TMI Blog2016 (7) TMI 1669X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is established considering the finding of fact by the Commissioner of Income-tax (Appeals) - Thus following the ratio laid down by the Hon ble Bombay High Court in the case of Reliance Utilities [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] we confirm the order of the Ld. CIT (A). Disallowances of expenses on the ground as incurred in cash and remained un-vouched - HELD THAT:- CIT (Appeals) has opined that he agrees with the submission of the assessee that maintenance of proper vouchers for petty expenses is not possible and that producing all the vouchers procured from various locations before the AO after a long period is in onerous task. The ld. CIT (A) also held that no comments have been made in the tax audit report regarding the genuineness of the expenditure claims. Having perused the records and also the reasoning adopted by the Ld. CIT (A) on this issue as well as the fact that the Ld. DR could not successfully controvert the observations of the Ld. CIT (A), we find no reason to differ from the conclusion arrived at by the ld. CIT (Appeals) and while upholding his finding on the issue, we dismiss ground of the Department s appeal. Disallowance under the sub-head sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company and they were accordingly disallowed. The ld. CIT (A) held that since the assessee has already declared the amount and paid tax under FBT, the disallowance merited deletion. Considering the factual matrix as well as drawing strength from the decision of the co-ordinate Bench of ITAT Delhi in ACIT vs Micro Turners [ 2013 (3) TMI 466 - ITAT DELHI] we find no reason to disturb this finding of the ld. CIT (A) on this issue. In the result, ground of the Department s appeal is dismissed. Addition of non-business expenditure - HELD THAT:- CIT (A) held that since FBT had already been paid, no disallowance was called for. Having heard the rival submissions and perused the material on record and also the decision rendered by the coordinate bench in own case we are of the opinion that the matter stands covered by the said decision of the Tribunal in favour of the assessee. Excessive expenditure on horticulture - HELD THAT:- Having considered the rival submissions and the findings in the impugned order, we are of the considered opinion that the ld. CIT (A) has not dealt with this issue in an appropriate manner. On one hand, he has accepted the contention of the assessee that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NSHU SRIVASTAVA, JUDICIAL MEMBER: ITA No. 2490/Del/2011 has been preferred by the Revenue for AY 2003-04, ITA No. 2491/Del/2011 has been preferred by the Revenue for AY 2004-05, ITA No. 3472/Del/2011 has also been preferred by the Revenue for AY 2005-06, ITA No. 784/Del/2010 has been preferred by the assessee, whereas ITA 913/Del/2010 is the cross appeal by the Revenue for AY 200607. ITA No. 10/Del/2011 has been preferred by the Revenue for AY 2007-08, ITA No. 3473/Del/2011 has been preferred by the Revenue for AY 200809, ITA 2132 has been preferred by the Revenue for AY 2009-10 and ITA 4000/D/2011 has again been preferred by the Revenue for AY 2010-11. Since all the appeals were heard together, they are being disposed of through this common order for the sake of convenience. We now take up the appeals one by one: ITA 2490/Del/2011- AY 2003-04 2. In this appeal the sole issue contested by the Department is the deletion of addition of Rs. 16,795,247/- made by the AO by disallowing the notional interest paid by the assessee attributable on the non interest bearing advances of Rs. 139,593,723/- to Sh. Arun Kapoor out of interest bearing funds. It was the AO s contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31st March, 2002, therefore, the AO s conclusion that interest bearing funds have been utilized is also factually incorrect. 2.4 We have heard the rival submissions and have also perused the records. It is seen that the Ld. CIT (Appeals) has examined the issue in detail in his order for AY 2006-07 and has agreed with the aforesaid contentions of the assessee. The copies of FIRs have also been placed on record and the contention of the assessee about having surplus funds as on 31.03.2002 is also correct. Hence, we find no reason to interfere with the order of the Ld. CIT (Appeals) and uphold the same. 2.5 In the result, the appeal of the Department for AY 2003-04 is dismissed. ITA No. 2491/D/2011 AY 2004-05 3. In this appeal the Department has contested the action of the ld. CIT(Appeals) on two issues viz. (i) deletion of addition of Rs. 16,143,877/- on account of notional interest added to the income of the assessee and held as attributable to the non interest bearing advance of Rs. 134,532,307/- to Sh. Arun Kapoor. (ii) Deletion of addition of Rs. 5,614,948/- made by the AO u/s 14A of the Act. 3.1 It is seen that the first issue is identical to the issue raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee viz. M/s Reliance Utilities and Power Ltd. had invested certain amounts in Reliance Gas Ltd. and Reliance Strategic Investments Ltd. It was the case of the assessee that they themselves were in the business of generation of power and they had earned regular business income there from. The investments made by the assessee in M/s Reliance Gas Ltd. and M/s Reliance Strategic Investments Ltd. were done out of their own funds and were in the regular course of business and therefore no part of the interest could be disallowed. It was also pointed out that the assessee had borrowed Rs.43.62 crores by way of issue of debentures and the said amount was utilised as capital expenditure and inter-corporate deposit. It was the assessee s submission that no part of the interest bearing funds (viz. Issue of debentures) had gone into making investments in the said two companies. It was pointed out that the income from the operations of the Assessee was Rs.313.53 crores and with the availability of other interest free funds with the assessee the amount available for investments out of its own funds were to the tune of Rs.398.19 crores. In view thereof, it was submitted that from the analysis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen a presumption would arise that investments would be out of the interest-free funds generated or available with the company if the interest-free funds were sufficient to meet the investment. In this case this presumption is established considering the finding of fact both by the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal. 3.2.3 Hence, on the facts of the case and respectfully following the ratio laid down by the Hon ble Bombay High Court in the case of Reliance Utilities (supra) we confirm the order of the Ld. CIT (A) on this issue for AY 04-05. 3.3 In the final result, the Departmental appeal for AY 04-05 is dismissed. ITA No. 3472/D/2011 AY 2005-06 4. In this Departmental appeal, the department has raised three issues viz. (i) deletion of disallowance of Rs. 19,384,066/- made by the AO u/s 14A of the Act on account of interest attributable to investments in mutual funds out of borrowed funds; (ii) deletion of addition of Rs. 16,143,877/- on account of interest attributable to alleged interest free advance of Rs. 134,532,307/- made to Sh. Arun Kapoor and (iii) deletion of additions made under various expenses. 4.1 It is seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons were rightly made. The Ld. AR supported the impugned order on the issue. A perusal of the impugned order reveals that the ld. CIT(Appeals) has categorically dealt with this issue in Para 6.3 of his order, wherein he has opined that the turnover of the assessee is about Rs. 500 crores and its manufacturing/assembling facilities are spread across many places. It is the Ld. CIT (A) s observation that considering the turnover of the assessee and the claim of the expenses, the disallowances made by the AO are very meager. The ld. CIT (Appeals) has opined that he agrees with the submission of the assessee that maintenance of proper vouchers for petty expenses is not possible and that producing all the vouchers procured from various locations before the AO after a long period is in onerous task. The ld. CIT (A) also held that no comments have been made in the tax audit report regarding the genuineness of the expenditure claims. Having perused the records and also the reasoning adopted by the Ld. CIT (A) on this issue as well as the fact that the Ld. DR could not successfully controvert the observations of the Ld. CIT (A), we find no reason to differ from the conclusion arrived at by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 5.1 Ground no. 3 of the assessee s appeal pertains to disallowance of Rs. 433,403/- of export commission and ground no. 4 pertains to disallowance of Rs. 231,227/- under the head advertisement and sales promotion expenses . The ld. AR submitted that ground nos. 3 4 were not being pressed before the Tribunal. Hence, ground nos. 3 4 are dismissed as not pressed. 5.2 Ground no. 5 of the assessee s appeal assails the action of the ld. CIT (Appeals) in upholding the disallowance of Rs. 8,000/- under the sub-head sales promotion dealer expenses under the head advertisement and sales promotion expenses . The Ld. AR disputed the findings of the Ld. CIT (A) whereas the Ld. DR supported the impugned action of the Ld. CIT (A). A perusal of the assessment order reveals that the AO has opined that on 21/12/2005 the assessee company had incurred cash expenses of Rs. 40,000/-. The AO held that this was a violation of the provisions of sec. 40A (3) and Rule 6DD and accordingly, disallowed Rs. 8,000/- being 20% of the cash expenses. The ld. CIT (Appeals) also upheld this disallowance. It is seen that section 40A(3) provides that where the assessee incurs any expenditure in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. AR and the findings of the ld. CIT (Appeals) on this issue, we are of the opinion that these three disallowances/additions need re-adjudication and reconsideration afresh. The ld. CIT (Appeals) has dismissed the grounds pertaining to these three disallowances in a most cryptic and summary manner without recording any finding or giving any reasoning for upholding these disallowances. Hence, we deem it a fit matter for restoration to the file of the AO for fresh adjudication after allowing the assessee due opportunity to present the relevant documents and evidences/explanations. In the result, ground nos. 8, 9 10 of the assessee s appeal are allowed for statistical purposes. 5.5 Ground no. 11 being consequential is not being adjudicated upon. 5.6 In the final result the appeal of the assessee is partly allowed. 5.7 In ITA No. 913/Del/2010 for AY 06-07, the Department has contested the action of the ld. CIT (Appeals) on as many as 18 counts. They are being taken up one by one as under: 5.7.1 Deletion of disallowance of Rs. 9,948,023/- u/s 14A by restricting the disallowance from Rs. 13,565,438/- to Rs. 3,617,415/-. This ground is common both to the assessee s appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for and on which the AO did not offer any comments. Accordingly, the working of the assessee was accepted and disallowance u/s 14A read with Rule 8D was restricted to Rs. 3,617,415/- being based on the the working provided by the assessee to the ld. CIT(Appeals). The ld. DR placed reliance on the AO s order in respect of this issue and submitted that the disallowance had been correctly made. In response the ld. AR submitted that the investment in the dividend yielding mutual funds was made in FY 2003-04 duly authorized by the resolution of the Board of Directors and that the company had surplus funds available with it to the tune of Rs. 116.26 crores out of which only 12.99 crores were invested in mutual funds and fresh investment was made out of the sale proceeds of prior year investments and out of dividend earned during the year. The ld. AR submitted that when the investment is made out of own funds and surplus funds, then no disallowance can be made u/s 14A of the Act and for this proposition he placed reliance on the following case laws: 1. CIT vs. Winsome Textile Industries Ltd. 319 ITR 204 (P H); 2. CIT vs. Metal Man Auto Pvt. Ltd. 336 ITR 434 (P H); 3. CIT vs. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention that the purpose of keeping such investments was to keep liquid money for huge Govt. orders and thus, no interest expenditure could be disallowed u/s 14A as the investments were made for business purposes. It is also the assessee s contention that the AO has failed to prove any nexus between the investments and the loans taken. The assessee has also disputed the recording of satisfaction by the AO for the purpose of disallowance u/s 14A. However, the ld. CIT(A) has referred to and reproduced the calculation of disallowance u/s 14A purporting to have been submitted by the assessee itself in the impugned order in which it is alleged that the assessee has itself accepted an amount of Rs. 3,617,415/- for the purpose of disallowance u/s 14A. However, the assessee has contested this finding of the ld. CIT (A) and has specifically raised ground no. 1 in its appeal on the issue. We find that there is an apparent contradiction in facts as stated by the assessee and as stated by the ld. CIT (A) on this issue. Hence, we deem it appropriate to restore the matter to the file of the AO for fresh adjudication after giving the assessee due opportunity to present its case. 5.7.6 In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s referred to in the relevant provisions and there is no requirement to segregate such expenses between those incurred for official purposes and personal purposes. It was further clarified while answering question No. 81 that when expenditure on running and maintenance of motor cars is liable to fringe benefit tax, the employees will not be liable to income tax on the perquisite value of motor car provided by the employer. As rightly contended by the learned counsel for the assessee, circular No 8/2005 dated 29-08-2005 issued by the Board explaining the provisions relating to fringe benefit tax thus makes it clear that fringe benefit tax is levied on the expenses incurred by the employer irrespective of whether the same are incurred for official or personal purposes. In our opinion, once fringe benefit tax is levied on such expenses as has been done in the present case, it follows that the same are treated as fringe benefits provided by the assessee as employer to its employees and the same have to be appropriately allowed as expenses incurred wholly and exclusively incurred by the assessee for the purpose of its business. In that view of the matter, we delete the disallowance made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the assessee has already declared the amount and paid tax under FBT, the disallowance merited deletion. Considering the factual matrix as well as drawing strength from the decision of the co-ordinate Bench of ITAT Delhi in ACIT vs Micro Turners (supra), we find no reason to disturb this finding of the ld. CIT (A) on this issue. In the result, ground no. 4 of the Department s appeal is dismissed. 5.11 Ground No. 5 challenges the deletion of addition of Rs. 53,403/- alleged to be personal advertisement expenses. The ld. AR has submitted that this ground does not originate either from the order of the AO or from the order of the Ld. CIT (A). On looking into the contention of the assessee, we find that the submission of the assessee is correct and we accordingly dismiss this ground as being in fructuous. Ground no. 5 of the department s appeal is accordingly dismissed. 5.12 Ground No. 6 assails the deletion of additions of Rs. 300,006/- as allegedly being personal expenses of the Directors and Officers of the assessee under staff and workers welfare expenses . The Ld. DR supported the Assessment Order while the Ld. AR supported the order of the Ld. CIT (A). It is seen that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of welfare of widows of the deceased employees of the assessee company. The ld. AR submitted that the ITAT had allowed a similar expenditure in assessee s own case for AY 19992000, copy of which has been placed on record. It was also submitted that FBT had also been paid on these expenses and the contention of the AO that the expenses were incurred for non business purposes is incorrect. It was also submitted that the AO has not submitted the remand report sought by the ld. CIT (A) on this issue. The ld. CIT (A) held that since FBT had already been paid, no disallowance was called for. Having heard the rival submissions and perused the material on record and also the decision rendered by the coordinate bench of the ITAT in ITA No. 1863/Del/2003, we are of the opinion that the matter stands covered by the said decision of the Tribunal in favour of the assessee. We accordingly, find no reason to interfere on this issue and uphold the view taken by the ld. CIT (A). Ground no. 8 of the department s appeal is dismissed. 5.15 Ground No. 9 contests the deletion of additions of Rs. 429,312/- as allegedly being non-business expenditure. The AO disallowed a sum of Rs. 429,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t but the AO did not comment on these additional evidences. The ld. CIT (A) held that since FBT has been paid on these expenses, no disallowance was called for. Having considered the rival submissions we are of the opinion that since FBT has been paid on these amounts, the ld. CIT (A) was correct in deleting the disallowances. Drawing our strength from the decision of the co-ordinate Bench of ITAT Delhi in ACIT vs Micro Turners (supra), we find no reason to interfere with the reasoning adopted by the ld. CIT (A) and uphold the same. Ground no. 11 of the department s appeal is dismissed. 5.18 Ground No. 12 assails the deletion of addition of Rs. 4 lakhs as allegedly being non business expenditure out of dealers account. The Ld. DR supported the AO s order while the Ld. AR supported the order of the Ld. CIT (A). These expenses again pertain to Malanpur Unit and the details/evidences thereof could not be produced before the AO during the assessment proceedings. The AO made an adhoc disallowance of Rs. 4 lakhs out of total expenses of Rs. 1,423,353/-as being for non business purposes. Copies of the bills were however, submitted before the ld. CIT(A) and the AO did not offer his comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in cash and are shown as paid to one Sh. K.B. Sharma for bird treatment. The AO has stated that no vouchers and bills have been furnished and accordingly, a sum of Rs. 1,50,000/- was disallowed. The ld. CIT (A) has held that these expenses are to be allowed as the AR has submitted that evidences along with photograph were duly furnished before the AO. The ld. CIT (A) has also recorded that the AO has in his remand report stated that the same was additional evidence. Having considered the rival submissions and the findings in the impugned order, we are of the considered opinion that the ld. CIT (A) has not dealt with this issue in an appropriate manner. On one hand, he has accepted the contention of the assessee that the evidences were furnished before the AO and on the other hand, he also mentions the fact that the AO has mentioned in his remand report that these were fresh evidences. Hence, in the interest of justice, we restore the issue to the file of the AO for fresh adjudication after giving assessee due opportunity to present its case. Ground no. 17 is allowed for statistical purposes. 5.21 In the final result, ITA No. 913/Del/2010 filed by the Department for AY 06-07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention of the revenue that directly or indirectly some expenditure is always incurred which must be disallowed u/s 14A and the impact of expenditure so incurred cannot be allowed to be set off against the business income which may nullify the mandate of sec. 14A, cannot be accepted. Disallowance u/s 14A requires finding of incurring of expenditure where it is found that for earning exempted income no expenditure has been incurred, disallowance u/s 14A cannot stand. In the present case finding on this aspect, against the revenue, is not shown to be perverse. Consequently, disallowance is not permissible. 6.1.1 Respectfully following the ratio laid down by the Hon ble P H High Court in CIT vs Hero Cycles (supra), which is also the jurisdictional High Court for the assessee and also keeping in view the factual finding recorded by the ld. CIT (A) which could not be successfully contested by the Department, we uphold the action of the ld. CIT (A) on this issue. Ground no. 1 is accordingly dismissed. 6.2 Ground no. 2 pertains to deletion of addition of Rs. 16,088,065/- as notional interest attributable to non interest bearing loan advanced to Sh. Arun Kapoor by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh adjudication after proper verification. On similar lines we restore this issue also to the file of the AO for fresh adjudication after giving the assessee due opportunity of being heard. Ground no. 4 of the Department s appeal is allowed for statistical purposes. 6.5 Ground no. 5 challenges the action of the ld. CIT (A) in deleting the addition of Rs. 211,898/- incurred by the assessee on account of publishing the photo of its founder Sh. Jankidas Kapoor on his death anniversary. The Ld. DR supported the AO s order while the Ld. AR supported the order of the Ld. CIT (A). It is seen that the AO held that this was a purely personal expense and was hence not allowable as a business expenditure. However, the ld. CIT (A) held that the issue was squarely covered in favour of the assessee by the decision of the coordinate Bench of the ITAT in assessee s own case for AY 2000-01 and the addition was accordingly deleted. It is seen that this issue/identical issue of advertisement was not before the coordinate Bench of the Tribunal in AY 2000-01 and hence the Ld. CIT (A) has allowed the assessee s ground on a wrong appreciation of facts. Hence we have no option but to restore the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r running the business or working it with a view to produce the profits it is a revenue expenditure. If any such asset or advantage for the enduring benefit of the business is thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically. The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure. It was further held that the expressions enduring benefit or of a permanent character were introduced to make it clear that the asset or the right acquired must have enough durability to justify its being treated as a capital asset. In Bombay Steam Navigation Co. (1953) (P) Ltd. vs. CIT (1965) 56 ITR 52 (SC), it was observed that if the expenditure is so related to the carrying on or conduct of the business that it may be regarded as an integral part of the profit-earning process, then such expenditure is to be taken as revenue expenses. In Lakshmiji Sugar Mills Co. (P) Ltd. vs. CIT (1971) 82 ITR 376 (SC), it was held that if the expenditure is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge accrued from the use of the glow sign boards is not of enduring nature. Thus, the expenditure by the assessee on these glow sign boards did not bring into existence any asset or advantage for the enduring benefit of the business. The assessee has spent the expenditure on the glow sign boards with an object to facilitate the business operation and not with an object to acquire asset of enduring nature. Therefore, the said expenditure was of revenue nature and the Tribunal has rightly treated the same as of revenue nature. 6.6.1 Considering the factual matrix of the case and respectfully applying the ratio of judgment of the Hon ble Punjab Haryana High Court in the case of CIT vs Liberty Group marketing Division (supra), find no reason to interfere with the findings of the ld. CIT (A). Ground no. 6 is accordingly dismissed. 6.7 Ground no. 7 challenges the impugned action of the ld. CIT (A) in deleting addition of Rs. 10 lacs alleged to be purely personal expenses of the Directors, Officers and their family members under the head travelling expenses . The Ld. DR supported the AO s order while the Ld. AR supported the order of the Ld. CIT (A). It is seen that the AO has ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -05, 06-07 and 07-08. Hence, ground no. 1 is dismissed. 7.1 Ground no. 2 pertains to deletion of addition of Rs. 137,180/- on a/c of marriage gift expenses and Rs. 139,518/- under subscription expenses. The Ld. DR supported the AO s order while the Ld. AR supported the order of the Ld. CIT (A). It is seen that it was the contention of the assessee that these amounts were paid as shagun on the marriage ceremonies of employees, dealers and suppliers of the company and the company had to necessarily incur these expenses because of its business necessities. It was submitted that the company has over 2000 employees and more than 4000 dealers and as such these expenses were in the nature of business expediency. The ld. CIT (A) deleted the disallowance. Similarly, a sum of Rs.139,518/- was disallowed out of total expense of Rs. 256,401/- under subscription expenses on the ground that they were personal in nature. The ld. CIT (A) deleted this addition also by taking note of the fact that FBT was paid on these expenses and also that out of the disallowed expenses Rs. 50,000/- was towards subscription to Cycle Manufacturers Association which took care of the collective interest of cycle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee of being heard. Ground no. 3 is allowed for statistical purposes. 7.3 Ground no. 4 pertains to deletion of addition of Rs. 177,478/- on a/c of capitalization of Glow Sign Board expenses. This issue has already been decided by us in ITA No. 10/Del/2011 for AY 07-08 in favour of the assessee and following the same we uphold the findings of the ld. CIT (A) in this year as well. Ground no. 4 of the Department s appeal is accordingly dismissed. 7.4 Ground no. 5 pertains to deletion of Rs. 5 lacs out of foreign travel expenses of the top management of the company. This ground also challenges deletion of addition of Rs. 54,534/- under the head entertainment, wine and beer expenses and Rs. 53,000/- under prize and rewards. The Ld. DR supported the AO s order while the Ld. AR supported the order of the Ld. CIT (A). It is seen that the ld. CIT (A) has given a categorical finding that an adhoc disallowance of Rs. 5 lacs was made on a/c of foreign travel expenses without pointing out the particular tours which have not been undertaken for business purposes. The ld. CIT (A) has also noted that the exports and imports of the assessee company have increased over the years and that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and after giving the assessee a due opportunity of being heard. Ground no. 6 is accordingly allowed for statistical purposes. 7.6 In the final result, ITA No. 3473/Del/2011 for AY 08-09 is partly allowed. ITA No. 2132/Del/2012 for AY 2009-10 8. Ground no. 1 pertains to deletion of addition of Rs. 16,088,065/- being notional interest attributable to advance made to Sh. Arun Kapoor. This issue has already been settled in favour of the assessee and against the department in ITA No. 2490/Del/2011 for AY 03-04 and also for subsequent assessment years. Hence, this ground is dismissed. 8.1 Ground no. 2 pertains to deletion of addition of Rs. 236,618/- under marriage gift expenses and Rs. 213,700/- under subscription expenses. It is seen that these two additions are identical to ground no. 2 of the department s appeal in ITA No. 3473/Del/2011 for AY 08-09 and which have been held against the department. Since, these two issues are identical as aforementioned, following our adjudication on these two issues in ITA No. 3473/Del/2011 for AY 08-09, we dismiss this ground also. 8.2 Ground no. 3 challenges the action of the ld. CIT (A) in deleting the addition of Rs. 5 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f four items totaling Rs. 135,515/-. Apart from this it is seen that the AO has disallowed an amount of Rs. 409,378/- incurred on purchase of silver items as the assessee could not explain as to how the expenditure in this regard was incurred wholly and exclusively for business purposes. A perusal of the finding of the ld. CIT(A) on this issue shows that the issue has been dealt by him in a very casual manner without discussing the specifics of the disallowance and also without bringing on record as to whether the procedure as laid down under Rule 46A was followed or not. Hence, in the interest of justice, we deem it a matter fit to be restored to the file of the CIT (A) for fresh adjudication after giving the assessee a due opportunity of being heard and furnishing the relevant documents after duly calling for a remand report from the AO. Ground No. 6 is allowed for statistical purposes. 8.6 In the final result ITA No. 2132/Del/2012 filed by the department is partly allowed. ITA No. 4000/Del/2013 for AY 2010-11 9. Ground no. 1 pertains to deletion of addition of Rs. 16,088,065/- being notional interest attributable to advance made to Sh. Arun Kapoor. This issue has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition of Rs. 2,46,685/- under prize and rewards expenses. This ground is again identical to ground no. 5 in the department s appeal in ITA No. 3473/Del/2011 for AY 08-09 in which we have dismissed the department s ground. Identical grounds were also in appeal before us for AY 2009-10 which we have decided against the department. As the factual matrix is identical in this year as well and the department could not bring any new fact on record, we dismiss ground no. 5 on the same reasoning as adopted by us in AY 08-09. 9.5 Ground no. 6 challenges the deletion of addition of Rs. 2,00,000/- under the head sales promotion expenses . The Ld. DR supported the AO s order while the Ld. AR supported the order of the Ld. CIT (A). The ld. CIT (A) has recorded a finding that the assessee has submitted voucher wise details of these expenses before him. A perusal of the finding of the ld. CIT(A) on this issue shows that the issue has been dealt by him in a very casual manner without discussing the specifics of the disallowance and also without bringing on record as to whether the procedure as laid down under Rule 46A was followed or not. Hence, in the interest of justice, we deem it a matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) has held that a mere making of claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to inaccurate particulars. The relevant portions of the judgment of the Hon'ble Supreme Court are reproduced hereunder:- 7. As against this, learned Counsel appearing on behalf of the respondent pointed out that the language of section 271(l)(c) had to be strictly construed, this being a taxing statute and more particularly the one providing for penalty. It was pointed out that unless the wording directly covered the assessee and the fact situation herein, there could not be any penalty under the Act. It was pointed out that there was no concealment or any inaccurate particulars regarding the income were submitted in the Return. Section 271(l)(c) is as under :- 271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person- (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. A glance at this provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There can be no dispute that everything would depend upon the Return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. In Dilip N. Shroff v. Jt. CIT [2007] 6 SCC 329, this Court explained the terms concealment of income and furnishing inaccurate particulars . The Court went on to hold therein that in order to attract the penalty under section 271(l)(c), mens rea was necessary, as according to the Court, the word inaccurate signified a deliberate act or omission on behalf of the assessee. It went on to hold that Clause (Hi) of section 271(1) provided for a discretionary jurisdiction upon the Assessing Authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term inaccurate particulars was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars. It was fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript. We have already seen the meaning of the word particulars in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that, any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(l)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. 10. It was tried to be suggested that section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did ..... X X X X Extracts X X X X X X X X Extracts X X X X
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