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TMI Blog2017 (9) TMI 2019X X X X Extracts X X X X X X X X Extracts X X X X ..... ef facts of the case are that the assessee a partnership firm having income from business and profession filed its return of income for the Assessment Year 2011-12 declaring the total income of Rs. 1,37,56,110/-. The same was processed u/s 143 (1) of the Act. The case was selected for scrutiny and notice u/s 143 (2) 142 (1) of the Act were served upon the assessee. In response thereof the authorized representative filed the requisite details and made submissions. It was noticed that fall in profit was on account of substantial amount of grading and certification expenses. The assessee was accordingly asked to explain the co-relation between grading and certification expenses and sale and closing stock. The assessee claimed the expenses genu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iating the absence of co-relation of the expenditure with the sale and stock of diamonds." 4. We notice that the revenue has inadvertently mentioned in ground No 3 of the appeal that the Ld. CIT(A) has wrongly restricted the disallowance of expenditure to 30% contrary to the fact that the CIT(A) has deleted the entire amount of addition made by the AO. The Ld. departmental representative relying on the findings of the AO, submitted before us that the Ld. CIT(A) has erred in holding that the expenditure was incurred wholly and exclusively for the purpose of business. The Ld. CIT(A) has wrongly deleted the addition without appreciating the fact that the assessee has failed to prove co-relation of the expenditure with the sale and stock of di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. (i) Rapaport Rs. 1,59,934/-, (ii) GIA Rs. 1,51,04,499/- and (iii) IGA at Rs. 20,14,468/-. The Certification charge of Rs. 94,81,195/- is paid to only one party only ie. Rapaport. These appear to be renowned laboratories, and the payments have been made by cheques after deducting TDS. As such the appellant, being engaged in diamond manufacturing and trading, is not precluded from getting the diamonds graded and certified, which in fact is an essential part of its business. Many a time the customers are attracted simply because a jeweler is selling the diamonds graded and certified from reputed laboratories. The decision as to how much to spend on a particular item rests entirely upon the assessee, which cannot be questioned simply because ..... X X X X Extracts X X X X X X X X Extracts X X X X
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