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TMI Blog2014 (7) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal before us and has raised the following grounds:- 1. The Ld. CIT(A)-XIV, Ahmedabad erred in law and on facts in deleting the disallowance of Rs. 20,78,870/- made by the Assessing Officer relating to show room renovation / repairs expenses. 2. The Ld. CIT(A)-XIV, Ahmedabad erred in law and on facts in deleting the disallowance of Rs. 3,96,000/- made by the Assessing Officer on account of interest u/s.36(1)(iii). 3. The Ld. CIT(A)-XIV, Ahmedabad erred in law and on facts in deleting the addition of Rs. 18,50,275/- made by the Assessing Officer on account of advertisement u/s.40A(2)(b) of the Act. 4. The Ld. CIT(A)-XIV, Ahmedabad erred in law and on facts in deleting the addition of Rs. 35,61,355/- made by the Assessing Officer on account of unexplained expenditure on advertisement u/s.69C of the Act. Ground no. 1 is with respect to deletion of disallowance relating to show room renovation/repair expenses. 4. During the course of assessment proceedings, A.O noticed that Assessee had debited Rs. 23,09,855/- as expenses for renovation of show room. The submission of the Assessee that the expenditure was made for different rented show rooms of the company and the renovation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carrying on of the business, the expenditure may be regarded as revenue expenditure. It aiso seen that no show-cause notice was issued ' before making this addition. Considering all these facts in totality I find force in the submission of the assessee and impugned expenditure of Rs. 23,09,855 on repairs and renovation of show rooms is directed to be treated as revenue expenditure being in the nature of current repairs and this ground of appeal is allowed. 5. Aggrieved by the order of CIT(A), the Revenue is now in appeal before us. 6. Before us, ld. D.R. took us through the findings of A.O. and supported his order. The ld. A.R. on the other hand reiterated the submissions made before CIT(A) and supported his order. 7. We have heard the rival submissions and perused the material on record. We find that CIT(A) after considering the submissions of the Assessee and on perusing the copies of the bills has given a finding that the expenditure incurred by the Assessee was by way of replacement/repairing of old existing furniture and fixtures and modification made to facilitate the display of changed models of products of companies which are sold by Assessee. CIT(A) after relying o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue is now in appeal before us. 10. Before us ld. D.R. relied on the order of A.O. On the other hand ld. A.R. reiterated the submissions made before CIT(A) and supported his order. 11. We have heard the rival submissions and perused the material on record. CIT(A) after considering the submissions of the Assessee has noted that the furniture deposit was old amount given to Sales India and M/s Santosh Trading for using the existing furniture of these concerns without payment of rent. He has further noted that the deposits have been given for the purpose of business and there was no justification of disallowing the notional interest. Before us, ld. D.R. could not controvert the findings of CIT(A) and therefore we find no reason to interfere with the order of CIT(A) and thus this ground of Revenue is dismissed. Ground no. 3 is with respect to deleting the addition of Rs. 18,50,275/- under section 40A(2)(b) of the Act. 12. During the course of assessment proceedings, A.O noticed that Assessee had paid Rs. 1,23,35,170/- to Arts India, which is a related party covered under section 40A(2)(b) of the Act for advertisement. A.O also noted that substantial advertisement expenses wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal meaning thereby that the order of CIT(A) has been accepted by Revenue and has attained finality. Before us no material has been brought to demonstrate as to how the payment made by Assessee to Arts India was excessive. Before us, ld. D.R. has not brought any material on record to controvert the findings of CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of CIT(A) and thus this ground of Revenue is dismissed. 4th ground is with respect to deletion of addition on account of unexplained advertisement expenditure under section 69C. 16. A.O noticed that Assessee had shown Rs. 1,25,87,697/- as advertisement expenses. He also noted that out of the total advertisement expenses, about 98% was paid to Arts India which was a related party of the Assessee. To verify the reasonableness of expenditure paid by Assessee to Arts India and to verify the actual amount paid by Arts India to different advertising agencies letter under section 133(6) were issued to some newspapers/advertising agencies which are listed on page 7 of the order. On perusal of statements given by different advertisement agency, A.O noticed that Arts India actually paid a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opening credit balance of Rs. 32,45,462 and the total of credit side of the account including the transaction during the year is Rs. 1,55,80,633 and during the year the payment made to M/s Arts India is Rs. 1,17,43,432 leaving credit balance of Rs. 38,37,200 in the account of M/s Arts India payable by the assessee. In view of these facts it is also possible that M/s Arts India might have made payment for this year as well as towards old outstanding dues. Considering all these factual aspects it is seen that the conditions of section 69C are not fulfilled and in absence of any proof of incurring expenditure out of books by the assessee, no case of any addition u/s 69C has been made by the assessing officer. Therefore the addition of Rs. 35,61,355 u/s 69C is hereby directed to be deleted and the ground of the assessee is accordingly allowed. 17. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 18. Before us, ld. D.R. relied on the order of A.O on the other hand ld. A.R. supported the order of CIT(A). 19. We have heard the rival submissions and perused the material on record. CIT(A) while deleting the addition has noted that the information gathered by the A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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