TMI Blog2018 (6) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... rmises - hence CIT(A) rightly deleted the addition - Decided against the assessee. Disallowance on account of business promotion expenses - Held that:- When we examine Business Promotion Expenses of ₹ 23,46,918/- claimed by the assessee in the light of the facts that the assessee has given turnover of more than ₹ 190 crores with returned income of ₹ 4,97,47,060/- and further in the light of the fact that in AYs 2008-09 & 2009-10, the Revenue has allowed expenses on account of Promotion Business Expenses to the tune of ₹ 32.33 lacs and 29.11 lacs respectively, the disallowance has rightly been deleted - Decided against the Revenue.. Disallowance u/s 40A(2)(b) for Fabrication Charges paid to the sister concern - Held that:- The disallowance cannot be made merely on the basis of estimation particularly when there is no fall in the G.P. Rate or Net Profit Rate which is more than the preceding year - AO has not collected any evidence to prove evidence from the prevailing market that expenditure incurred/claimed by the assessee were excessive or unreasonable with regard to the fair market value of the services - thus CIT(A) has eighty deleted the disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h in fact was in the nature of providing evidence. 4. In the facts and circumstances, the Ld. CIT (A) erred in deleting disallowance of ₹ 7,35,71,281/- made by the AO u/s 40A(2)(b) 'on account of fabrication charges paid to sister concerns in the absence of proper evidence adduced by the assessee specially when the onus was on the assessee to establish with evidence that the payments made were as claimed at arm's length price. 5. In the facts and circumstances, the Ld. CIT (A) erred in deleting disallowance of production incentive of ₹ 22,41,828/- made by the AO, in the absence of even primary evidence as to whom the payment was made and also by ignoring the fact that no such incentive was paid in earlier year. 6. The appellate craves to be allowed to add any fresh ground of appeal and/or delete or amend any of the grounds of appeal. 2. Briefly stated the facts necessary for adjudication of the controversy at hand are: The assessee company is into the business of manufacturing and exports of readymade garments. The AO noticed that the assessee has debited an amount of ₹ 3991718/- under the head Municipal Corporation of Delhi (MCD), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. 3. The Asseessee carried the matter before the Ld. CIT(A) by way of filing the appeal, who has deleted the addition made by the AO by allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal. 4. We have heard the Ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and order passed by the revenue authorities below in the light of the facts and circumstances of the case. Ground no. 1. 5. In so far as the question of Capitalization of conversion and Parking Charges of ₹ 39,91,717/- are concerned. Undisputedly, the assessee has got the use of industrial unit changed to commercial unit qua its outlet at Moti Nagar. Payment of conversion and parking charges by assessee to the Municipal Corporation of Delhi (MCD) is also not disputed. It is also not in dispute that assessee has paid one time conversion and parking charges to the MCD. 5.1 We are of the considered view that conversion charges as well as parking charges paid by the assessee are necessary charges without which the assessee cannot run the business. 5.2 Identical issue has been decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of accounts. Secondly, when we examine Business Promotion Expenses of ₹ 23,46,918/- claimed by the assessee in the light of the facts that the assessee has given turnover of more than ₹ 190 crores with returned income of ₹ 4,97,47,060/- and further in the light of the fact that in AYs 2008-09 2009-10, the Revenue has allowed expenses on account of Promotion Business Expenses to the tune of ₹ 32.33 lacs and 29.11 lacs respectively, the disallowance has rightly been deleted by the Ld. CIT(A). So, Ground No. 3 determines against the Revenue. Ground no. 4. 8. In so far as deleting the disallowance of ₹ 7,35,71,218 made by the AO u/s 40A(2)(b) on account of Fabrication Charges paid to the sister concern is concerned, again, AO has disallowed the same in the absence of explanation made by the assessee as to how the rates charged by sister concern are on prevailing market rates. Firstly, AO has not disputed the books of accounts but has simply restricted the Fabrication Expenses to 25% of the sale price only, keeping in view the fact that the profit of the assessee company has been reduced by 3.6% of the sale value. Since, the AO has not dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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