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Pearl Drinks Ltd. Versus ITO, Ward-14 (2) , New Delhi

2016 (9) TMI 556 - ITAT DELHI

Disallowance of advertising and publicity expenses - Held that:- We may point out that the lack of financial resources for conduct of business and major income or low income by the payee cannot be a basis for making disallowance as to basis of doubt only. The payee is a tax payer and if he left the earlier place of business then he may be called from new address to explain his position and in the extent of return of notice unserved on the old address can be obtained from the payer assessee to es .....

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ent through banking channels towards bills raised for logo and wall painting which is nothing but actual advertisement and publics expenses. The DR did not take the assessee to submit new address of the payee thus addition cannot be made only because notice u/s 133(b) of the Act could not be served upon the assessee due the reasons beyond control. We may also point out that 10 years have been elapsed after transaction thus at this stage we cannot expect the assessee to submit more evidence s to .....

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f interest are hire purchases cannot be characterized as interest payable and this provisions of Section 194A of the Act are not attracted in such transactions - ITA No. 2123 /Del/2011 - Dated:- 3-8-2016 - SHRI G. D. AGRAWAL, VICE PRESIDENT, AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER For The Appellant : Sh. Ved Jain, CA, and Sh. Ganjal Srivastava For The Respondent : Sh. Amrit Lal, Sr. DR ORDER PER CHANDRA MOHAN GARG, JM This appeal by the assessee has been filed against the order of the CIT(A .....

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ion & Images on the alleged belief that the party was merely used as a conduit for providing fake bills of various expenses. 3. The Hon ble CIT(A) has erred in confirming the disallowance of a sum of ₹ 25,136/- representing interest paid to M/s Gee Capital TFS Ltd. being interest on assets on hire purchase on the ground that no TDS has been deducted on the aforesaid interest. Ground No. 2(a) of the assessee:- 3. Apropos above ground, we have heard arguments of both the sides and carefu .....

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cal approaches and without proper appreciation of facts. This impugned order was be set aside. He drew our attention to Para 2.4 of the order of the CIT(A) and pointed out that the first appellate authority without providing opportunity to explain its case properly. The Ld. Counsel pointed out that as per assessee profit & loss a/c (APB Page 11), Schedule 12 to final accounts (APB page 24) the total turnover was 13 crores and in the field of cold drinks and beverages advertisement and public .....

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d order of CIT(A) and contended that merely because notice u/s 133(6) was not responded on account of shifting of page from earlier place is not a legally tenable ground for making disallowance. The Ld. Counsel vehemently pointed out that lack of funds for business purpose and income of very low amount in the hands of the assessee cannot be a basis for making disallowance and addition in regard to advertisement and publicity expenses genuinely incurred on the assessee by making payment through b .....

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2015] [Mum-Tri] ITAT, Mumbai 5. Replying to the above, the Ld. Departmental Representative (DR) strongly supported the action of the A.O and contended that the CIT(A) after proper appreciation of facts upheld the order of the A.O on this issue which requires no interference. 6. On careful consideration of above in the present case the A.O dismissed claim of the assessee by merely observing that the notice issued u/s 133 (6) of the Act could not be served on the payee (M/s Images) as it left the .....

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s been shown as income from the Firm Vision and M/s Images. The CIT(A) also alleged that only a small sum of ₹ 43,557/- has been shown undue the head cash and bank balances which clearly shown that it did not have any source for incurring huge expenses on salary material consumed etc from its own pocket and there are discrepancies in the TDS claim placed by Shri Rajender Kumar, the proprietor of payee firm. After observing above, the CIT(A) upheld the disallowance by concluding that Mr. Ra .....

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firm is not in the business of advertisement and publicity and these bills are bogus and the assessee received the impugned amount of payment make from Mr. Rajendra Kumar and thus it is not allowable. We may point out that the lack of financial resources for conduct of business and major income or low income by the payee cannot be a basis for making disallowance as to basis of doubt only. The payee is a tax payer and if he left the earlier place of business then he may be called from new addres .....

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