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TMI Blog2023 (6) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... but not furnished details of beneficiaries to whom these gift items were distributed - whether the expenses have been incurred for the purpose of the business and is not of capital in nature? - HELD THAT:- As there is no dispute that the expenses were incurred for the purpose of business and were not of capital expenditure, the same has to be allowed. But, at the same time, the quantum can be questioned for want of supporting evidences as the same were not justified by production of books of account. Therefore, in the interest of justice and fair play, we deem it fit to restrict the disallowance to 10% of the expenditure claimed under this head. Thus direct the AO to restrict the disallowance. Addition of overriding commission - justification of claim of expenditure and explain the basis of payment asked - as per AO justification for payment given by the assessee is too general and no specific information has been given justifying payment - CIT-A deleted the addition - HELD THAT:- It is true that in A.Y 2010-11 also, similar disallowance has been made and it is equally true that while making the disallowance for A.Y 2011-12, the AO has simply followed the findings given in A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debited in the trading account though it has direct link to the amount of sales, instead the trade discount has been debited to the profit and loss account. 7. The Assessing Officer concluded that trade discount is clearly a part of trading account and not of profit and loss account and, accordingly, recasted the trading account as under: 8. And as per the method adopted by the assessee, trading account is recast as under: 9. Comparative chart finally determined by the Assessing Officer is as under: A.Y Trade Discount G.P. rate N.P. rate 2012-13 14.74% 31.57% .93% 2011-12 19.77% 35.67% 1.36% 2010-11 9.58% 28.22% 1.70% 2009-10 15.18% 31.27% 1.95% 10. Accordingly, the GP rate declared by the assessee was not accepted and applying G.P rate of 18.66% for A.Y 2010-11, the Assessing Officer computed the GP for the A.Ys 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, sale is prime component to determine the GP ratio and if the sale factor is not comparable, resulting GP cannot be considered comparable. On totality of facts, we do not find any reason to interfere with the findings of the ld. CIT(A). The common grounds relating to GP addition in A.Y 2011-12 and 2012-13 are dismissed. 19. The next common grievance in all the three appeals relates to the deletion of addition made by the Assessing Officer on account of Scheme Expenses, though the quantum may differ. 20. While scrutinizing the return of income, the Assessing Officer noticed that the assessee has claimed expenses under the head Scheme Expenses . The assessee was asked to furnish details regarding the scheme with supporting documentary evidences and justification for payment of scheme expenses alongwith list of beneficiaries. 21. In its reply, the assessee stated that the items of the scheme were purchases and expenses booked under the scheme expenses. No party wise details have been maintained as the purchase items do not form part of stock. The assessee furnished copy of various schemes framed on quarterly basis. The Assessing Officer observed that though the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance to 14.92 lakhs in A.Y 2011- 12, Rs. 27.23 lakhs in A.Y 2012-13 and Rs. 30.34 lakhs in A.Y 2013-14. Thus, this common ground is partly allowed. 27. The third issue in A.Y 2011-12 relates to the deletion of addition made by the Assessing Officer on account of overriding commission amounting to Rs. 1,11,16,495/-. 28. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed an amount of Rs. 1,11,16,495/- on account of overriding commission as against an amount of Rs. 63,78,711/- claimed in the immediately preceding year. The assessee was asked to justify the claim of expenditure and explain the basis of payment. 29. The assessee filed detailed reply dated 29.01.2013. It was explained that the commission has been paid to few persons who helped the company in selling its products. It was explained that the commission has been paid to MAP Auto Ltd. for marketing and technical support given to it. 30. After going through the reply of the assessee, the Assessing Officer was of the opinion that the justification for payment given by the assessee is too general and no specific information has been given justifying paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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