TMI Blog2017 (1) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... t to evade taxes. we are inclined to delete the impugned disallowance of 20% made u/s 40A(2). See Commissioner of Income-tax Versus VS. Dempo and Co. P. Ltd. [2010 (10) TMI 711 - Bombay High Court ] - Decided in favour of assessee Adhoc 20% disallowance of certain expenditures for want of verification of vouchers on test check basis - Held that:- The factual position is that although complete details were made available by the assessee before lower authorities but additions were made for want of verification of vouchers for 3 months on test check basis. There is nothing adverse on record with respect to expenditure in Tax Audit Report. Gujrat High court in CIT Vs. Vallbh Glass Works Ltd. (2013 (9) TMI 806 - GUJARAT HIGH COURT ) has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de Bombay High Court order dated 16/04/2010 . As per said order, Hindustan Unilever Ltd. was to step into the shoes of Bon Limited in all its pending proceedings. The original appeal was filed within time on 09/04/2009 by M/s Bon Limited as ITA No. 2271/M/09 but the same was dismissed by ITAT vide its order dated 19/01/2011, being not maintainable as assessee was not in existence at the time of hearing. Therefore, a new appeal was filed in the name of M/s Hindustan Unilever Ltd. vide ITA No. 1144/M/2011 within 9 days of receipt of Tribunal order. Further, there is actual delay of only 296 days and not 662 days as calculated by registry. With this background, the assessee has requested for condonation of delay by an affidavit dated 09/03/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses Cartage Freight as assessee failed to submit the requisite vouchers for verification on test check basis. Thus, disallowances which are subject matter of this appeal were made in the following manner:- No. Nature of Expenditure Total Amount (Rs.) Disallowance made (%) Amt. of disallowance 1. Payment made to entities covered u/s 40A(2)(b) 2,05,61,370/- 20% 41,12,274/- 2. Trading Primary Expenses and Other Misc. Expenses Rs.3,44,995/- ₹ 1,19,760/- respectively 20% 92,991/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us. A paper-book containing inter-alia various submissions made before AO along-with final accounts and Tax Audit Report of the assessee has been placed before us. Qua 40A(2) disallowance, the Ld. Counsel for assessee has contended that the impugned payments were reasonable and fair keeping in view the prevailing market conditions. AO could not point out any basis on which adhoc disallowance has been made. Further, the payment has been made from one subsidiary to holding company and both being company assessee, falls under the same tax bracket and hence tax neutral. The CBDT vide circular number 6-P dated 06/07/1968 has stated that no disallowance is called for u/s 40A(2) in respect of payments made to relatives/sister concerns wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Common Cost 21,80,000/- 3. Service Charges 3,36,000/- 4. Excise Duty Reimbursed 27,31,452/- 5. Payment for raw material / packing material / chemicals 81,68,950/- TOTAL 2,05,61,370/- Admittedly, the assessee do not have any manufacturing facility as no investment in fixed assets have been made by it rather it availed manufacturing facility of its holding company and paid related costs. The complete details of cost incurred item-wise were given in various submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and its subsidiary. Similarly view has been expressed by Bombay High Court in the case of CIT Vs. Indo Saudi Services (P) Ltd. (supra). In view of the fact that that there are no allegations of tax evasion by revenue and keeping in view the above judicial pronouncements, we are inclined to delete the impugned disallowance of 20% made u/s 40A(2). Hence, Ground Nos. 1 to 4 of the assessee succeeds. 7. The second issue is related with adhoc 20% disallowance of certain expenditures for want of verification of vouchers on test check basis. The Ld. AR has drawn our attention to various pages of the Paper Book to show that complete details of expenses were made available to AO. But since one factory at Trichy was sold during th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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