Allow ability of expenditure for Income tax assessment

Last updated: 31 October 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The facts of the case of the appellant are very simple in the sense that the assessee firm has debited a total of Rs.8,21,885/- to its Profit & Loss a/c which are routine expenses like expenditure for income tax assessments, trade marks, and other legal cases etc. The maximum that Assessing Officer could have disallowed is Rs.8,21,855/- and that too after giving a finding of fact that the expenditure so disallowed was incurred for earning the exempt income. However, the ld.AO proceeded to apply Rue 8D and arrived at an arithmetical figure of Rs.33,05,662/-, which to my mind is travesty of justice. It is illogically to make disallowance on weighted basis. The observation of my ld.Predecessor in assessee’s own case for preceding Assessment Year that there is no equity in tax laws is respectfully disagreed. Therefore, the addition made by the Assessing Officer to the tune of Rs.33,05,662/- is deleted

Citation :
ACIT, Circle 24(1) New Delhi (Appellant) Vs.M/s Bharti Enterprises H 5/12, Qutab Ambience Mehrauli road, New Delhi PAN: AAAFB 2416 M (Respondent)

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCHES: “A” New Delhi

BEFORE SHRI AD JAIN, JUDICIAL MEMBER AND

SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER

ITA No: 4828/Del/2010

Assessment Year: - 2007-08

ACIT, Circle 24(1)

New Delhi

(Appellant)

Vs.

M/s Bharti Enterprises

H 5/12, Qutab Ambience

Mehrauli road, New Delhi

PAN: AAAFB 2416 M

(Respondent)

Appellant by: Shri Pirthi Lal, Sr.D.R.

Respondent by: Shri Anil Bhalla, C.A.

O R D E R

PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER

This is an appeal filed by the Revenue directed against the order of the Ld. Commissioner of Income Tax (Appeals)-XXIII, New Delhi dt. 30.8.2010 pertaining to the Assessment Year 2007-08 on the following grounds.

“1. On the facts and on circumstances of the case, Ld.CIT(A) has erred in deleting the addition of Rs.33,05,662/- being expenditure incurred in relation to exempt income under Section 10(34).”

2. We have heard Shri Pirthi Lal, Sr.D.R. on behalf of the Revenue and Shri Anil Bhalla, C.A. on behalf of the assessee. The Commissioner of Income Tax (Appeals) at para 4 held as follows:-

“4. The facts of the case of the appellant are very simple in the sense that the assessee firm has debited a total of Rs.8,21,885/- to its Profit & Loss a/c which are routine expenses like expenditure for income tax assessments, trade marks, and other legal cases etc. The maximum that Assessing Officer could have disallowed is Rs.8,21,855/- and that too after giving a finding of fact that the expenditure so disallowed was incurred for earning the exempt income. However, the ld.AO proceeded to apply Rue 8D and arrived at an arithmetical figure of Rs.33,05,662/-, which to my mind is travesty of justice. It is illogically to make disallowance on weighted basis. The observation of my ld.Predecessor in assessee’s own case for preceding Assessment Year that there is no equity in tax laws is respectfully disagreed. Therefore, the addition made by the Assessing Officer to the tune of Rs.33,05,662/- is deleted.”

3. The assessee himself had disallowed 1/10th of the total expenses debited to Profit and Loss a/c. Under the circumstances. We uphold the order of the First Appellate Authority and dismiss this appeal of the Revenue.

4. In the result the appeal of the Revenue is dismissed.

Order pronounced in the Open Court on 5th September, 2012.

Sd/- Sd/-

(A.D. JAIN) (J.SUDHAKAR REDDY)

JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: the 5th September, 2012

*mangavathy

Copy of the Order in ITA no. 4828/Del/2010 for the Assessment Year 2007-08 forwarded to:

1. Appellant;

2. Respondent;

3. CIT;

4. CIT(A);