9911796707
TMI Blog2015 (5) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... 3), proscribing allowance of expenditure in the sum of Rs. 20,000/- or more, otherwise allowable, where paid otherwise by an account payee cheque or account payee draft, is not attracted. The same did not find favour with the Assessing officer (A.O.) as no bills/vouchers in support of the claim were produced by the assessee. The same found endorsement with the ld. CIT(A) in appeal. The expenditure had been booked by way of a singly entry of Rs. 47,050/- on 29.05.2007. No evidence had been produced to exhibit that the purchases were less than Rs. 20,000/- each, so that section 40A(3) shall not apply. Aggrieved, the assessee is in appeal. 3. We have heard the parties, and perused the material on record. Without doubt, section 40A(3), a non obstante clause, would apply to an expenditure incurred in a sum in excess of Rs. 20,000/-, where it is paid for otherwise than by the stated mode of account payee cheque/bank draft. The disallowance is attracted with reference to the mode of payment, and not for the expenditure per se. In the instant case, however, the assessee claims to have paid directly to the staff on the occasion of the birth date of the water park. There is, therefore, no q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not be allowed as an expense. He, accordingly, directed for the same being treated as such and, further, to be allowed deduction u/s.80-G, where applicable. 5. We have heard the parties, and perused the material on record. Our first observation is that the payment could be said to be a donation where it is for an altruistic or charitable purpose. In the present case there is no alluding to any public cause, but only toward the promotion of its business by the assessee. Whether the same, i.e., the business purpose, is proved or not, so that, where not, the consequence of disallowance shall follow, is another matter. Further, even where the expenditure is otherwise deductible, i.e., its business purpose is proved, the same, where the expenditure is one to which the provisions of Chapter XVII-B are applicable, its deduction shall be subject to deduction and payment of tax at source thereon by the defined period. Breach thereof would defer the allowability to the year where so deducted and paid. The ld. CIT(A) found the business purpose of advertisement, or business advantage in general, as missing. However, we observe no opportunity by him to exhibit so to the assessee, who ple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the same was only an advance/part receipt. This did not find acceptance by the A.O., as the same, in that case, ought to have been reflected as a liability. The claim was even otherwise not supported by any details/evidence. The balance sum of Rs. 19,656/- was, accordingly, included as the assessee's income. The same found confirmation at the first appellate stage for the same reason/s. 7. We have heard the parties, and perused the material on record. The assessee's explanation of the same being an advance is, firstly, in contradiction to its treatment of the same as a receipt (income). When, if so, was the balance payment of Rs. 19,656/-; the rate of Rs. 200/- per person being admitted, received, even as observed by the ld. CIT(A)? In fact, there would be similar instances as well, and which would reflect and exhibit both the validity of the assessee's claims as well as the modus operandi being followed by the assessee in such cases. For which date was the booking? Did it materialize? Were tickets issued and in what number? Such like questions arise as a concomitant to the assessee's explanation, and which we find as totally unanswered/not met. Further, an advance would not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... True, the impugned expenditure is abnormally large in relation to the monthly average, which works to Rs. 2.92 lacs, i.e., upon excluding the impugned sum from the total claim of Rs. 45.84 lacs for the year. However, it is not the case that the assessee has not furnished any explanation, or one which is not plausible. The account heads of garden maintenance, transport, octroi and electricity are in the nature of regular maintenance expenses. It is also not the case that the said expenditure stands incurred under any other account. The total expenditure for the immediately preceding year, for which the assessee had a lower turnover, is at Rs. 62.82 lacs, i.e., as against Rs. 45.84 lacs for the current year. Non furnishing of the relevant evidence, thus, should not prove fatal to its case - the sole purpose of procedural law being to promote justice. Reference in this context is made to the case of Smt. Prabhavati S. Shah vs. CIT [1998] 231 ITR 1 (Bom). The matter, therefore, as afore-stated, is restored back to the file of the A.O. for the purpose. We decide accordingly. 10. Ground 6 is in respect of disallowance of Rs. 3 lacs out of the claim of Rs. 6 lacs by way of director's re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisition or retention or sale. The assessee's claim, therefore, that it had not incurred any administrative expenditure, could not be accepted. Section 14A includes within its sweep both direct and indirect expenditure. The latter was thus estimated following the prescription of Rule 8D, following the decisions in Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT [2010] 328 ITR 81 (Bom) and Cheminvest Ltd. vs. ITO [2009] 317 ITR (AT) 86 (Del)(SB). The same found confirmation in appeal for the same reasons. 13. We have heard the parties, and perused the material on record. Rule 8D has to be resorted to where the assessee cannot substantiate its claim with reference to its accounts, as in the present case, of having not incurred any expenditure in relation to the exempt income. Its claim for expenditure would thus stand to be disallowed, i.e., in part, irrespective of whether the income not forming part of the total income has actually ensued or not, even as explained in afore-referred decisions, besides the decision in the case of CIT v. Rajendra Prasad Moody [1978] 115 ITR 519 (SC), as also discussed at length by the tribunal in the series of decisions, viz. D. H. Securities (P.) Ltd. vs. D ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
