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TMI Blog2014 (8) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... ine business expenses, which has not been denied by either of the revenue authorities – the expenses deserve to be allowed as there was no hint of personal usage in any of the expenses, noted by the revenue authorities – - because of opening a new show room at Noida, the business has increased considerably - Along with the increase in business, the routine business expenses have also increased, as compared to the preceding year - the AO did not at all look into the comparative figures as produced before him - when the business has increased by 60.15%, it is obvious that corresponding expenses shall also increase - no disallowance is called for - the order of the CIT(A) is set aside and the AO is directed to delete the disallowance - Decided in favour of Assessee. Import Promotion Expenses – Claim of depreciation – Held that:- There is no term as import promotion expenses - the assessee has used the wrong term for the expenses which he has incurred - It is seen from the details as filed that the expenses had been incurred by the assessee for travelling abroad for the purpose of business, like buying tickets, foreign currency, stay etc. – it has not been examined by the revenue a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modify or drop the grounds of appeal at the time of hearing . 2. Ground no. 1 pertains to disallowance of ₹ 5,08,595/- by invoking section 35D. 3. The facts are that the assessee, an individual and proprietor of M/s Reemal Investrade and Onstage Music Factory. The assessee through its proprietary concern is engaged in the business of import and selling in whole sale, western musical instruments for the last many years. 4. In the year under consideration, the assessee took over a tenanted premises and incurred ₹ 6,35,714/- for its repairs. The AO in the assessment proceedings called for explanation with regard to the claim of expense as revenue. The assessee explained that though the expenses incurred were of enduring nature, but since the premises did not belong to him, the expense was claimed as revenue. The AO rejected the claim of the assessee and held the same to be deferred revenue expense and as per the provisions of section 35D, allowed 20% of the expenses to be charged in the year. 5. The assessee approached the CIT(A) and reiterated the submissions made before the AO and further submitted, a) The appellant explained to the Assessing officer tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions made on behalf of the appellant. In my considered view, the A.O. is quite justified in amortizing the expenses under s. 35(D) of the I.T. Act given the enduring nature of the repairs and maintenance expenses. The case laws cited by the appellant were found to be distinguishable. Therefore, the disallowance so made by the AO is accordingly confirmed . 7. Against this decision of the CIT(A), the assessee is before the ITAT. 8. Before us, the AR reiterated the submissions made before the revenue authorities that the issue pertained to disallowance of expenses incurred for repairs of the showroom, which was tenanted premises. 9. The AR submitted that the revenue authorities erred in invoking the provision of section 35D. 10. The DR relied on the orders of the revenue authorities. 11. The issue before us is to see whether the provisions of section 35D, at all, could be applicable on the assessee, where the assessee incurs expenses to repair the place of his work. Section 35D pertains to amortization of preliminary expenses, where there is an extension of undertaking or setting up of a new unit. 12. The assessee, in the instant case is a wholesaler and retailer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been denied by either of the revenue authorities. In such a circumstance, the impugned expenses deserve to be allowed as we cannot find even a hint of personal usage in any of the expenses, noted by the revenue authorities. 20. We, therefore, set aside the order of the revenue authorities on the ad-hoc disallowance of ₹ 1,86,352/- and direct the AO to allow the expense as claimed. 21. Ground no. 2 is therefore, allowed. 22. Ground no. 3 pertain to ad-hoc disallowance of ₹ 1,98,979/-. 23. In the course of assessment proceedings, the AO noticed marked increase in expenses, compared to the preceding year. The following expenses were identified: Sr. No. Nature of expenses Current year (Rs) Previous Year (Rs.) 2 Publicity expenses 2,14,730 1,99,927 3 Salary 4,13,911 1,10,594 4 Professional charges 56,517 NIL 5 Conveyance charges 41,054 12,553 6 Misc. expenses 20,903 11,155 7 Staff welfare expenses 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of traveling out of India in connection with business of import and purchase of foreign currency for such travel. It was requested that the expenses should be allowed . 33. The CIT(A), after considering the submissions, held, I have carefully gone through the assessment order and the submissions made on behalf of the appellant. It is seen from the comparative table of expenses incorporated by the A.O. in the assessment order that in the previous year no expenses were claimed under the head import promotion expenses. Further, the onus is on the appellant to justify and prove that the expenses were incurred for the purposes of the business of the appellant being import promotion expenses. From the records, it appears that this onus has not been discharged by the appellant. It is for the appellant to explain as to what items were imported for which foreign travel was necessitated. Further, who were the parties which were contacted and why such expenses were not needed in the previous year. I find from the record that no satisfactory answer to these queries has been given by the appellant. Under the circumstances, I have no other option but to confirm Cthe disallowance made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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