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TMI Blog2015 (10) TMI 2240X X X X Extracts X X X X X X X X Extracts X X X X ..... owance to ₹ 5,89,573/- and direct the Assessing Officer to delete the same - Decided in favour of assessee. Additional depreciation on expenditure on moulds disallowed - Held that:- The additional depreciation on assets is allowable under section 32(1)(iia) of the Act. However, no additional depreciation is allowable as per the proviso to section 32(1)(iia) of the Act, where plant & machinery installed after 31.03.2005, was earlier used either within India or outside India by any other person. Further, additional depreciation is not allowable on any office appliances. The assessee had paid labour charges for the conversion of its old mould into new mould and there was no purchase of new plant & machinery. In the above said facts and circumstances, we find no merit in the claim of the assessee and upholding the order of CIT(A) in disallowing additional depreciation on expenditure of ₹ 68,035/- incurred on account of labour charges in respect of conversion of old mould into new mould - Decided against assessee. Disallowance of sales promotion expenses - Held that:- The claim of the assessee was that the payments were made through ICICI bank credit card. Except filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory premises of the assessee on the same date. The assessee filed return of income for the year under consideration on 30.03.2009 declaring total income of ₹ 12,42,891/-. During the course of assessment proceedings, the Assessing Officer noted that the assessee had made investment in shares of sister concern to the extent of ₹ 1,74,24,000/- and had also given interest free loans advances to sister concerns of ₹ 3,00,350/-. The Assessing Officer further noted that the Reserves Surplus funds available with the assessee was ₹ 36,83,453/-. The Assessing Officer in view of the interest free advances made by the assessee by way of investment in shares of the sister concerns and after adjusting the Reserves Surplus funds available with the assessee, was of the view that notional disallowance of interest @ 12% is to be made in the hands of the assessee on the balance investment in shares and interest free advances of ₹ 1,38,67,538/-, at ₹ 16,64,104/-. Further, as the actual interest debited to the books of account was ₹ 10,16,378/-, disallowance under section 36(1)(iii) of the Act was restricted to ₹ 10,16,378/-. 5. Before the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs of CIT(A) that similar disallowance was made in all seven scrutiny assessment years was incorrect. It was further pointed out by him that the said investments and advances were made because of commercial exigency as the assessee had business dealings with the sister concerns. Our attention was drawn to the submissions made before the Assessing Officer vis- -vis the details regarding share investments and the availability of funds in financial years 1995-96 to 2007-08. Reliance was placed on the ratio laid down by the Hon ble Bombay High Court in CIT Vs. Srishti Securities (P) Ltd. (2009) 321 ITR 498 (Bom). 8. The learned Departmental Representative for the Revenue on the other hand, pointed out that in case no scrutiny assessment was made in the earlier years and the issue has not been considered by the Assessing Officer, disallowance under section 36(1)(iii) of the Act could be made in the hands of the assessee in the instant assessment year, in view of the facts of the case. 9. We have heard the rival contentions and perused the record. The issue arising in the present appeal is against the disallowance made under section 36(1)(iii) of the Act. The assessee was a compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... free funds available as on 31.03.2008 was ₹ 1,26,37,878/-, against which the investment in loans advances and share investments with the sister concerns amounted to ₹ 1,75,50,991/-. The CIT(A) worked out the disallowance under section 36(1)(iii) of the Act on the differential amount of ₹ 49,13,113/- and computed the disallowance @ 12% amounting to ₹ 5,89,573/-. The case of the assessee before us is that all these advances were made in the earlier years and no such disallowances were made in all the earlier years. The CIT(A) at page 5 has given a finding that the Assessing Officer had disallowed interest under section 36(1)(iii) of the Act in all seven years under appeal, for which the scrutiny assessments were made. The assessee on the other hand, has pointed out that no scrutiny assessments were made in the earlier years. The Revenue is not in appeal against the order of CIT(A) in allowing the benefit of interest free funds available with the assessee at ₹ 1.26 crores as against investment of ₹ 1.75 crores. The only issue raised in the present appeal is whether any disallowance of interest under section 36(1)(iii) of the Act is to be made on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther contended by the assessee that the installation expenses of capital assets were to be regarded as capital assets. Another plea raised by the assessee was that the Assessing Officer had incorrectly disallowed expenditure in respect of assets for which, the assessee had not claimed additional depreciation. The submissions of the assessee were forwarded to the Assessing Officer, who in the remand report dated 24.02.2011 has accepted that the additional depreciation was allowable on generator set purchased for ₹ 1,30,000/- and also accepted that the additional depreciation was incorrectly disallowed in respect of some items amounting to ₹ 83,798/-, on which the assessee had not claimed additional depreciation. The CIT(A) accepted the contention of the Assessing Officer in respect of expenditure on conversion of old mould into new mould totaling ₹ 68,035/-, on which additional depreciation of ₹ 13,607/- was claimed and confirmed the addition. In respect of expenditure relating to installation of new generator set at factory premises amounting to ₹ 25,660/-, the plea of the assessee that the said expenditure was capitalized with the cost of asset for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was found to be irrelevant. Further, since the assessee had not filed details of the gifts purchased and also bills in support of its claim, the said claim of expenditure of ₹ 1,53,290/- was disallowed. 21. The CIT(A) upheld the said addition in the absence of any evidence being filed by the assessee. However, the CIT(A) allowed 1/3rd of the expenditure, since the payments were made through credit card. However, disallowance of ₹ 1,02,193/- was confirmed by the CIT(A). 22. Even before us, the claim of the assessee was that the payments were made through ICICI bank credit card. Except filing the statement of payments at pages 72 and 73 of the Paper Book, the assessee has failed to furnish any bills or any details or break-up of the expenditure incurred by the assessee under the head sales promotion expenses . It is the requirement of law that for allowing any expenditure under section 37(1) of the Act, onus is upon the assessee to establish that the said expenditure has been incurred for carrying on its business. Where the assessee has failed to furnish even basic details of the break-up of expenditure or the nature of expenditure, we find no merit in the claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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