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TMI Blog2018 (1) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... nexus between the interest debited and the funds utilized is proved, the stand taken by the department regarding capitalization of interest, in our opinion, cannot be accepted. Therefore, the addition made by the authorities below in this head by way of impugned reassessment proceedings, deserves to be deleted. In respect of exhibition expenses paid to M/s. Mullar & Phipps India Ltd., there is no rebuttal of the contention of the assessee made before us that this point was raised by the Assessing Officer in the original assessment proceedings. The assessee had filed its reply, which stood accepted by the Assessing Officer with due application of mind. In these circumstances, the addition made by the authorities below on this account by r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty products. He filed return of income on 28.09.2006 declaring income of ₹ 1,23,74,570/-. The assessment was completed u/s. 143(3) on 26.12.2008 determining total income at ₹ 1,24,78,120/-. Subsequently, case was reopened by issuing notice u/s. 148 dated 08.03.2011 by recording the reasons placed at page 2 of the paper book which is as under : Reasons for Initiating proceedings u/s 147 of the Income Tax Act, 1961. Return of Income for the A.Y, 2006-07 was filed on 28.11.206 declaring an Income of ₹ 1,23,74,570/-. Assessment u/s 143(3) was completed in this case on 26.12.2008 at income of ₹ 1,24,78,120/-. 1. Subsequently, it came to notice that the assessee has invested Rs,33,00,000/- in advance booking of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 9,672/- is allowable. Thus, the assessee has made wrong claim of expenditure amounting to ₹ 54,808/-in its profit and loss account. In view of the above facts, I have reasons to believe that due to failure/omission on the part of the assessee to disclose fully and truly material facts, an Income of ₹ 54,808/- of the assessee for the AY 2006-07 has escaped assessment within the meaning of section 147 of the Income Tax Act on this account. 3. Subsequently, it has also come to notice that the assessee has claimed exhibition expenses of ₹ 3,54,737/- which are of the nature of advertisement expenses on which no TDS was deducted by the assessee. Since the expenses are of the nature of advertisement expenses whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing additions vide reassessment order : i). Addition on a/c of non-capitalization of Interest 3,96,000/- ii). Addition a/c of non-capitalization of expenses incurred on mixer machine. 54,808/- iii). Disallowance u/s. 40(a)(ia) 3,54,737/- The matter was carried before the ld. CIT(A) on the validity of reopening proceedings as well as on merits of the additions. The ld. CIT(A) after considering the assessment order and the submissions of the assessee justified the reopening proceedings u/s. 147/148. The ld. CIT(A) accepted the alternative plea of the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 3,54,737.95 has been debited to Exhibition expenses having being incurred by M/s. Mullar Phipps India Ltd. on our behalf (Pg.21). The said sum so paid is in fact publicity expense/selling expense, where the company's products are displayed at various stages and platforms/exhibitions. The expenses are initially borne by M/s. Mullar Phipps and later on a claim is lodged with the Assessee along with other various expenses. These expenses being in the nature of Publicity Exhibition expenses are not covered under the provisions of sec 194C of the Income Tax Act, 1961. As no Contractual Obligation is entered into, therefore, no TDS had been deducted thereon. Hence the proposed addition is against the provision of law. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest debited and the funds utilized is proved, the stand taken by the department regarding capitalization of interest, in our opinion, cannot be accepted. Therefore, the addition made by the authorities below in this head by way of impugned reassessment proceedings, deserves to be deleted. 7. In respect of exhibition expenses paid to M/s. Mullar Phipps India Ltd., there is no rebuttal of the contention of the assessee made before us that this point was raised by the Assessing Officer in the original assessment proceedings. The assessee had filed its reply, which stood accepted by the Assessing Officer with due application of mind. In these circumstances, the addition made by the authorities below on this account by reopening the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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