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TMI Blog2022 (11) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO, Dy. CIT, Circle-10(2) New Delhi (hereinafter referred as the Ld. AO). 2. Facts of the case are that the assessee is a Public Limited Company under the name and style Gryphon Appliances Limited. During the financial year relevant to the Assessment Year 2014-15, the year in respect of which appeal is preferred, the appellant was carrying on the business of Trading/distribution of a range of domestic kitchen appliances products of Black & Decker. Gryphon & Hitkari. Return declaring Income of Rs. 32,52,680/- was filed on 26.11.2014. The same was processed u/s 143(1). The assessment has been completed u/s 143(3) by making certain additions as follows: S. No. Head of Expenditure Basis of Disallowances Disallowance by the Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omotion expense by the Commissioner of Income Tax (Appeals) is contrary to facts and law." 5. Heard and perused the record. 6. In regard to ground no 1 it was submitted that disallowance of Commission Expenses of Rs.46,06,393/- includes Rs.36,28,842/- paid to M/s Hitkari Potteries Ltd. The Appellant claims that it had entered into an agreement with Hitkari Potteries Ltd a well know brand in potteries and Ceramicware to market their product in their brand particularly to canteen store department(Army) and other government department. The company had agreed to pay them a commission based on turnover achieved in various years. However, in event of non achievement of sales, a minimum commission was guaranteed to M/s Hitkari Potteries Ltd .Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that Tax Authorities below have fallen an error in considering it to be prior period expenses. The ld DR defended the order of the ld Tax Authorities below. 8. Now it can be appreciated from the matter on record that before the ld AO only settlement dated 18.06.2012 was filed and the other letter dated 24.01.2014 as filed was not settlement document or a bilateral document but a unilateral letter of the assessee. The ld CIT(A) in para 6.1.5 observes that appellant had submitted letter dated 24.01.2014. The amount has been forfeited by the Pr. Company under direction of this letter. The ld CIT(A) disbelieved this letter with following findings:- "Before me the letter was submitted but the said letter does not bear the stamp of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s paid by the appellant in present FY. Thus, the findings of the ld CIT(A) holding that payment was on account of royalty and a prior period expense cannot be sustained. The ground no 1 is allowed in favour of the assessee. 11. In regard to ground no 2 it was submitted that the Appellant had incurred Rs. 53,65,666/- towards business promotion expense. The Appellant had claimed Rs. 44,74,666/- as expenses toward business promotion pertaining to business activity of Appellant. The Appellant had voluntarily disallowed Rs. 8,91,000/- towards personal expenses of Managing Director/ Directors. It is pertinent to mention that the entire expenses has been made by Bank/Credit cards and as such are fully vouched leaving no scope for suspicion of wro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure." 15. As from plain reading of the provision, it is clear that for an expenditure to be allowable under section 37(1) of the Act, it is required that the expenditure is: - incurred during the previous year concerned and - not in the nature described under section 30 to 36 of the Act, - not capital expenditure or - not personal expenses of the assessee, but it should be laid out or expended wholly and exclusive for the purpose of business 16. There is no dispute that the expenditure was incurred in the previous yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Amounts 5-05-13 5-06-13 6-07-13 5-11-13 12-04-13 01-06-13 26-06-13 13-10-13 AMERICAN EXPRESS CREDIT CARD DAYAL OPTICALS NEW DELHI INDIA GREENWAYS SAREES CELEBRITY CRUISES MIAMI DELHI DUTY FREE-ins07 20000.00 f* 20000.00^ 69636.83^ 2805.71 03-06-13 03-06-13 06-05-13 03-09-13 03-11-13 22-02-14 25-02-14 25-02-14 INDUSIND BANK CREDIT CARD DUTYFREE Interest charges DUTY FREE DAYAL OPTICALS MINISREY OF COMPANY AF MINISREY OF COMPANY AF 9395.34 577.87 11338.41 100000.00 46227.23 263805.00 20-05-13 20-06-13 20-12-13 20-01-14 20-02-14 02-05-13 02-05-13 04-05-13 28-08-13 07-06-13 19-11-13 04-12-13 04-12-13 05-01-14 20-01-14 27-01-14 27-01-14 CITI BANK CREDIT CARD LOUIS VUITTON C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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