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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 ..... be sustained. The ground no 1 is allowed in favour of the assessee. Addition of business promotion expense - Appellant had voluntarily disallowed towards personal expenses of Managing Director/ Directors - AR submitted that the Tax Authorities below have fallen in error in not appreciating that the personal expenditure of the directors were suo motto deducted while claiming the expenditure - HELD THAT:- The bench is of considered opinion that to substantiate the validity of the expenditure of the nature refered above it is necessary to establish that the same can be laid out wholly and exclusively for the purpose of business, however, the assessee failed to establish the same by filing any vouchers or other evidences which would have shown that these expenses were for the procurement of business or for business negotiations or specific business promotion activity. In case of business promotion expenses, the assessee is expected to show that the expenses intended to achieve any specific or general business target or how it could have helped the promotion of business or business interest of the assessee. Specially, when the expenses incurred are not supported by any vouchers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess promotion Expense Revenue Expenditure 8,94,933/- iv) Disallowance of Penalties- Contractual Revenue Expenditure 75,960/- v) Disallowance of Repair and Maintenance of car Revenue Expenditure 80,558/- Vi) Disallowance of Employee's contribution to PF. Revenue Expenditure 19,629/- 3. In appeal before the ld CIT(A) the assessee was able to get relief with regard to disallowances of travelling allowances, disallowances of canteen store department, disallowances on account of repair and maintenance of cars and disallowances on account of delay in deposit of employees contribution to EPF. 4. However, the disallowance of the commission expenses as prior period expenses and disallowance of the business promotion expenses @20% ad hoc was not only sustained but enhanced to whole of the amount. The assessee is in appeal before Tribunal with the following grounds:- 1. That disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited. It was submitted that the amount of Rs. 33,27,279/- was not paid during the year but was lying the Hitkari Potteries ltd and same was forfeited for loss of commission of short sales and TDS was paid upon same. It was thus submitted 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 company M/s Hitkari Potteries Private Limited. Also, it is noted that no amount is mentioned in such letter and no confirmation of account is furnished on record substantiating from the other party that the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reduced from the credit card expenditure which included purchases date 06.05.2013 with Indusind Bank credit card at duty free shop of Rs. 9395.34, which has been referred by ld CIT(A) in para 6.3.2 as having booked as business expenses. It was submitted that as the nature of business required frequent travelling and credit card in the name of directors of the company were use to entertain the clients the same are allowable as business promotion expenses. The ld DR however supported the finding of the Tax Authorities below. 13. In regard to this ground it is relevant to reproduce section 37(1) of the Act along with explanation:- 37. (1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head Profits and gains of business or profession . Explanation 1.--For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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