2011 (10) TMI 766 - AT - Income Tax

Summary

Issues involved: Appeal against order u/s 143(3) of the Income-tax Act,1961 regarding disallowance of rebate and trade discount expenses, disallowance of freight and cartage expenses u/s 40(a)(ia).

Grounds of Appeal:
1. Challenge to the order of the ld. CIT(A).
2. Disallowance of rebate and trade discount expenses.
3. Disallowance of freight and cartage expenses u/s 40(a)(ia).
4. Request for leave to add, alter, amend, or withdraw any grounds of appeal.

Dispute on Rebate and Trade Discount Expenses:
- Assessee contended that rebate and discounts were allowable due to sales to sister concerns.
- Lack of specific amount passed on to dealers for discount received.
- Disallowance justified as discounts to sister concern lacked business consideration.
- AO found special rebate excessive and without business consideration.
- CIT(A) upheld AO's findings, emphasizing lack of business expediency.

Dispute on Freight and Cartage Expenses:
- Assessee argued that disallowance u/s 40(a)(ia) was unwarranted as it involved reimbursement of expenses.
- Tribunal found it to be a case of reimbursement, not falling under Section 40(a)(ia).
- CIT(A)'s decision set aside, and assessee succeeded in this ground.

Conclusion:
- Appeal partly allowed, with findings upheld on rebate and trade discount expenses, but set aside on freight and cartage expenses.
- Judgment pronounced on 17th October, 2011 by ITAT Chandigarh.