9911796707
TMI Blog2014 (2) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... services charged from clients – Held that:- The decision in JM. Baxi & Co. Versus Dy. Commissioner of IT., Mumbai [2014 (1) TMI 1258 - ITAT MUMBAI] followed - After the lapse of almost 12 years no useful purpose would be served if the matter is restored back to the file of the A.O, to make fresh enquiries whether the clients of The assessee were aware that they were required to reimburse the illegal expenses - it is clear that after assesse filed its reply neither the assessee nor the AO made any effort to prove that such expenditure was illegal and was being reimbursed by such clients/principals – Advocate agreed that he will have no objection if sundry expenses are disallowed to the extent of 25% of the expenses – thus, the order of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratio laid down by the Hon ble Bombay High Court in the case of CIT vs. Allana Sons Pvt. Ltd. reported in 216 ITR 690. 5. The Ld CIT (A) ought to have appreciated that the expenses like gift, diwali, chandla and business promotion could never be described as Capital Expenses nor were they personal expenses of the Appellant company and hence they are admissible expenses having been laid out wholly and exclusively for the purposes of the business of the Appellant. 6. The ld CIT (A) erred in confirming an addition of Rs. 71,98,735/- being 25% of the total addition of Rs. 2,87,94,940/- made by ld A. 0. on an ad hoc basis on account of expenses incurred by the appellant on behalf of its principals. 7. The appellant craves leave to add, am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, diwali and personal expenses. 7. We have heard the ld. AR of the assessee as well as the ld DR and considered the relevant material. It was pointed out by the Id AR of the assessee that a similar issue has been considered and decided by the Tribunal in assessee s own case for AY 2006-07 in ITA no. 263/Mum/08 vide order dated 12.12.2009 in 8. Ground Nos. 1 2 in Revenue s appeal are against the relief allowed by the CIT (A)out of Diwali expenses and gift expenses. 9. At the time of hearing, both the parties have agreed that the Tribunal in the earlier year in the assessee s own case has sustained the disallowance by 50% out of the disallowance sustained by the Id. CIT(A) in this regard and, therefore, the issue may be decided accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artly allowed, while the grounds taken by revenue are rejected. 8. Accordingly, following the earlier order of the Tribunal, we restrict the sustained by the CIT(A) to 50%. 5. In this view of the situation, after hearing both the parties we restrict the disallowance to 50% of the disallowance sustained by Ld. CIT(A) in respect of all these expenditure. Accordingly, Ground No.1 to 5 are partly allowed. 6. Ground No.6 was also stated to be covered by the aforementioned order. A sum of Rs.2,87,94,940/- was disallowed as the same was held by the AO not allowable under section 37(1) of the Act. The disallowance pertains to the expenses claimed by the assessee against certain fees or services charged by the assessee from its clients. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. After considering the rival submissions carefully, we find That an identical issue came up for consideration before the Tribunal in the case of M/s. N. Jamnadas Co. vs. ACIT (supra) and the issue was decided vide paras 7 8 which are as under: 7. We have considered the rival submissions carefully. We agree with the submission of the learned senior Advocate that after the lapse of almost 12 years no useful purpose would be served if the matter is restored back to the file of the A.O, to make fresh enquiries whether the clients of The assessee were aware that they were required to reimburse the illegal expenses. In fact it is clear that after assesse filed its reply neither the assessee nor the A. 0. mode any effo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said that all the money has been paid to government employees. In the absence of details we follow the guidelines laid down in the case of A.P.l. (India) P. Ltd. (supra) and hold that 25% of the expenditure is hit by the Explanation to section 37(1) and the some is required to be disallowed. This proposal was given in the open Court and accepted by the learned senior Advocate on behalf of the assessee. Therefore, we set aside the order of the learned CIT(A) and direct the A.O. to disallow 25% of Rs. 18,46,151/- and Rs. 13,84,432/- for A.Y. 1997-98 and 1998- 99 respectively being alleged illegal expenses. In the present case also Ld. Sr. Advocate agreed that he will have no objection if sundry expenses are disallowed to the extent of 25% ..... X X X X Extracts X X X X X X X X Extracts X X X X
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