9911796707
TMI Blog2017 (4) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has erred in law and on the facts of the case in disallowing charges Rs. 14,76,363/-. 2. The learned CIT(Appeals) has erred in law and on the facts of the case in ignoring the decision of the Supreme Court in the case of CIT vs. Dhanrajgiriji reported in 91 ITR 544 wherein the Hon'ble Supreme Court had laid down the law of the land that every businessman knows his interest best and it is not open to the department to prescribe what expenditure an assessee should incur and in what circumstances he should incur that expenditure. 3. The learned CIT(Appeals) has erred in law and on the facts of the case in sustaining the order of the assessing officer making an addition of Rs. 13,92,822/- on account of rejection of materials. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbursed by them. The assessee has shown reimbursement of Transportation Charges of Rs. 21,40,444/- that was 60% of the Transportation Charges. As per agreement, the assessee has delivered the material at their site and had to incur the Transportation Charges. The AO disallowed the Transportation Charges without any reasonable basis holding that assessee has not produced evidence to show that assessee wanted to recover the expenses. It was further argued that Revenue cannot be allowed to decide that as to what kind of expenditure, businessmen has to incur, and under which circumstances. The commercial expediency is the sole discretion of businessmen to safeguard his interest. In support of his contention, the ld. AR of the assessee relied up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther concluded that there is no restriction to bear the expenses on account of other parties and even non-business expenses. The ld. CIT(A) while considering the Ground of Appeal confirmed the disallowance holding that the expenditure was not wholly and exclusively for the purpose of business. The Hon'ble Apex Court in S.A. Builders (supra) while dealing with the "Commercial Expediency" relating to section 37 held that decision relating to section 37 will also be applicable to section 36(1)(iii) because in section 37 the expression used is "for the purpose of business". It was further held that consistently it has been held in decision relating to section 37 that expression "for the purpose of business" includes expenditure voluntarily inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only. The rejection is around 1.25% of the turnover of the assessee-company. Such rejections were accepted in the past. The rejected material was written off only Profit & Loss Account by reducing the amount of rejected material from the Revenue. The AO disallowed the cost of rejected material holding that assessee has not been able to prove as to how quality issue led to rejection of material and no confirmed of buyer is filed. The AO ignored the evidence in the form of debit notes received from the customers. The AO has not rejected the books of accounts. On the other hand, ld. DR for the Revenue supported the order of authorities below and would argue that assessee has not placed on record the copy of labels or sample label which was all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that the lower authorities have not rejected the books of accounts. No findings were given on the debit notes filed by the assessee before the authorities below. Considering the submission of the ld AR for the assessee that similar disallowance was claimed in the preceding years and was allowed to the assessee, we deem it appropriate to restore this ground of appeal to the file of AO to consider it afresh and pass order in accordance with law. The AO is directed to examine the delivery challans of goods supplied and the debit note issued thereafter for rejected goods. Needless to say the AO will provide opportunity of hearing to the assessee. Thus, this ground of appeal is allowed for statistical purpose. 8. In the result, appeal o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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