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TMI Blog1997 (2) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... r less identical grounds. 3. Before us the learned counsel, at the outset, stated that he was pressing the ground only in respect of an expenditure of Rs. 4,606 as detailed on p. 26 of the paper-book. According to him the payments were no doubt to individuals, but those who were intimately connected with the company in one capacity or the other. A perusal of the details shows that some of them are related as advertisers, others as bankers and one of them in the position of a statutory auditor. It was the argument of the learned counsel before us that good relations had to be maintained with these persons strictly in the interest of the company's business and no personal element was involved. In support of these arguments, he placed relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned disallowance on the short ground that the amount in question had not been provided for in the books of accounts. On further appeal the CIT(A) confirmed the action of the AO observing in the process as under: "Interest on Agents Security :--A claim of Rs. 4,32,865 was made on account of interest payable on agents security in the year under consideration. The AO did not allow this claim observing perusal of the auditor's report shows that a sum of Rs. 4,32,865 on this account has not been provided in the books of account. This amount is, therefore, not allowable." The counsel of the appellant-company submitted that this sum of Rs. 4,32,865 pertains to liability towards interest on agents security. The appellant-company maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is fixed for a particular period and the interest is provided in the books of account. Normally the payment of interest in such circumstances is authorised through a Board's Resolution at the end of the accounting period. Thereafter the rate of interest to be given to the agents on their security deposit is fixed. As regards this claim of Rs. 4,32,865 there is no information on record as to when the rate of interest was fixed and how this liability has been ascertained. The fact that the same has not been provided for in the books of account shows that the same had not been ascertained at the time of closing of the books of account. As the liability on account of payment of interest to this account was not an ascertained liability during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been provided. The learned counsel also invited our attention to the copy of Board's resolution pertaining to asst. yr. 1987-88 for the proposition that such a resolution was passed and the rate of interest fixed only after ascertaining the financial position of the company towards the end of the previous year in question. 7. In support of the argument that similar claims had been allowed in the two preceding assessment years, the learned counsel invited our attention to the copies of the statement of taxable income for the asst. yr. 1987-88 along with the assessment order for the same period as also that for asst. yrs. 1988-89 and 1989- 90. The relevant extracts from the audit report for asst. yrs. 1987-88 and 1988-89 were also placed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) ITO vs. Andhra Pradesh Paper Mills Ltd. (1991) 38 ITD 1 (SB). 9. The learned Departmental Representative, on the other hand, strongly supported the orders passed by the tax authorities and the subsequent arguments advanced by her were a reiteration of the reasons recorded by the said authorities in rejecting the assessee's claim. 10. After considering the rival submissions, we are of the view that there is substantial merit in the arguments advanced by the learned counsel for the assessee in support of the claim made as also the view-point canvassed. No doubt the entries for the amount claimed in the year under consideration had not been made in the books of accounts, but it is nobody's case that the same does not pertain to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following two effective grounds have been raised: 1. On the facts and in the circumstances of the case learned CIT(A) has erred in allowing relief of Rs. 6,966 out of the total addition of Rs. 8,862 made on account of disallowances of entertainment expenses by relying upon the decision of Tribunal order dt.26th June, 1991for the asst. yr. 1984-85 which has not been accepted by the Department. 2. "On the facts and in the circumstances of the case the learned CIT(A) has erred in deleting the addition of Rs. 25,245 made on account of inadmissible expenses under the head "Sale promotion and Advertisement expenses" by relying on the order of the learned Tribunal for the asst. yrs. 1986-87 and 1987-88 which have not been accepted by the De ..... X X X X Extracts X X X X X X X X Extracts X X X X
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