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TMI Blog2017 (12) TMI 1732X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses is not a part of profit making apparatus of the assessee-company - We direct the AO to treat the EDP expenses as revenue expenditure. Thus the 1st ground of appeal is allowed. Disallowance of advertisement expenses - HELD THAT:- We are of the considered view that whether there should be disallowance of advertisement expenses or not requires verification at the level of AO from the primary documents. It cannot be decided at an abstract level treating it as capital expenditure or revenue expenditure. One has to delve into micro details from bills/vouchers. Disallowance by the AO of travelling and conveyance expenses - HELD THAT:- We are of the considered view that whether the expenditure incurred by the assessee for travelling and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted order for the sake of convenience. ITA No. 1271/MUM/2013 Assessment Year: 2008-09 2. The 1st ground raised in this appeal by the assessee is against the order of the Ld. CIT(A) confirming the disallowance of ₹ 8,42,189/- of EDP expenses considering the same as capital expenditure. 2.1 During the course of assessment proceedings, the assessee submitted before the AO that it has debited ₹ 8,42,189/- as EDP expenses and included it in 'Miscellaneous Expenses'. The AO following the judgment of the Hon'ble Rajasthan High Court in the case of CIT vs. Arawali Constructions (P) Ltd. 259 ITR 30 (Raj) disallowed the said EDP expenses of ₹ 8,42,189/-. 2.2 In appeal, the Ld. CIT(A) agreed with the findings of the AO and di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same was incurred for business purpose. 3.2 In appeal, the Ld. CIT(A) upheld the addition of ₹ 1,03,16,614/- made by the AO. He further found that out of total expenditure of ₹ 32,28,07,483/-, the amount of ₹ 10,47,17,975/- is expenditure incurred more than ₹ 10,00,000/- on each item. He held the same as capital expenditure and added back to the taxable income. 3.3 Before us, the Ld. counsel of the assessee submits that the Ld. CIT(A) has ignored the fact that the agreement as referred to by the AO in the assessment order was never asked for to be produced and the said disallowance has been made without asking for any further details/explanation in the course of assessment. It is also stated by him that the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the said expenditure was incurred wholly and exclusively for business purposes. 4.3 Before us, the Ld. counsel the assessee submits that the Ld. CIT(A) has ignored the fact that the said disallowance is made without asking for any further details/explanation in the course of assessment. On the other hand, the Ld. DR supports the order passed by the Ld. CIT(A). 4.4 We have heard the rival submissions and perused the relevant materials on record. We are of the considered view that whether the expenditure incurred by the assessee for travelling and conveyance is wholly and exclusively for the business purpose or not has not been examined either by the AO or the Ld. CIT(A). It requires verification at the level of the AO from bills/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed. ITA No. 336/MUM/2015 Assessment Year: 2008-09 8. The ground raised by the assessee in this appeal is against the order of the Ld. CIT(A) confirming penalty of ₹ 49,86,946/- on account of disallowance of travelling and conveyance expenses of ₹ 1,46,71,804/- as not incurred wholly and exclusively for the purpose of its business. 8.1 The above addition made by the AO and upheld by the Ld. CIT(A) has been set aside by us as per para 4.4 and 6 hereinbefore. Therefore, the penalty imposed by the AO on the said addition does not survive as held in K.C. Builders vs. ACIT (2004) 265 ITR 562, 569 (SC). Therefore, the penalty is cancelled. 9. In the result, the appeal is allowed. 10. To sum up the appeal filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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