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TMI Blog2024 (8) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... e had filed return of income for the assessment year 2021-22 declaring total income of Rs. 56,19,600/-. The case was selected for scrutiny under CASS and accordingly statutory notices under section 143((2) and 142(1) of the Income Tax Act, 1961 were issued. During the course of assessment proceedings, it was noticed that assessee claimed an amount of Rs. 21,04,875/- towards business expenditure which was not related to the business of appellant. The assessee contended that the amount was business expenditure. The Learned AO added back to the returned income. The assessee contended that the nature of expenditure had got commercial expediency and was incurred in connection with the business. The contention held as not acceptable. Expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total - Rs.21,04,875/- 21,04,875 4. Total Income determined as per the above proposal 77,24,475 3. Appellant preferred an appeal mentioning that addition of Rs. 20,00,557/- and Rs. 1,04,318/- under section 37 of the business promotion expenses were spent to Taj Mahal Hotel, New Delhi including Buffet dinner Rs. 9,00,000/- liquor Rs. 7,52,901/- and Government taxes to DLF Resort for promotion of business. Learned AO initiated penalty proceedings under section 270A of the Act. Learned CIT(A) through order dated 30.08.2023 partly allowed confirming disallowance of Rs. 18,73,722/- and Rs. 1,04,318/-. 4. Being aggrieved assessee preferred an appeal. In appeal assessee submitted that disallowance of Rs. 18,73,722/- and Rs. 1,04,318/- were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business, for extension of a business, or for a substantial replacement of equipment. ii) Expenditure may be treated as property attributable to capital when it is made not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade. iii) It is to be seen whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital. iv) It is not the size of the expenditure, but its nature, which determines the character or such expenditure. Under section 37(1), expenses which are not specifically allowed as deduction, can be claimed as deduction provided certain condition are fulfilled. For example, expenditure incurred in orga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cotton Mills Company vs. Commissioner of Income Tax (1967) 63 ITR 65 relating to capital expenditure. In present, the expenditure incurred is revenue in nature and hence the same is fully allowable. The reasoning is not just fair and reasonable. Since the matter was regarding launch of new medium food product and promote a new line of business. Therefore the assessee was entitled to get allowable expenses of Rs. 20,00,557/-. Likewise the assessee had spent Rs. 1,04,318/- to Golf Club for food and liquor business meeting in DLF Club Gurgaon. The assessee was entitled to get deduction of Rs. 1,04,318/-. In view of abovesaid material facts and well settled principle of law the order of Learned AO is liable to be set aside and order of the Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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