1998 (1) TMI 513 - AT - Income Tax

Summary

Issues Involved:
1. Dismissal of certain grounds as not pressed.
2. Admission of additional grounds of appeal.
3. Computation of disallowance u/r 6D.
4. Disallowance u/s 37(3A) for advertisement expenses.

Summary:

1. Dismissal of Certain Grounds as Not Pressed:
Ground Nos. 2, 3, 4, 6, 7, and 8 were dismissed as not pressed by the appellant.

2. Admission of Additional Grounds of Appeal:
The appellant raised an additional ground of appeal concerning the disallowance of Rs. 4,25,099 and Rs. 1,00,000 u/s 37(3A) and 37(3B) for repairs to vehicles and other expenses. The Tribunal deliberated on whether it is bound to admit additional grounds of appeal without the appellant explaining the omission. Citing the Supreme Court's decision in Jute Corpn. of India Ltd. v. CIT and the Bombay High Court's decision in Ahmedabad Electricity Co. Ltd. v. CIT, the Tribunal concluded that it has the discretion to admit additional grounds but must be satisfied with the reasons for the omission. Since the appellant did not provide reasons for the omission, the Tribunal declined to admit the additional ground.

3. Computation of Disallowance u/r 6D:
Ground No. 1 pertained to the computation of disallowance u/r 6D. The appellant argued for a consolidated computation of disallowance, while the Assessing Officer computed it based on each trip. The Tribunal upheld the Assessing Officer's method, supported by the Andhra Pradesh High Court's decision in Coramandel Fertilisers Ltd. v. CIT and an unreported Bombay High Court case, confirming the disallowance sustained by the CIT(Appeals).

4. Disallowance u/s 37(3A) for Advertisement Expenses:
Ground No. 5 related to the disallowance of Rs. 32,13,965 u/s 37(3A) for advertisement expenses. The appellant contended that these expenses should be covered u/s 37(3) and not subject to disallowance u/s 37(3A). The Tribunal held that section 37(1) is a residuary section allowing deductions not covered by sections 30 to 36, and sub-sections (3) and (3A) impose restrictions on such deductions. The Tribunal found no merit in the appellant's contention and upheld the CIT(Appeals)'s disallowance.

Conclusion:
The appeal of the assessee was dismissed.