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TMI Blog1996 (3) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... on with its business it has to incur expenditure on providing tea, coffee and snacks to its constituents who visit the office day-to-day. There are as many as 39 groups of chits and in the process of attending to its constituents the staff also partakes of the refreshment. The expenditure being incurred for promotion of sales and wholly connected with business, merits no disallowance. As to the auction expenses, the assessee conducts auctions of various chits on every third and fourth Sunday of each month. While doing so the amounts are spent on hiring of chairs, crockery, tables as well providing tea, coffee and snacks to the customers. Considering that there are more than 1,200 constituents who participate in the auctions, the expenses cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid section. 4. The third ground of appeal pertain to disallowance of Rs. 81,800 on account of commission paid to the various parties. In the course of appellate proceedings in the written submissions made the assessee restricted its claim to Rs. 32,600 in respect of the following parties alone on the ground that commission to the tune of Rs. 49,200 stood allowed under s. 250 of the IT Act: 1. Shri Ashutosh Vats Rs. 17,600 2. Shri Ajay Bhamba Rs. 7,900 3. Smt. Kailash Bhamba Rs. 7,100 As per the arguments advanced, the assessee was running as many as 39 chit fund groups during the year under consideration. The above three commission agents had introduced 84 subscribers out of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok, there is another letter from the father of Shri Ashutosh Vats conveying that the party was away toHollandand he was not available for 7 months. The letter is dt.7th May, 1990. Considering that not only the party confirmed having introduced the subscribers and also having received the amount, we are unable to uphold the order of the learned CIT(A) on the issue. This is specifically so when at the time when the party was asked to be produced, he was not available in the circumstances as explained by his father. In absence of any material to hold that the evidence so produced is not worth credence we would delete the addition of Rs. 17,600. 6. The second amount pertains to Shri Ajay Bhamba which is at Rs. 7,900. In this respect, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made were in respect of the deposits of the following persons: (a) Mrs. Darshana Gandhi Rs. 7,000 . (b) Mr. Naresh Bansal Rs. 8,000 . (c) Mr. Devender Mittal Rs. 9,000 . (d) Smt. Kailash Bhamba Rs. 7,000 . . . Rs. 31,000 (e) Smt. Darshan Kumari Rs. 8,000 . (f) Smt. Sushma Bangia Rs. 9,000 . (g) Sh. Ram Chander Rs. 8,000 . (h) Sh. Ajay Bamba Rs. 14,000 Rs.39,000 . . Rs.70,000 As per the submissions made Smt. Darshna Kumari, Smt. Sushma Bangia, Shri Ram Chander and Shri Ajay Bhamba were produced before the AO and their statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d statements of Smt. Darshan Kumari, Shri Ajay Bhamba, Smt. Sushma Bangia and Shri Ram Chander. From the facts as detailed by the learned CIT(A), we find that in the case of Smt. Darshan Kumari the amount was not accepted on the ground that she had mainly monthly income of Rs. 200 from tailoring work and she was not in a position to save Rs. 8,000 from her meagre income. As regards Smt. Sushma Bangia, since the party could not establish that the amount deposited with the company represented her savings from her pocket money and tuition work, the addition was sustained. Similar was the case in respect of Shri Ram Chander who was stated to have worked with Northern Railways as a carpenter. Despite an affidavit filed the party was not in a pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders are identified and it is established that they have invested money in the purchase of shares, then the amount received by the company would be regarded as a capital receipt and to that extent the observations in CIT vs. Stellar Investment Ltd. (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del), are correct; but the observations in that case to the effect that even if the subscribers to the capital were not genuine 'under no circumstance could the amount of share capital be regarded as undisclosed income of the (company)' are not." Thus, the issue is to be decided is whether the share capital as introduced in the names of the various parties is genuine or not. This has to be looked into by the AO as contended by the authorised represen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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