2020 (11) TMI 138 - AT - Income Tax

Interest attributable to advance made - AO has disallowed the interest as interest attributable at 12% which was advanced to Sh. Arun Kumar out of interest bearing funds, of the company - HELD THAT - CIT (Appeals) has given a clear finding that this sum was advanced interest-free as Mr. Arun Kapur is the son of founder of the company and besides that in the past assessment years also the same has been allowed by the Revenue. Therefore, ground No. 1 of the Revenue s appeal is dismissed. Addition under the sub-head marriage gift, subscription expenses for various clubs, consultancy expenses and expenses incurred in advertisement in Hindustan Times on the anniversary of Late Shri Jai Dev Kapur - business or personal in nature - HELD THAT - These expenses have been claimed in the past and there is no fresh finding given by the Revenue during the assessment proceedings as well as the appellate proceedings as to why these expenses should not be allowed. The assessee has produced the evidences before the Revenue authorities and established the claim for these expenses. Hence, ground No. 2 of Revenue s appeal is dismissed. Addition under the head glow shine board expenses - Since the normal life of three years and expenses incurred are debited during the year under consideration are not allowable - HELD THAT - Regarding capitalization of glow shine boards expenses, the assessee has given all the details before the Assessing Officer. There was a clear finding by the CIT (Appeals) that the glow shine boards were not owned by the assessee as the company had charged some amount from dealers against supply of these glow shine boards. Besides this, in the earlier assessments also these expenses were allowed by the Revenue. Hence ground No. 3 of the Revenue s appeal is dismissed. Addition under the head entertainment Beer expenses, prize and rewards, sale promotion and staff welfare - All these expenses are un-vouched and for which no bills were furnished - HELD THAT - The assessee company has given the details of these business expediency related to these expenses and demonstrated before the Assessing Officer as well as CIT (Appeals) about the genuinity of these expenses. In the past also these expenses were allowed by the Revenue. Hence, ground No. 4 of the Revenue s appeal is dismissed. Addition of foreign travel expenses - DR submitted that as most of the foreign expenses are in connection of Kapur family, who are the top management and not related to the company, therefore, the CIT (Appeals) did not establish that these expenses were for business purposes - HELD THAT - These expenses were demonstrated before the Assessing Officer as well as CIT (Appeals) by the assessee in detail by submitting supporting evidences. And after going through the said evidences, the CIT (Appeals) has given a categorical finding that these foreign trips were for the business purpose only. Hence ground No. 5 of the Revenue s appeal is dismissed.

Summary

Issues Involved:
- Appeal against order dated 11.05.2016 and 09.05.2017 passed by the Commissioner of Income Tax (Appeals), Rohtak for assessment years 2013-14 and 2014-15.
- Grounds of appeal raised by the Revenue for assessment years 2013-14 and 2014-15.
- Disallowance of various expenses by the Assessing Officer.
- Deletion of additions by the CIT (Appeals) and the reasons behind it.
- Dispute over interest attributable to advances made to individuals.
- Assessment of business expenses and their admissibility.

Analysis:
1. Assessment Year 2013-14:
- The Revenue challenged the deletion of additions made by the Assessing Officer. These additions included interest on advances, personal expenses like marriage gifts, subscription expenses, consultancy expenses, advertisement expenses, entertainment expenses, and foreign travel expenses.
- The CIT (Appeals) justified the deletion of these additions based on past practices, substantiation of expenses, and business purposes. The Revenue's arguments were countered with evidence provided by the assessee.
- The Tribunal dismissed the Revenue's appeal for assessment year 2013-14, upholding the CIT (Appeals) decision on the grounds that the expenses were legitimate and had been allowed in previous assessments.

2. Assessment Year 2014-15:
- Similar grounds of appeal were raised by the Revenue for this assessment year, including challenges to the deletion of additions related to interest on advances, consultancy expenses, advertisement expenses, and business promotion expenses.
- The Tribunal found these grounds to be identical to the issues raised for the previous assessment year and hence dismissed them accordingly.
- The Tribunal upheld the CIT (Appeals) decision for assessment year 2014-15, citing consistency with the findings for the preceding year and the validity of the expenses claimed by the assessee.

3. Overall Decision:
- Both appeals were dismissed by the Tribunal for assessment years 2013-14 and 2014-15. The Tribunal affirmed the CIT (Appeals) decisions to delete the additions made by the Assessing Officer, emphasizing the legitimacy and substantiation of the expenses claimed by the assessee. The Tribunal's rulings were based on the evidence presented and the business rationale behind the expenses incurred by the company.

This detailed analysis highlights the key issues raised in the legal judgment, the arguments presented by the parties involved, and the final decisions rendered by the Tribunal for both assessment years.