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TMI Blog2015 (11) TMI 1843X X X X Extracts X X X X X X X X Extracts X X X X ..... Thereupon, the said situation, in our view section 40A(3) of the IT Act is not attracted in the hands of the assessee. Hence, the Ld. CIT(A) has rightly deleted the being 20% of the expenses. Addition of speed money is to be payable by the company to the labourers and others to achieve the result or to do the work at spot. This expenditure has also been incurred by the assessee company on behalf of its client. This amount has not been belonging to the assessee company and in this regard the company also reflected the said amount in its Profit and Loss account. As discussed above, section 40A(3) deals with the computing of income under the head of profit and gains of business and provision under section 40A(3) is one of the sub sections of section 40A and while computing the taxable income under the head of profit and gains of business then the provisions of section 40A(3) can be invoked. When there is no claim with regard to any expenditure, therefore there should not be any disallowance in view of the provision under section 40A(3) When the expenditure is not related to the assessee company, however executed on behalf of its client, then the question of application of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notices u/s.133(6) issued to the clients of the assessee to verify the genuineness of the claim were returned unserved. (2) (i) On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of ₹ 10,00,000/- made on account of Speed Money. (ii) While doing so, the ld.CIT(A) has failed to appreciate that while explaining the nature of activities during the course of BCTT proceedings, the assessee has stated before the Investigation Wing of the Department that the cash payment technically called Speed Money has to be paid by it on the spot to have the results. Thus, the ld.CIT(A) has failed to appreciate that this expenditure is hit by the provisions of Explanation to Section 37(1) of the I.T. Act, 1961 and hence the same was not allowable. (3) (i) On the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition of ₹ 48,00,000/- on account of payment made to Dena Bank as One Time Settlement against the liability. (ii) While doing so, the ld.CIT(A) has failed to appreciate that any credit balance written back was income of the assessee in view of the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of Ld. CIT(A) dated 28.01.2011 is liable to be set aside and the order of the AO is liable to be restored. 5. On the other hand, the Ld. A.R. on behalf of the assessee has argued that the Ld. CIT(A) has passed the order judiciously and correctly which does not require to be interfered with in the appeal. It is also specifically argued that the assessee is in the business of clearing agent (CHA), clearing, forwarding, speed money, transportation, loading and unloading for the clients and did not claim any expenditure on behalf of him as he was doing the business on behalf of other, therefore, in the said circumstances, the Ld. CIT(A) has rightly allowed the expenditure and speed money and allowed the term loan etc. and assailed the contention of the Ld. D.R. and also reliance placed on the law settled in (2010) 2 ITR 29 (Tri.- Cochin). 6. By giving the careful thoughts to the contentions raised by the representatives for the parties and perused the record carefully, the grounds which have been taken by the assessee are being decided accordingly. Issue-I It is required to be decided whether the Ld. CIT(A) has erred in deleting the disallowance of ₹ 46,75,800/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be any disallowance in view of the provision under section 40A(3). In this regard, we also find the support of the law settled in (2010) 2 ITR 29 Tri.- Cochin. 7. As discussed above, when the expenditure is not related to the assessee company, however executed on behalf of its client, then the question of application of the provisions of section 37(1) of the Income Tax Act, 1961 does not arise. Therefore, it is quite clear that the Ld. CIT(A) has rightly decided the issue numbers (1) (2) in favour of the assessee which is not required to be interfered with at this stage. Hence, the finding of the Ld. CIT(A) under the issues number (1) (2) are hereby affirmed. 8. The third issue has been raised by the Revenue is in connection with the deletion of the addition of ₹ 48 lakh on account of payment made to the Dena Bank as one time settlement against the liability. The Ld. D.R. has argued that an amount of ₹ 48 lakhs have duly been added to the income of the assessee in the light of the judgment in case of Solid Containers Ltd. vs. DCIT (2009) 178 Taxman 198 (Bom.) but the Ld. CIT(A) has wrongly exempted the term loan of ₹ 48 lakhs whereas the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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