TMI Blog2008 (4) TMI 765X X X X Extracts X X X X X X X X Extracts X X X X ..... t the CIT(A) should have entertained the additional ground with regard to expenditure of ₹ 4,14,955 on account of payments made to the suppliers of skimmed milk, when the assessee had claimed the said amount for asst. yr. 1986-87? 2. The assessment year is 1985-86 and the relevant accounting period is the year ended on 30th June, 1984. In the assessment framed under section 143(3) of the Act, the AO adopted the figure of ₹ 17,36,625 for applying the provisions of section 37(3A) of the Act as being gross expenditure towards the advertisement, publicity and sales promotion. The plea of the assessee that the only amount which could be considered for the purposes of working out the limit for disallowance was ₹ 46,470 becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the head profits and gains from business. What can be allowed as deduction is an amount what is claimed as deduction. If the assessee does not claim the expenditure anywhere either in the return or in a letter same cannot be allowed or disallowed as a deduction. The assessee has claimed an expenditure of ₹ 46,473 only. Therefore, the disallowance if any, has to be considered from this amount only. 5. In relation to the second issue, after setting out the relevant data in para No. 4 of the order, the Tribunal has recorded following findings: We have given the full details of the dates which are relevant to the issue in question. There is no dispute that the expenditure has been incurred and is of allowable nature. The ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 37(1) of the Act. According to the learned counsel, once the conditions prescribed in section 37(3B) of the Act were fulfilled, the AO had only to work out and apply the limit and the prescribed percentage laid down in section 37(3A) of the Act without looking at any other provisions of the Act. It was, therefore. urged that the finding of the Tribunal on this count is required to be reversed. 7. In relation to the second issue, Mr. Naik has submitted that the appellate authority was vested with a discretion, whether to admit the additional ground of appeal or not; the appellate authority had exercised such a discretion, and the Tribunal ought not to have interfered with the exercise of such discretion. 8. On beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses of the assessee and; (3) laid out or expended wholly and exclusively for the purposes of the business or profession. Therefore, the first question that would arise is as to what is the nature of the claim made by the assessee in the present case. Whether the expenditure under the head of Advertisement and sales promotion account is an expenditure qualified for such a deduction? The question of partial disallowance by applying the limit prescribed under section 37(3A) of the Act comes into the play only thereafter. 12. Therefore, the first thing is to determine what is the expenditure claimed by the assessee; is it the gross amount debited to the Advertisement and sales promotion account , or is it the net amount after consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. In other words, there cannot be any disallowance of an amount which is not claimed as a deduction. The Tribunal has recorded a finding that the assessee has claimed an expenditure of ₹ 46,473 only; that would be the only amount which would come up for consideration as being allowable or otherwise under section 37(1) of the Act. The scheme of the Act itself envisages that only after amount is determined under section 37(1) of the Act as being allowable and the same falls within any of the specified categories of section 37(3B) of the Act, can the question of partial disallowance under section 37(3A) of the Act arise. 14. In the aforesaid fact situation and the position of law, as stated hereinbefore, there is no infirmity in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny hard and fast rule can be laid down for this purpose. The aforesaid principles have been borne in mind by the Tribunal while determining the issue raised before the Tribunal. 17. In the circumstances, taking into consideration the findings of the Tribunal, there is no infirmity in law so as to enable the High Court to take a different view of the matter. It is an admitted position that proceedings for asst. yr. 1985-86 were pending on the day the additional ground was raised before CIT(A) and that the amount was otherwise allowable as deduction is not in dispute. The Tribunal was, therefore, justified in holding that CIT(A) should have entertained the additional ground with regard to expenditure of ₹ 4,14,955 on account of payme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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