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TMI Blog2015 (6) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... to interfere in the matter. - Decided against revenue. Disallowance of salary - amount was far more excessive as compared to preceding year when there was some business activity whereas in the period under consideration there was no business activity - CIT(A) deleted the addition - Held that:- There is nothing more than increase in expenditure which has been put against the assessee in support of impugned disallowance but even this alleged increase in debit overlooks the fact that while overall expenses were broadly the same, the increase in net debit was due to no recoveries from sister concern. In any event, as uncontroverted findings of the CIT(A) show, all the requisitioned details were before the authorities below and the disallowance was thus wholly uncalled for. A decrease, or even absence, of business activity does not necessarily lead to proportionate reduction in staff salaries. In view of these discussions, as also bearing in mind entirety of the case, we approve the conclusion arrived at by the CIT(A) and decline to interfere in the matter. - Decided against revenue - ITA No. 4390/Del./2011 - - - Dated:- 27-3-2015 - Shri I. C. Sudhir And Shri Pramod Kumar JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer and observed as follows : 3.2. It is observed that in the present case, the question of remission of liability does not arise because the liability against the names of the creditors namely, M/s. Geo-chem Laboratories, M/s. Jain House, Calcutta and Shri Sohan Lal Ghai has been shown in the balance-sheet by the assessee in the subsequent years which is evident on perusal of the copies of the balance sheet as at 31.03.2009 and 31.03.2010 that were submitted during the appellate proceedings. Under the circumstances stated above and in view of the discussions made above, I am of the considered view that the provisions of section 41(1) are not applicable to the instant case in respect of the liability standing against the names of the creditors namely, M/s. Geochem Laboratories, M/s. Jain House, Calcutta and Shri Sohan Lal Ghai. Accordingly, it is held that the Assessing officer was not justified in making the addition of ₹ 3,66,287/- on account of remission/cessation of liability under section 41(1) of the Act and the addition made by the Assessing Officer is not sustainable in law. Therefore, it is deleted. 4.3. On these facts and circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed. 5. The Assessing Officer is aggrieved of the relief so granted by the CIT(A) and is in appeal before us. 6. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 7. We find that it is an uncontroverted finding by the CIT(A) that the amounts which were shown as payable to M/s. Geo-chem Laboratories, M/s. Jain House and Shri Sohan Lal Ghai have been subsequently paid by the assessee. Under these circumstances, there cannot be any good reason to conclude that these were ceased liabilities. We have also noticed that the details of identity, creditworthiness and genuineness of the creditor Ms Priyanka Jhunjhunwala were duly furnished and the revenue has not brought on record any material against the same. In any case, there is no dispute that these amounts reflected in the balance sheet were not even written back by the assessee and these being so shown in the balance sheet also constituted as an acknowledgment of debt, as was held by Hon ble jurisdictional High Court in the case of CIT vs. Shri Vardhman Overseas Ltd. (343 ITR 408). In view of these discussions, as also b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not justified. It is well settled that it was for the assessee to decide how best to protect his own interest and/or what expenditure has to be incurred and in which circumstances every businessman knows his interest best and the AO cannot direct the assessee to conduct its business in a particular manner. Further reasonableness of the payment has to be judged not on any subjective standards of the AO but from the point of view of commercial expediency. In this context, reliance is placed on the decision of the Apex Court in S.A. Builders Ltd. Vs. CIT (2007) 288 ITR 1 (SC) (approving Delhi High Court judgment in 254 ITR 377). Relevant part of the judgment is reproduced hereunder :- 25. The expression commercial expediency is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. The expenditure may not have been incurred under any legal obligation, but yet it is allowable as a business expenditure if it was incurred on grounds of commercial expediency 34. We agree with the view taken by the Delhi High Court in CIT vs. Dalmia Cement (Bharat) Ltd. (2002) 254 ITR 377 that once it is established that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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