2023 (2) TMI 686 - AT - Income Tax

Disallowance u/s 14A r.w. Rule 8D(2)(iii) - CIT- A restricting disallowance only to the extent of investments yielding actual exempt income - HELD THAT - As it has come on record that the CIT(A)'s has already taken note of the settled legal proposition on the instant issue. We thus find no merit in the assessee s instant sole substantive grievance. It s instant former substantive ground stands rejected therefore. Sales promotion expenses - dinner for guests at JW Marriot Hotel, Pune - HELD THAT - We note with the able assistance coming from the Revenue side that the assessee has not been able to prove the impugned dinner expenses to have been incurred wholly and exclusively for the purpose of business by way of filing cogent supportive evidence. We thus affirm the instant latter disallowance of sales promotion expenses as well. - Decided against assessee.

Summary

Issues:
1. Correctness of CIT(A)'s action restricting the Assessing Officer's action invoking sec.14A r.w. Rule 8D(2)(iii) disallowance.
2. Disallowance of alleged sales promotion expenses representing dinner for guests at JW Marriot Hotel.

Analysis:
1. The first issue in this case revolves around the correctness of the CIT(A)'s action restricting the Assessing Officer's action invoking sec.14A r.w. Rule 8D(2)(iii) disallowance. The appellant contended that only investments yielding actual exempt income should be considered for disallowance under sec.14A. The CIT(A) referred to various legal precedents supporting the appellant's claim. However, the tribunal found no merit in the appellant's grievance as the CIT(A) had already considered settled legal propositions on the issue. Therefore, the tribunal rejected the appellant's substantive grievance regarding the disallowance under sec.14A r.w. Rule 8D(2)(iii).

2. The second issue pertains to the disallowance of alleged sales promotion expenses amounting to dinner for guests at JW Marriot Hotel. The Assessing Officer disallowed these expenses as the appellant failed to provide bills or establish the business purpose of the expenses. During the appellate proceedings, the appellant submitted bills and claimed the expenses were incurred for a business meeting after acquiring a manufacturing unit. However, the CIT(A) upheld the disallowance, stating that the appellant failed to provide sufficient evidence to prove the expenses were wholly and exclusively for business purposes. The tribunal, supported by the Revenue side, affirmed the disallowance of the sales promotion expenses, as the appellant could not substantiate the business purpose of the expenses. Consequently, the tribunal dismissed the appellant's appeal regarding the disallowance of sales promotion expenses.

In conclusion, the tribunal dismissed the appellant's appeal for the assessment year 2010-2011, upholding the actions of the CIT(A) and the Assessing Officer regarding the disallowances under sec.14A r.w. Rule 8D(2)(iii) and the sales promotion expenses at JW Marriot Hotel.