1982 (9) TMI 83 - AT - Income Tax

Summary

Issues:
1. Deletion of extra profit addition in revenue's appeal.
2. Weighted deduction claims under section 35B in the assessee's appeal.
3. Disallowance of expenses on Sea and Air Freight, Insurance, Packing and Forwarding.
4. Disallowance of weighted deduction for expenses on foreign tour, samples, and commission.
5. Disallowance of claim for inland traveling.
6. Disallowance of miscellaneous expenses.
7. Taxation of cash assistance.

Analysis:

1. Deletion of Extra Profit Addition:
The appeal involved a dispute over the deletion of an extra profit addition of Rs. 75,000 in the revenue's appeal. The ITAT upheld the order of the CIT (A) stating that the gross profit shown by the assessee was in line with previous years and did not require the addition. The ITAT noted that the assessee's historical gross profit rates ranged from 11.8% to 16.3%, and considering various factors, the deletion of the extra profit addition was confirmed. The appeal filed by the revenue was consequently dismissed.

2. Weighted Deduction Claims under Section 35B:
The assessee's appeal primarily focused on weighted deduction claims under section 35B. The ITAT reviewed various claims related to bank commission, expenses on postage, telephone, telex, office salary, printing, stationery, and advertisement. The ITAT disagreed with the CIT (A)'s restriction of weighted deduction to 20% of total expenditure and allowed 64% of total expenses on specified items. However, expenses on Sea and Air Freight, Insurance, and Packing and Forwarding were disallowed in line with previous decisions.

3. Disallowance of Expenses on Foreign Tour, Samples, and Commission:
The ITAT reviewed the disallowance of weighted deduction for expenses on foreign tour, samples, and commission. It found discrepancies in the IAC's disallowances and allowed the weighted deduction on the claimed amounts, rejecting the IAC's arbitrary disallowances.

4. Disallowance of Claim for Inland Traveling and Miscellaneous Expenses:
The ITAT upheld the disallowance of a portion of the claim for inland traveling based on past history. Similarly, the disallowance of miscellaneous expenses was confirmed as the assessee failed to provide details to challenge the IT authorities' decision.

5. Taxation of Cash Assistance:
The final issue revolved around the taxation of cash assistance received by the assessee. The ITAT considered the nature of the cash assistance and upheld the CIT (A)'s decision to tax the amount received. Despite arguments from both sides citing relevant case law, the ITAT found no justification to interfere with the CIT (A)'s order on this matter.

In conclusion, the ITAT partly allowed the assessee's appeal while dismissing the revenue's appeal, thereby providing a detailed analysis and resolution for each issue raised in the cross-appeals.