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2018 (3) TMI 879

he A.Ys 2008-09, 09-10 & 10-11. We further find that no submissions were made by the ld.DR before us that the appeal, if any, challenging the same is pending before the Tribunal or the Hon’ble High Court. We find that the CIT-A was not correct in confirming the same. In view of above, no disallowance can be made on adhoc basis. - Addition on account of gift and presents and general expenses - Held that:- We find from the assessment order that the assessee produced the vouchers and supporting evidence before the AO. All the expenses as claimed are fully verifiable and supported by third party vouchers. The case laws as relied on by the assessee before us are relevant to the facts of the present case. The Hon’ble High Courts and Tribunals held that the AO cannot make addition on estimation. No submissions were made by the ld.DR before us that the appeal, if any, challenging the same is pending before the Tribunal or the Hon’ble High Court. In view of above, no such disallowance can be made on adhoc basis. - Charging of interest on dividend distribution tax (DDT) - Held that:- It is observed from record that no discussion whatsoever was made by the AO in the assessment order .....

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₹ 4,01,828/- and added the same to the total income of assessee. 6. Before the CIT-A, it was contended that the total turnover for the A.Y under consideration of ₹ 135.66 crores and the expenditure claimed under the head advertisement expenses of ₹ 4,01,828/- is meager and, the disallowance @ 100% i.e ₹ 4,01,828/- is unjustified and arbitrary. After considering the above submissions of the assessee the CIT-A confirmed the said addition made by the AO. 7. Before us the ld. AR submits that since inception of the assessee company there was no disallowance made in the earlier years The AO has wrongly made this addition on adhoc basis and on the ground that the product is customer specific and expenditure did not incur in the course of business. The ld.AR referred to written submissions filed before us and argued that the turnover of the assessee has increased constantly from 68.44 crores in the A.Y 2007-08 to ₹ 135.66 crores in the A.Y under consideration. He further argued that there is a considerable increase in the market share from the existing customer as well as from the new customers and the said expenditure is incurred only for the commercial purpo .....

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t the assessee debited an amount of ₹ 4,87,234/- under the head Entertainment & Hospitality expenses. The AO held that these expenditure were incurred in respect of MD s office on lunch, dinner, snacks at different restaurants and clubs involving personal elements and disallowed ₹ 2,43,617/- and added the same to the total income of assessee. 13. The ld. CIT-A after considering the submissions of assessee and by relying on the orders of the Hon ble Supreme Court in the case of CIT Vs. Kalkattaa Agency Ltd reported in (1951) 19 ITR 191 (SC) and the Hon ble Karnataka High Court in the case of J.K Panthaki & Co. Vs. ITO reported in (2012) 22 Taxmann. Com 49 (Kar) confirmed the addition made by the AO. 14. Before us the ld.AR submits that the orders of lower authorities were bad in law and contrary to the facts on record. In support of his contention, he referred to written submissions filed before us and argued that there is no such disallowance in the past year since inception of the company. The expenses have been incurred for serving tea, coffee, lunch, dinner or snacks at different restaurant and clubs for the staff as well as customers and other persons includ .....

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f P & L account the AO found that the assessee debited an amount of ₹ 13,47,0743/- under the following heads which seems to be excessive and personal in nature:- Nature of Expenses Amount (Rs.) Festival Celebration 20,000/- Gift & Presents 3,41,474/- General Expenses 9,85,599/- Total 13,47,073/- 20. In support of claim of above expenditure of ₹ 13,47,073/- the assessee produced ledgers and vouchers for proving the said expenditure. The AO found that internal vouchers are not correlated with reference to third party evidence. In view of assessee s submissions and turnover of assessee for the A.Y under reference, the AO proposed to disallow 25% of the total expenditure of ₹ 13,47,073/- i.e ₹ 3,36,768/- and added the same to the total income of assessee. 21. Before the CIT-A the assessee produced the vouchers and supporting evidence, which were available before the AO. In support of its claim and contention, the ld.AR of the assessee relied on various judgments against the adhoc disallowance of expenses. Tripat Kaur, New Delhi Vs. ACIT ITA No. 3244/Del/2012 CIT Vs. The Lakshmi Vilas Bank Ltd, ITA No. 896 of 2013 dt. 16-04-2014, TM1 827. CIT-A s order in .....

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ake up the appeal in ITA No. 69/Ran/2016 for the A.Y 2012-13. 29. Ground no. 1 is relating to confirmation of disallowance of ₹ 49,42,950/- by the CIT-A on account of following expenditure incurred by the assessee:- Sl.No. Nature of Expenses Amount (Rs.) 1. Other Expenses 2,37,70,000 2. Travelling Expenses 47,34,000 3. Advertisement, Promotion & Selling 8,49,000 Total 3,29,53,000 30. The AO observed that the internal vouchers and supporting evidences cannot be co-related with third party corroborative evidence. The AO disallowed 15% of ₹ 3,29,53,000/-. The CIT-A confirmed the addition made by the AO. 31. Before us the ld.AR referred to written submission and argued that the confirmation of addition by the CIT-A is unjustified, arbitrary and liable to be deleted and further submitted that the various Hon ble High Courts and Tribunals held against adhoc disallowances and placed his reliance on the following case laws:- • Sayajit Iron & Engg Co. Vs. CIT (2002) 253 ITR 749(Guj) • Core Health Care Limited Vs. DCIT(200) 70 TTJ ™ (Ahm) • Tripat Kaur, New Delhi Vs. ACIT, ITA No. 3244/Del/2012 • CIT Vs. The Lakshmi Vilas Bank Ltd, ITA No. 896 of .....

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/2014 for the A.Ys 2009-10 & 2010-11 and in the case of Shree Niwas Joshi Vs. ACIT, ITA Nos. 279 & 280/Ran/2016 for the A.Ys. 2001-02 & 2005- 06, copy of the same are on record, on similar set of facts and circumstances has disposed of the said issue in favour of assessee by dismissing the grounds of appeal of the revenue by following the decision of the Hon ble Jurisdictional High Court of Jharkhand in the case of supra. We further find that the issue in hand, facts and circumstances of those cases of ITAT Ranchi are identical and similar. 37. In view of above, and respectfully following the decision of the Hon ble Jurisdictional High Court in the case of Ajay Prakash Varma supra, we are of the view the order of CIT-A is not justified in confirming the order of AO in charging the interest. The AO is directed to modify his order. Therefore, the ground no. 2 relating to charging of interest u/s. 234B of the Act raised by the assessee is liable to be modified. This ground is allowed for statistical purpose. 38. The appeal in ITA No. 69/Ran/2016 for the A.Y 2012-13 is allowed in part. 39. In the result, both the appeals of assessee being ITA Nos. 68 & 69/Ran/2016 for t .....

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