2016 (8) TMI 965 - HC - Income Tax

Allowance of non-business expenditure - Whether Learned Tribunal was justified in law to allow the non-business expenditure claimed to have been given to a third party on oral understanding only? - Held that - The question suggested by the revenue has been indicated above. From the question it appears that the payment was made to a stranger, whereas from the findings recorded both by the CIT(A) and the learned Tribunal it appears that the payment was made to a del credere agent of the assessee for the services rendered by him. Mr.Sinha is unable to improve the situation. He, as a matter of fact, did not advance any submission in support of the question suggested. We, as such, are of the opinion that there is no merit in the appeal. We, therefore, refuse to admit the same. The appeal is, therefore, dismissed.

Summary

Issues:
1. Justification of allowing non-business expenditure claimed by the assessee.

Analysis:
The High Court of Calcutta dealt with an appeal challenging a judgment and order passed by the Income Tax Appellate Tribunal, "B" Bench, Kolkata regarding the assessment year 2009-10. The main question of law raised was whether the Tribunal was justified in allowing a non-business expenditure of ?1,10,00,000 claimed to have been given to a third party on oral understanding only. The assessing officer initially disallowed the expenditure, citing a lack of material to support the service provided by the third party. However, the CIT(A) reversed this decision based on additional evidence provided by the assessee, which included details of the payment made by the appellant for managing a significant turnover of materials. The CIT(A) allowed the deduction, emphasizing the nature of the payment made. The Tribunal also upheld this decision, stating that the coordination charges paid by the assessee were clearly allowable as a deduction. The High Court noted that while the revenue suggested the payment was made to a stranger, the findings indicated it was made to a del credere agent for services rendered. The appellant's advocate failed to provide any substantial arguments supporting the revenue's question, leading the Court to conclude that there was no merit in the appeal, ultimately dismissing it.

This detailed analysis of the judgment showcases the progression of the case from the initial disallowance of the expenditure by the assessing officer to the subsequent decisions by the CIT(A) and the Tribunal in favor of the deduction. The Court's assessment of the nature of the payment and the lack of substantive arguments presented by the appellant's advocate highlights the reasoning behind the dismissal of the appeal.