2015 (10) TMI 1439 - AT - Income Tax

Disallowance of service charges for getting back the refund from Excise Department - CIT(A) allowed the claim - Held that - The assessee has filed all the relevant documentary evidences before the A.O. as well as before the Ld. First Appellate Authority which has properly been appreciated by them and the addition in dispute has been rightly been deleted by the Ld. First Appellate Authority. No interference is called for in the well reasoned order passed by the Ld. First Appellate Authority, uphold the impugned order by dismissing the appeal filed by the Revenue. - Decided in favour of assessee.

Summary

Issues:
1. Deletion of addition of freight expenses as allowable expenditure.
2. Deletion of addition of business expenditure due to lack of genuineness.

Analysis:
1. The appeal was filed by the Revenue against the order of the Ld.CIT(A) for the Assessment Year 2007-08. The first issue revolved around the deletion of an addition of Rs. 1,43,60,817 as freight expenses, which the Revenue argued were mainly administrative expenses and not allowable as revenue expenditure, considering the meager other income earned by the assessee from the project. The Ld.CIT(A) had deleted this addition, holding that the freight expenses were indeed allowable as revenue expenditure. The Tribunal upheld the Ld.CIT(A)'s decision, emphasizing that the relevant documentary evidence had been submitted and properly considered by both the Assessing Officer and the Ld.CIT(A), leading to the deletion of the addition.

2. The second issue pertained to the deletion of an addition of Rs. 19,90,820 claimed as business expenditure. The Revenue contended that the genuineness of these expenses was not established before the Assessing Officer during the assessment proceedings. However, the Ld.CIT(A) found that the appellant had provided substantial evidence to support the transaction, including a debit note, bank account details, PAN, and TDS certificate of the payee. These documents demonstrated the genuineness of the payment, which was made through proper channels. The Ld.CIT(A) concluded that the payment represented genuine business expenditure and directed the Assessing Officer to grant the relief accordingly. The Tribunal, after reviewing the findings of the Ld.CIT(A) and the documentary evidence submitted, upheld the decision to delete the addition, as the appellant had satisfactorily proven the genuineness of the expenditure.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the orders of the Ld.CIT(A) in both issues. The Tribunal found that the appellant had provided sufficient documentary evidence to support the allowability of the freight expenses and the genuineness of the claimed business expenditure, leading to the deletion of the additions made by the Assessing Officer. The Tribunal emphasized the importance of proper documentation and evidence in establishing the legitimacy of expenses claimed by the assessee.