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TMI Blog2023 (10) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... detail with other company was also filed. Thus, we are not inclined to interfere in the decision of Ld. CIT(A) in following his findings in assessee s own case for A.Y. 2013-14. The ground is dismissed. Disallowance of packing expenses and office expenses - CIT(A) deleted the addition - HELD THAT:- The nature of business activity of the assessee was such which required extensive involvement of individuals and on that account certain expenditures if made on the support of self drawn vouchers, the same cannot be doubted when otherwise there is no defect in the books and the business turnover. Ld. CIT(A) has been reasonable to hold that such adhoc disallowances are not justified and the findings require no interference. The grounds are decided against the revenue. - Sh. M. Balaganesh, Accountant Member And Sh.Anubhav Sharma, Judicial Member For the Assessee : Dr. Rakesh Gupta, Adv Shri Somil Agarwal, Adv. For the Revenue : Shri Anuj Garg, Sr. DR ORDER PER ANUBHAV SHARMA, JM : The appeal is preferred by the Revenue against the order dated 02.06.2017 of Commissioner of Income Tax (Appeals)-4, New Delhi (hereinafter referred as Ld. First Appellate Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n treating the addition of Rs. 1,91,846/- made by the AO on account of disallowance of office expenses as eligible expenses under section 37 of the Act and subsequently deleting the same. 4. The appellant craves leave,, to add, alter or amend any ground of appeal raised above at the time of the hearing. 4. Heard and perused the record. 5. Ld. DR has submitted that Ld. CIT(A) has failed to appreciate the factual discussion of the issue while Ld. AR submitted that the disallowances were rightly deleted firstly; for the reason that there were consistently being claimed and in assessment year 2018-19 the assessment order passed u/s 143(3) does not make any addition in that regard. Further taking Bench through the submissions made before Ld. Tax Authorities, Ld. AR submitted that all the relevant evidences were before Ld. AO, however, he failed to take into consideration the same. Lastly, he submitted that disallowance on adhoc basis is not justified for which he relied the judgments of hon ble Supreme Court of India in the case of Pr. CIT vs. R.G.Buildwell Engineers Ltd. (2018) 99 taxmann.com 283 (Del) . 6. After taking into consideration the matter on record and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO. I find from the chart incorporated by the AO of the turnover and the expenses claimed by the assessee on business promotion, that for the assessment year under consideration turnover of the appellant assessee company increased from 27.91 crores in AY 2011-12 to Rs. 169.57 crores in AY 13-14 which is about 6 times, whereas the corresponding increase in expenses is 4.65 times. Thus, the expenses claimed have not increased in proportion to the increase in turnover and on the same side it cannot be brushed aside the nature of business carried out by the appellant requires expenditure on business promotion to promote its business. The AO disallowed 25% of the expenses claimed without bringing on record any specific name of any of the party in respect of whom any such distribution of expense is claimed, and any of such party would have denied to have received any such gift from the assessee company. Merely because in some of the cases as stated by the AO some complete details of that agent could not be provided cannot be a reasons to make a disallowance of 25% of the expenses claimed by the assessee on Business promotion expenses, when such expenses have not been considered as no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled list of distributors to whom gift items have been distributed and also furnished the comparative chart of turnover and expenses incurred on business promotion. The AO has also categorically stated in the impugned assessment order that assessee filed details of the expenses claimed stated to have been incurred. I find that the expenditure claimed by the appellant as business promotion expenses and the items claimed to be distributed by the assessee for which the details has been furnished by the assessee, was only for the purpose of business expediency and promotion of the business of the assessee in the nature of business carried out by the assessee, expenditure incurred on such promotional gifts cannot be considered ocher than for business needs of such companies until and unless some specific instance is brought on record by the assessee. In fact the disallowance has to be made on some material and it cannot be arbitrary. The AO failed to bring on record that assessee has claimed the excess expenditure as compared to earlier years when the sales of the year are considered. In the absence of any specific contrary evidences brought on record, I do not find any reason to make a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. This can be confirm from the following facts. Asstt. Year Turnover (In Crores) Net Profit (In Crores) Business Promotion /IR Expenses (In Crores) 2015-16- 341.10 43.43 4.57 2014-15 162.30 15.34 6.75 2013-14 169.57 16.01 5.58 2012-13 121.94 6.03 4.11 . The details of the item distributed as business promotion and list of the person to whom such items has been given are produced. 9. Ld. AR during the course of arguments has demonstrated that all the relevant details of the business promotion expenditure including a list of persons to whom such items has been given was produced. He also demonstrated that the area of interest of assessee company being FMCG distribution/ advertisement expenses form substantial part of the expenditure for which the comparative detail with ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employees of the business man. Such expenses may be on conveyance, purchase of milk, purchase of small petty items from nearby small shopkeepers so on and so forth. Therefore, merely because the AO found that some vouchers are self made or are paid in cash cannot be a reason to make any such addition and tha too in an adhoc manner. As the AO failed to specify any such expenses, I do not find any reason to sustain the addition made in an adhoc manner. Therefore, the adhoc addition made of Rs. 5,00,000/- is hereby deleted. This ground of appeal is allowed in favour of the assessee. 11. At the cost of repetiation the Bench can observe that the nature of business activity of the assessee was such which required extensive involvement of individuals and on that account certain expenditures if made on the support of self drawn vouchers, the same cannot be doubted when otherwise there is no defect in the books and the business turnover. Ld. CIT(A) has been reasonable to hold that such adhoc disallowances are not justified and the findings require no interference. The grounds are decided against the revenue. 12. C onsequently, the appeal of Revenue is dismissed. Order prono ..... X X X X Extracts X X X X X X X X Extracts X X X X
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