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TMI Blog2011 (12) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... Disallowance out of Employees' Welfare expenses being amount paid to Shroff Foundation Trust – Held that:- Details of payments made to Shroffs Foundation Trust (copy of the ledger account and copies of invoices received, on sample basis) to substantiate that the payment was made for services availed of the medical centre run by the said trust and was not a donation to the said trust - on submitting additional evidence and in the interest of natural justice and fair play the matter is restored back to the file of AO for fresh adjudication after providing reasonable opportunity of being heard to the assessee - ground of assessee is allowed for statistical purposes. Additional ground of assessee – CIT(A) held that the provisions of section 14A of the Act read with Rule 8D of the Income tax Rules, 1962 are applicable in the facts and circumstances of the case - AO stated that assessee has received dividend/UTI income claiming exemption u/s 10(33) without allocating any expenses against this income - investment in shares, govt. securities, UTI, etc., which are dividend bearing investments - AO disallowed interest on average rate of borrowings u/s 14A - CIT(A), he directed the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs.2,32,645/- as per provisions of section 40A(3) of the Act. The brief facts of the case are that during the assessment proceedings the AO on verification of the statement attached with the return observed that assessee has not added back an amount of Rs.2,32,645/- being inadmissible u/s 40A(3) though the tax auditor as per Annexure-16 of Form No.3CD has reported that the said amount was inadmissible under section 40A(3). The assessee was show caused as to why this amount should not be disallowed as the cash payment of Rs.11,63,224/- exceeded the limit prescribed as per provisions of section 40A(3). The assessee submitted that the payment made in cash was towards electricity bill, telephone bill and Octroi and since the payment was made to the Government/local authorities the provisions of section 40A(3) are not applicable in this case. The AO was, however, of the opinion that the expenditure incurred did not fall within the meaning of expenditure mentioned in Rule 6DD(b) of the Act. Therefore, the amount of Rs..2,32,645/- being 20% of cash payment made of Rs.11,63,224/- was disallowed u/s 40A(3) and added back to the total income of the assessee. This action of the AO was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee submitted that the expenses have been crystallized during the year as the debit notes raised by the parties have been received and accounted for during the year after settlement of amount. The AO, however, was of the view that the assessee has not furnished full details of its claim for the prior period expenses of Rs.54,27,076/-, as the debit notes produced before him covered only a part of such expenditure. He therefore, disallowed the entire prior period expenditure of Rs.54,27,076/- and added back to the total income of the assessee. This action of the AO was also confirmed by ld. CIT(A) when the assessee went in appeal before him. Further aggrieved, now the assessee is in appeal before us. 9. The assessee has also made request for admission of following additional evidences Sl.No./Page Nos. as per Index of the Paper Book. Particulars/Remarks 6/21-25 Details of prior period expenses with description/remarks. 8/27-56 Copy of the agreement dated 30.11.2000 between the company and M/s Transpek-Silox Industry Ltd. (TSIL) for sale of company's sulphoxylates business on a going concern basis to substantiate claim of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Foundation Trust. Your appellant had rightly claimed the same as per provisions of section 37(1) of the Act. Your appellant therefore submits that the same be allowed in full. (3) The Hon'ble CIT(A) has erred in confirming the disallowance of rs.3,00,000/- out of disallowance of rs.11,92,332/- made by the AO on ad hoc basis in case of following expenses: -Foreign Travel expenses Rs.5,32,146/- -General expenses Rs.1,13,420/- -Employees welfare expenses Rs.5,46,766/- Total Rs.11,92,332/- Your appellant submits that the disallowance confirmed by CIT(A) is unjust and uncalled for and be deleted now. (4) The Hon'ble CIT(A) has erred in not entertaining your appellant's claim to direct the AO to allow the expenses debited in this year as prior period expenses, pertaining to earlier years and further, to allow the expenses pertaining to this year debited as prior period expenses in subsequent year. ITA No.996/Ahd/2009 Asst. Year 2002-03 (Revenue's appeal): 12. The Revenue has raised the following grounds in its appeal:- (1) On the facts and in the circumstances of the case, the ld. CIT(A) erred in sca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in the equity shares of TSIL was made for strategic business reasons. 10/118-124 Copy of the relevant extracts of the company's balance sheet for financial year 2000-01 during which the company had sold off its sulphoxylates business as a going concern to TSIL to substantiate that there was no cash outgo for a major portion of the investment made in the equity shares of TSIL. 11/125-131 Copy of the relevant extracts of the company's annual report for financial year 1996-97 during which substantial investment was made by the company in the equity shares of M/s Excel Industries Ltd. (EIL) to substantiate that there were sufficient own funds available to make the investment in the equity shares of EIL. 12/132-141 Copy of the relevant extracts of the company's annual report for financial year 1992-93 during which the company made first investment in the equity shares of M/s United Phosphorus Ltd. (UPL) to substantiate that there were sufficient own funds available to make the investment in the equity shares of UPL. The assessee has also made request for admission of additional evidences which after hearing both the parties are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod expenses of Rs.8,59,327/-. The assessee stated that the expenses have been crystallized during the year. In absence of details the AO disallowed the entire prior period expenses of Rs.8,59,327/- and added to the total income of the assessee. This action of the AO was confirmed by ld. CIT(A) in appeal. 19. After hearing both the parties and perusing the record, we feel that the assessee be given one more opportunity to substantiate his claim that liability has crystallized during the year under appeal and, therefore, the matter is restored back to the file of AO with the direction to decide the same after providing reasonable opportunity of being heard to the assessee. This ground is allowed for statistical purposes. 20. During the appellate proceedings before us the assessee has raised following additional ground:- "The ld. CIT(A) has erred in holding that the provisions of section 14A of the Act read with Rule 8D of the Incometax Rules, 1962 are applicable in the facts and circumstances of the case." which being a legal ground was admitted after hearing both the parties.. 20.1 The following 2nd ground of Revenue's appeal is co-related to assessee's above a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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