1992 (10) TMI 121 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance u/s 40A(8)
2. Disallowance of previous year's expenses
3. Disallowance u/s 37(3A)
4. Disallowance u/s 43B
5. Disallowance of vehicle maintenance expenses
6. Deduction u/s 80J
7. Additional ground for previous year's expenses
8. Revenue's appeal on various grounds

Summary:

1. Disallowance u/s 40A(8):
The CIT(A) confirmed the disallowance of Rs. 23,499 made by the AO, holding that interest paid on hundies and delayed payment of bills amounted to interest on monies borrowed, thus falling within the definition of 'deposit' u/s 40A(8). The assessee's reliance on CIT vs. Kalani Asbestos (P) Ltd. was found distinguishable on facts. The Tribunal upheld the CIT(A)'s decision, rejecting the assessee's appeal.

2. Disallowance of Previous Year's Expenses:
The CIT(A) allowed certain expenses related to the previous year, totaling Rs. 68,291, but upheld the disallowance of Rs. 46,491. The Tribunal found no reason to interfere with the CIT(A)'s decision and did not issue any directions to the AO regarding the consideration of the claim in respective years.

3. Disallowance u/s 37(3A):
The CIT(A) confirmed the disallowance of certain items under s. 37(3A). The Tribunal remitted the matter of Rs. 25,020 (conveyance expenses) back to the AO for re-examination but confirmed the disallowance of Rs. 7,669 (gifts).

4. Disallowance u/s 43B:
The CIT(A) confirmed the disallowance of Rs. 5,28,504 related to sales-tax payable. The Tribunal upheld the CIT(A)'s decision but allowed the AO to examine the deduction in the year of actual payment.

5. Disallowance of Vehicle Maintenance Expenses:
The CIT(A) disallowed Rs. 20,164 for personal use by Directors. The Tribunal, relying on ITO vs. Ashoka Betalnut Co. (P) Ltd., deleted the disallowance, holding that non-official use by Directors could only result in additions in their assessments, not the company's.

6. Deduction u/s 80J:
The ground was not pressed by the assessee and was rejected.

7. Additional Ground for Previous Year's Expenses:
The CIT(A) rejected the additional ground for Rs. 1,13,172. The Tribunal found no categorical finding by the CIT(A) that the expenses pertained to the assessment year 1984-85 and rejected the ground.

8. Revenue's Appeal:
- Extra Addition of Rs. 21,43,755: The CIT(A) deleted the addition made by the AO by rejecting the books of account and applying s. 145. The Tribunal upheld the CIT(A)'s decision, finding no good ground to interfere.
- Relief of Rs. 68,291: The Tribunal upheld the CIT(A)'s decision, referring to the discussion in the assessee's appeal.
- Exclusion of Selling Commission Rs. 4,42,671: The CIT(A) excluded the selling commission from the disallowance u/s 37(3A), following the Tribunal's decision in ITO vs. Meera & Co. The Tribunal upheld the CIT(A)'s decision, also referring to decisions of the Calcutta High Court.

Conclusion:
The assessee's appeal was partly allowed, and the Revenue's appeal was dismissed.