TMI Blog2022 (6) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... items like knives, wrenches etc. which costs less than Rs. 5000/- per piece - HELD THAT:- The expenditure should be laid out or expended wholly or exclusively for the purpose of the business. The expression wholly emphasizes the quantification of the expenditure, whereas expression exclusively provides that such expenditure should be only for the purpose of the business. The objection raised by the ld. Assessing Officer is that how these expenditures are related to the business of the assessee. To our mind, ld. Assessing Officer failed to appreciate the nature of the business of the assessee which is cultivation and manufacturing of tea. Also, the ld. CIT(A) has given stereotyped findings by stating the observation of the ld. AO for sustaining the addition, without dealing with the matter on merit. These expenses incurred by the assessee towards general expenses for garden are not covered as described in section 30 to 36, these are not capital in nature or personal expenses of the assessee, it being a widely held company. Ld. Sr. DR placed reliance on orders of authorities below. There is nothing brought on record to suggest that these are not wholly and exclusively for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to verify and recompute the disallowance u/s. 14A read with Rule 8D and hence, allowed this ground of appeal before him for statistical purpose. Before us, by referring to the provisions of section 250 of the Act, Ld. Counsel submitted that Ld. CIT(A) ought to have deleted the addition made by the AO as there is no power available to the Ld. CIT(A) to remand the matter to the file of AO. We find that the claim of the assessee that its own funds are far in excess of the investments made and thus we direct the Ld. AO to verify the claim of the assessee and recompute the disallowance u/s. 14A read with Rule 8D in terms of the judicial precedents relied upon by the assessee supra. Accordingly, this ground of appeal of assessee is allowed for statistical purpose. Disallowance towards expenditure in cash in excess of Rs.20,000/- as prescribed u/s. 40A(3) - HELD THAT:- As considering the facts on record and explanation furnished by the ld. Counsel which requires verification of the records, we find it proper to set aside this issue to the file of ld. AO for limited purpose of verification and examination of documents furnished by the assessee and decide the matter in terms of law. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al evidence, I do not find any infirmity in the order of the assessing officer and the same is hereby upheld. In view of above, this ground of appeal is dismissed. 2.2. Aggrieved by the additions so sustained, the assessee is in appeal before the Tribunal, raising the following grounds which are dealt seriatim: 1. That the Ld. CIT(A)-2, Kolkata, erred in confirming the addition of Rs.5,20,300/- made by the Assessing Officer on account of Bonus Unpaid. 2 That the Ld. CIT(A)-2, Kolkata, erred in confirming the disallowance of Rs.1,01,473/- being the expenditure incurred by the Appellant for purchase of Stores items like Knives, Wrenches etc, each piece costing less than Rs.5000/-. 3 That the Ld. CIT(A)-2, Kolkata, erred in confirming the disallowance of Rs.67,191/- made by the Assessing Officer on estimated basis out of the expenses incurred by the Appellant under the head Miscellaneous/General Expenses. 4 That the Ld. CIT(A)-2, Kolkata, erred in confirming the addition of Rs.3,73,695/- made by the Assessing Officer for TDS as per Form-26AS. 5 That the Ld. CIT(A)-2, Kolkata, ought to have deleted the addition of Rs.3,87,497/- made by the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s otherwise, the addition shall remain sustained. Accordingly, this ground of appeal of the assessee is allowed for statistical purposes. 3. Ground no. 2 relates to disallowance of Rs.1,01,473/- in respect of expenditure incurred by the assessee for purchase of store items like knives, wrenches etc. which costs less than Rs. 5000/- per piece. It is pointed out by the ld. Counsel that these are general expenditure for tea garden which is commensurate to the line of business in which the assessee is engaged in. According to the ld. Counsel, these are expenses which are related to its business activities and are allowable expenditure u/s.37(1) of the Act. Ld. Counsel referred to the ledger of these expenses claimed during the year along with certain vouchers and invoices placed on record in the paper book at page 96 to 107. From the perusal of these documents, we note that these are general expenses relating to the business activities of the assessee which are covered within the meaning of section 37(1) of the Act. 3.1 Section 37 of the Income Tax Act contemplates that any expenditure not being expenditure of the nature described in sections 30 to 36 and not being in the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk on the same. These expenditures are general expenses incurred in respect of garden both at the work site and the Kolkata office of the assessee. Ld. Counsel further pointed out that visits to the tea garden of the assessee included officers of various inspection agencies and customers of the assessee. Accordingly, there is no justification for an ad hoc and estimated disallowance by adopting a rate of 20% of the expenses so claimed. These are also covered by the provisions of section 37(1) of the Act. Ld. Sr. DR placed reliance on orders of authorities below. 4.1 We note that the assessee is in the business of cultivation and manufacturing of tea and these expenses are in relation to business activities of the assessee. The conditions stipulated in section 37(1) of the Act as noted in our finding given for ground no. 2 above, are also applicable in respect of this ground and in the given set of facts, we do not find any reason to sustain the addition. We, thus, direct to delete the addition of Rs.67,191/-. This ground of appeal of assessee is allowed. 5. Ground no. 4 relates to the addition of Rs.4,73,695/- made by the Ld. AO on the basis of entries reflected in Form 26AS. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is allowed for statistical purpose. 6. Ground no. 5 is in respect of disallowance of Rs.3,87,497/- u/s. 14A of the Act. Ld. AO noted that assessee has earned dividend Income of Rs.2,90,007/- as reported in its audited financial statements placed on record. Ld. AO further noted that the assessee has failed to disallow any sum relating to this exempt income and accordingly proceeded to make a disallowance by applying Rule 8D(2)(ii) and 8D(2)(iii) of the Income-tax Rules, 1962 (hereinafter referred to as the Rules). The disallowance made u/s. 14A read with Rule 8D(2) comprises of Rs.977/- towards interest under sub-clause (ii) of Rule 8D(2) and Rs.3,86,520/- under sub-clause (iii) of Rule 8D(2) of the Rules. In this respect ld. CIT(A) accepted the contention of the assessee that the own fund of the assessee are far in excess of the value of investment made by the assessee and, therefore, the provision of section 14A of the Act are not applicable which is also covered by the decision of Hon ble Jurisdictional High Court of Calcutta in the case of DCIT v. Rasoi Ltd. in 407 ITR 126. The Ld. CIT(A) by following the decision of coordinate bench of ITAT, Kolkata and the Hon ble Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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