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2011 (5) TMI 839 - HC - Income Tax


Issues:
1. Disallowance of staff welfare expenses
2. Disallowance of sales and business promotion expenses
3. Disallowance of vehicle and telephone expenses

Analysis:

Issue 1: Disallowance of staff welfare expenses
The appeal was filed by the Revenue against the order of the Income Tax Appellate Tribunal confirming the deletion of an addition of Rs. 8,28,512 made by the Assessing Officer on staff welfare expenses. The Court considered whether the expenses were incurred wholly and exclusively for business purposes. The CIT(A) restricted the disallowance to Rs. 1,00,000, deleting the balance amount. The Tribunal upheld this decision. The Court held that this issue was not a substantial question of law and dismissed the appeal.

Issue 2: Disallowance of sales and business promotion expenses
The Revenue challenged the deletion of an addition of Rs. 3,31,539 made by the Assessing Officer on sales and business promotion expenses. The CIT(A) restricted the disallowance to Rs. 1,00,000, deleting the rest. The Tribunal upheld this decision. The Court found no illegality in the findings and concluded that no substantial question of law arose for adjudication. The appeal was dismissed.

Issue 3: Disallowance of vehicle and telephone expenses
The Revenue contested the deletion of an addition of Rs. 3,62,175 made by the Assessing Officer on vehicle and telephone expenses. The CIT(A) deleted this addition, and the Tribunal upheld the decision. The Court noted that previous challenges by the Department on similar issues were not considered substantial questions of law. Therefore, this issue was also dismissed, and the appeal failed.

In summary, the Court dismissed the appeal by the Revenue against the orders of the CIT(A) and the Tribunal regarding the disallowance of staff welfare expenses, sales and business promotion expenses, and vehicle and telephone expenses for the assessment year 2002-03.

 

 

 

 

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