pvt. Ltd., invoking the provisions of section 40A(2)(b) of the Income Tax Act, 1961. The AO has 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 ₹ 20,37,162/- on account of payments covered by section 40A(2)(b) for ₹ 12,66,643/- on account of some variation in the books of account. 7. Before us, both the parties made detaile ..... X X X X Extracts X X X X X X X X Extracts X X X X
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