2014 (8) TMI 684 - HC - Income Tax

Advertisement and sales promotion expenses u/s 37 Incurred wholly and exclusively for business purposes or not Held that - The Tribunal was rightly of the view that the assessee did not furnish any details and evidence regarding the assets written off and receivables and in the absence of any basis the order of the CIT(A) cannot be interfered Decided against Assessee. Claim of depreciation on warehouse - Held that - The Tribunal rightly upheld the order of the order of the CIT(A) that the assessee claimed depreciation on Central Warehouse at Saharanpur office in the light of the submissions for the assessment year 2004-05 - However, in the preceding year, no such disallowance was made - the assessee itself in terms of the agreement leased out all its assets to Liberty Shoes Ltd. while no material has been placed in order to controvert the findings of the CIT(A) nor any evidence reflecting use of the premises by the assessee so as to enable to take a different view Decided against Assessee. Payment of property tax Held that - The Tribunal was rightly of the view that the assessee had paid the property tax for the buildings which had been hired out to Liberty Shoes Ltd. and this fact had been admitted by the assessee - no evidence was that the properties were used for the purpose of the business of the assessee - There is no material to show that the assessee is the owner of the properties nor any such claim was made before us nor appears to have been made before the lower authorities Decided against Assessee.

Summary

Issues:
1. Disallowance of advertisement and sales promotion expenses.
2. Disallowance of assets written off and receivables.
3. Disallowance of car expenses and depreciation.
4. Perversity of findings by the Income-tax Appellate Tribunal.
5. Misdirection by the Income-tax Appellate Tribunal.

Issue 1: Disallowance of Advertisement and Sales Promotion Expenses:
The appellant challenged the disallowance of Rs. 2,50,000 for advertisement and sales promotion expenses, claiming they were incurred wholly and exclusively for business purposes. The Assessing Officer, Commissioner of Income-tax (Appeals), and Tribunal all upheld the disallowance due to lack of evidence justifying the business purpose. The Tribunal dismissed the appeal as the assessee failed to provide any basis for interference.

Issue 2: Disallowance of Assets Written Off and Receivables:
The disallowance of Rs. 15,334 for assets written off and Rs. 19,254 for receivables written off was contested by the appellant. The authorities disallowed these amounts due to the absence of proof. The Tribunal affirmed the disallowance, stating that without any evidence or details provided by the assessee, interference was unwarranted.

Issue 3: Disallowance of Car Expenses and Depreciation:
The disallowance of one-fourth of car expenses and depreciation was based on the personal use of the car by the partners of the assessee. The Commissioner of Income-tax (Appeals) and Tribunal upheld the disallowance, concluding that the expenses were not wholly and exclusively for business purposes.

Issue 4: Perversity of Findings by the Income-tax Appellate Tribunal:
The appellant argued that the Tribunal's findings were perverse and against the evidence on record, making them unsustainable in law. However, the Tribunal's conclusions were upheld as they were based on material and the appellant failed to demonstrate any error in the findings.

Issue 5: Misdirection by the Income-tax Appellate Tribunal:
The appellant contended that the Tribunal was influenced by irrelevant factors and applied erroneous criteria in deciding the issues under the Income-tax Act, 1961. The Tribunal dismissed the appeal, stating that no substantial question of law arose, and the appeals were devoid of merit.

In conclusion, the High Court dismissed the appeals, as the findings of the authorities below were deemed appropriate and based on material evidence. The appellant's attempts to challenge the disallowances were unsuccessful, as they failed to provide sufficient evidence to support their claims, leading to the dismissal of the appeals.