9911796707
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Issues Involved:
1. Disallowance of expenses u/s 37(2) for hospitality and sale promotion. 2. Deletion of addition on account of selling commission. 3. Disallowance of provision for contribution towards approved gratuity fund u/s 40A(7). 4. Allowance of depreciation on assets in excess of 100% due to amalgamation. Summary: Issue 1: Disallowance of Expenses u/s 37(2) for Hospitality and Sale Promotion The Tribunal found an error in the Assessing Officer's (AO) calculation of hospitality and sale promotion expenses. The AO had made an additional disallowance of Rs. 11,11,147.07, which was incorrect. The Tribunal deleted this addition, stating it was a pure finding of fact related to the calculation of the amount offered for taxation by the assessee. Issue 2: Deletion of Addition on Account of Selling Commission The AO disallowed the payment of Rs. 51,17,889/- as commission due to the absence of confirmation letters from the agents. The Tribunal allowed the claim, noting that the assessee had provided names, addresses, GIR numbers, agreements, and invoices, and payments were made by account payee cheques. The Tribunal's decision was based on the sufficiency of the evidence provided by the assessee. However, the High Court remitted the matter back to the AO for verification of the details and documents furnished by the assessee. Issue 3: Disallowance of Provision for Contribution towards Approved Gratuity Fund u/s 40A(7) The Tribunal followed the judgment in CIT Vs. Bechtel India (P) Ltd., which held that Section 40A(7)(b) overrides Section 43B. Since the provision made was towards an approved gratuity fund, the Tribunal allowed the deduction. The High Court agreed, stating no substantial question of law arises in this regard. Issue 4: Allowance of Depreciation on Assets in Excess of 100% Due to Amalgamation The Tribunal allowed the depreciation claim by both the amalgamating and amalgamated companies, which exceeded 100% for the same financial year. The High Court noted that the fourth proviso to Section 32(1), introduced by the Finance Act, 1996, w.e.f. 1st April 1997, restricts aggregate depreciation to the prescribed rates. However, this proviso was not applicable to the assessment year 1995-96. The High Court upheld the Tribunal's decision, stating that the existing law allowed such claims before the amendment. Other Appeals: - ITA 236/2008 (Assessment Year 1996-97): The first question was answered against the revenue based on a previous judgment. The second and third questions were similar to those in ITA 280/2008 and were disposed of accordingly. - ITA 235/2008 (Assessment Year 1997-98): The questions were similar to those in ITA 280/2008 and ITA 236/2008 and were disposed of based on the same reasoning. - ITA 258/2009 & ITA 266/2009 (Assessment Year 1998-99): These appeals pertained to the payment of commission and were disposed of based on the decision in ITA 280/2008. All appeals were disposed of accordingly.
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