2017 (5) TMI 1597 - HC - Income Tax

Addition on account of inventories written off - neither any details were furnished by the company and nor there was any supporting evidence to justify and establish that the inventories were actually destroyed - addition made on account of travelling and conveyance expenses nor any supporting evidence was filed to justify the claim - Held that - The issues are answered in favour of the assessee and against the department as relying on PRINCIPAL COMMISSIONER OF INCOME TAX ALWAR. VERSUS M/S GILLETTE INDIA LTD. 2017 (5) TMI 1592 - RAJASTHAN HIGH COURT

Summary

Issues:
1. Challenge to Tribunal's judgment and order
2. Substantial questions of law framed by the Court

Analysis:
1. The appellant challenged the Tribunal's judgment where the appeal was partly allowed for the assessee and dismissed for the department. The Court admitted the appeal and framed substantial questions of law regarding the addition of inventories written off, travelling and conveyance expenses, deduction under section 37 for advertisement and sales promotion expenses, and miscellaneous expenses. The Tribunal's decision on these issues was questioned by the appellant.

2. The Tribunal's observations from a previous year's appeal were cited to support the decision on the issues raised. For the addition of inventories written off, the Tribunal found that the claim was allowable based on accounting principles and legal precedents. The Tribunal also addressed the deduction of expenses under section 37, emphasizing the residency status of the company receiving payments and the applicability of TDS provisions. Ultimately, the Tribunal ruled in favor of the assessee on these issues.

3. The Court referred to a separate appeal to provide reasoning for the decision on issues related to expenses made by the appellant. The appellant argued that the expenses were not admissible under Section 37 due to income being disproportionate to turnover. However, the Tribunal's analysis highlighted the residency status of the company receiving payments and the nature of the expenses, leading to the deletion of disallowances made by the Assessing Officer.

4. Overall, the Court upheld the Tribunal's decisions on the various issues raised by the appellant, ruling in favor of the assessee and against the department. The appeal was ultimately dismissed based on the findings and reasoning provided in the judgment.