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2016 (11) TMI 890 - KERALA HIGH COURT

2016 (11) TMI 890 - KERALA HIGH COURT - [2017] 390 ITR 518 - Disallowance of expenditure claimed on the use of cars and telephone - Held that:- 8 cars were maintained by the assessee as his personal fad. It was also found that the assessee has not maintained any log register or other materials to establish that all these 8 cars were used by the assessee exclusively for the purpose of carrying on his business. - Insofar as the telephone bills, the expenses of which were also claimed by the as .....

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of the Tribunal regarding the cars and the telephone bills show that these are factual conclusions and do not give rise to any question of law for the consideration of this court. - Disallowance of salary paid to the assessee’s wife - Held that:- If the income earned by the wife of the assessee was on account of her technical or professional knowledge or experience, such income cannot be reckoned in computing the total income of the assessee. Reading of paragraph 6 of the assessment order s .....

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ecided against the assessee - Expenditure incurred for the Research and Development - Held that:- The expenditure in question was incurred during the previous assessment year and that the assessee who is following the mercantile system of accounting could not have claimed it during the assessment year in question. It was this finding which was ultimately sustained by the Tribunal. Since the assessee is admittedly following the mercantile system of accounting, the expenditure in question coul .....

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I.T.A. No. 55 of 2010 - Dated:- 26-9-2016 - ANTONY DOMINIC AND P.V.ASHA, JJ. FOR THE APPELLANT : ADVS.SRI.ANIL D. NAIR, SMT.NIVEDITA A.KAMATH FOR THE RESPONDENT : SRI.JOSE JOSEPH, SC, FOR INCOME TAX JUDGMENT Antony Dominic, J. This appeal is filed by the assessee impugning the order passed by the Income Tax Appellate Tribunal, Cochin Bench, in I.T.A.No.624/2007 pertaining to the assessment year 2004-2005. 2. On facts, it is relevant to state that for the assessment year 2004-2005, the assessee .....

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ing questions of law for the consideration of this court: i) In the facts and circumstances of the case, ought not the Tribunal had allowed the expenditure claimed on the use of cars and telephone bills ad allowable expenditure under Section 37(1) of the Act? ii) In the facts and circumstances of the case ought not the Tribunal had held that the salary paid to the wife is an allowable deduction as contemplated under Section 64(i)(ii) of the Act? iii) In the facts and circumstances of the case ou .....

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has been issued only on question Nos.3 and 4, having heard the submissions made at the Bar and on going through the orders impugned, we feel that the four questions of law framed in the appeal memorandum deserve to be considered. 5. Insofar as the first question regarding the expenditure claimed on the use of cars and telephone bills are concerned, reading of Annexure A assessment order shows that the assessee, who is the manufacturer of Anoop Hair Oil , on the basis of a secret formula develop .....

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er of the 1st Appellate Authority and restored the order passed by the Assessing Officer. 6. Reading of the order passed by the Tribunal shows that it has endorsed the conclusion of the Assessing Officer that the 8 cars were maintained by the assessee as his personal fad. It was also found that the assessee has not maintained any log register or other materials to establish that all these 8 cars were used by the assessee exclusively for the purpose of carrying on his business. 7. Insofar as the .....

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e used for the purpose of his business. The aforesaid conclusions of the Tribunal regarding the cars and the telephone bills show that these are factual conclusions and do not give rise to any question of law for the consideration of this court. 8. Next issue is concerning the disallowance of the salary paid to the assessee s wife. The findings of the Assessing Officer in paragraph 6 of the assessment order is that the assessee had paid an amount of ₹ 81,000/- to his wife. This was sought .....

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d the order of the Assessing Officer. 9. The learned counsel appearing for the appellant challenged the finding of the Tribunal by relying on the provisions of Section 64(1) (ii) and the decision of the Andhra Pradesh High Court in Batta Kalyani v. Commissioner of Income Tax [154 ITR 59]. 10. Section 64(1)(ii) provide that in computing the total income of any individual, there shall be included all such income as arises directly or indirectly to the spouse of such individual by way of salary, co .....

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come earned by the wife of the assessee was on account of her technical or professional knowledge or experience, such income cannot be reckoned in computing the total income of the assessee. Reading of paragraph 6 of the assessment order shows that the very contention of the Authorized Representative of the assessee was that the assessee had imparted secret formula of his medicine to her . In other words, apart from imparting the secret formula to his wife, even the assessee did not have a case .....

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of his wife. Insofar as this case is concerned, there is no such finding and, therefore, this judgment is of no assistance to the assessee. In the light of the above, the second question of law has to be answered against the assessee and in favour of the revenue. 13. Insofar as the third question regarding the expenditure incurred for the Research and Development is concerned, reading of paragraph 7 of the assessment order shows the same was disallowed by the Assessing Officer on the finding th .....

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ar in which it was incurred. Therefore, the third question also has to be answered against the assessee and in favour of the Revenue. 14. The fourth question is regarding the advertisement expenses incurred by the assessee. Reading of the assessment order shows that during the assessment year in question, the assessee had incurred ₹ 29,25,000/- as advertisement expenses. This was disallowed on the basis that it is a capital expenditure. While the 1st Appellate Authority allowed the appeal .....

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