M/s Sandesh Motors, Shimoga v. ITO, Shimoga

ITA 904/BANG/2010 | misc
Pronouncement Date: 16-02-2012 | Result: Allowed

Appeal Details

RSA Number 90421114 RSA 2010
Assessee PAN AAZFS1704R
Bench Bangalore
Appeal Number ITA 904/BANG/2010
Duration Of Justice 1 year(s) 7 month(s) 1 day(s)
Appellant M/s Sandesh Motors, Shimoga
Respondent ITO, Shimoga
Appeal Type Income Tax Appeal
Pronouncement Date 16-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 16-02-2012
Date Of Final Hearing 13-02-2012
Next Hearing Date 13-02-2012
Assessment Year misc
Appeal Filed On 15-07-2010
Judgment Text
PAGE 1 OF 12 ITA NO.9 04/BANG/2010 1 INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BEFORE SHRI N K SAINI ACCOUNANT MEMBER AND SHRI GEORGE GEORGE K JUDICIAL MEMBER ITA NO.904/BANG/2010 (ASST. YEAR 2006-07) M/S SANDESH MOTORS N T ROAD SHIMOGA. PA NO.AAZFS1704R VS THE INCOME TAX OFFICER WARD-1 SHIMOGA. (APPELLANT) (RESPONDENT) DATE OF HEARING : 13.02.2012 DATE OF PRONOUNCEMENT : 16.02.2012 APPELLANT BY : SHRI SRINIVASAN C.A. RESPONDENT BY : SHRI SARAVANAN B JT. CIT O R D E R PER GEORGE GEORGE K : THIS APPEAL INSTITUTED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) HUBLI DATED 09.06.2010. T HE RELEVANT ASSESSMENT YEAR IS 2006-07. 2. IN ALL THE ASSESSEE HAS RAISED SIX GROUNDS OF APPEAL. GROUND NOS. 1 AND 6 ARE GENERAL IN NATURE AND NO SPECIFIC ADJUDICATION IS CALLED FOR. HENCE THE SAME ARE DISMISSED. 3. GROUND NO.5 WAS NOT PRESSED DURING THE COURSE O F HEARING. HENCE THIS GROUND IS DISMISSED AS NOT PRESSED. PAGE 2 OF 12 ITA NO.9 04/BANG/2010 2 4. THE REMAINING EFFECTIVE GROUNDS NAMELY GROUND N OS.2 3 AND 4 READS AS FOLLOWS:- 2) THE LEARNED CIT(A) IS NOT JUSTIFIED IN UPHOLDING TH E DISALLOWANCE OF RS.5 12 675/- IN RESPECT OF THE COMMISSION PAID HOLDING THAT THE SAME RELATES TO TH E EARLIER FINANCIAL YEAR UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE. 3) THE LEARNED CIT(A) IS NOT JUSTIFIED IN UPHOLDING TH E DISALLOWANCE OF EXPENSES UNDER VARIOUS HEADS MENTIO NED BELOW AGGREGATING TO RS.6 07 372/- UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE:- (A) TRADE DISCOUNTS RS.3 52 734/- (B) DISCOUNT RS.1 15 258/- (C) SALARY RS. 18 845/- (D) OFFICE EXPENSES RS. 19 535/- (E) ADVERTISEMENT EXPENDITURE RS.1 01 000/- RS.6 07 372/- 4) WITHOUT PREJUDICE TO THE ABOVE THE ADDITIONS SU STAINED BY THE LEARNED CIT(A) IS HIGHLY EXCESSIVE AND LIABLE TO BE DELETED. 4.1 BRIEFLY STATED THE FACTS ARE AS FOLLOWS:- THE ASSESSEE IS A FIRM. IT IS A DEALER IN TWO WH EELERS. RETURN OF INCOME WAS FILED ON 25/10/2006 DECLARING AN INCO ME OF RS.2 40 500/-. THE SCRUTINY ASSESSMENT UNDER SECTION 143(3) WAS COM PLETED VIDE ORDER DATED 29/12/2008 FIXING THE TOTAL INCOME AT RS.14 0 8 670/-. THE ASSESSMENT WAS COMPLETED BY MAKING THE FOLLOWING DIS ALLOWANCES:- I) DISALLOWANCE OF COMMISSION : RS.5 12 675/- II) DISALLOWANCE OF EXPENSES UNDER VARIOUS HEADS : RS.6 07 372/- PAGE 3 OF 12 ITA NO.9 04/BANG/2010 3 DISALLOWANCE OF COMMISSION OF RS.5 12 675/- IN THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEB ITED A SUM OF RS.5 12 675/- UNDER THE HEAD COMMISSION PAYABLE FO R THE FINANCIAL YEAR 2004-05. THE ASSESSEE WAS DIRECTED TO EXPLAIN AS T O WHY THE COMMISSION PERTAINING TO EARLIER PERIOD SHOULD NOT BE DISALLOW ED. THE ASSESSEE FILED ITS EXPLANATION VIDE ITS LETTER DATED 19/12/2008. IT W AS CONTENDED THAT THE COMMISSION EXPENDITURE WAS NOT CLAIMED IN THE FINAN CIAL YEAR 2004-05 AND TDS IN RESPECT OF THIS PAYMENT WAS MADE DURING THE F INANCIAL YEAR 2005-06 RELEVANT TO THE ASSESSMENT YEAR 2006-07 AND HENCE E XPENDITURE ON ACCOUNT OF COMMISSION IS AN ALLOWABLE EXPENDITURE IN THE AS SESSMENT YEAR 2006-07. THE ASSESSEE ALSO RELIED ON THE ORDER OF THE TRIBUN AL IN THE CASE OF ABN AMRO V JCIT (96 TTJ 1041). THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON TWO COUNTS FIRSTLY THE ASSESSEE HA D NOT PRODUCED ANY EVIDENCE IN SUPPORT OF THE COMMISSION EXPENDITURE A ND SECONDLY THAT THE SAID EXPENDITURE NEITHER RELATE TO THE YEAR UNDER C ONSIDERATION NOR IT IS FOUND REFLECTED IN THE BALANCE SHEET AS ON 31/3/200 5. 4.2 AGGRIEVED BY THE DISALLOWANCE OF COMMISSION EXP ENDITURE THE ASSESSEE CARRIED THE ISSUE IN APPEAL BEFORE THE FIR ST APPELLATE AUTHORITY. 4.3 BEFORE THE FIRST APPELLATE AUTHORITY THE LEARN ED AR FILED THE CONFIRMATION IN RESPECT OF FIVE PARTIES TO WHOM TH E COMMISSION IS CLAIMED TO HAVE BEEN PAID. THE FIRST APPELLATE AUTHORITY CALLE D FOR A REMAND REPORT AND ON RECEIPT OF THE SAME AFTER ELABORATELY CONSIDERIN G THE SUBMISSIONS DISMISSED THE APPEAL FILED BY THE ASSESSEE. THE CIT (A) NOTED THE PAGE 4 OF 12 ITA NO.9 04/BANG/2010 4 INCONSISTENCY IN THE CONFIRMATION FILED BEFORE HIM A ND THAT OF THE TWO CONFIRMATION LETTERS FILED BEFORE THE ASSESSING OFF ICER IN THE COURSE OF REMAND PROCEEDINGS. THE RELEVANT FINDING OF THE CI T(A) READS AS FOLLOWS:- TAKING INTO CONSIDERATION OF ALL THESE CUMULATIVE FACTORS IT IS SEEN THAT THERE EXISTS INHERENCE CONTRADICTION BETWEEN THE CONFIRMATIONS FILED IN RE SPECT OF 2 PARTIES AND THE REPLIES SUBMITTED BY THESE PART IES BEFORE THE ASSESSING OFFICER DURING REMAND PROCEEDI NGS. THE REMAINING 3 PARTIES IN RESPECT OF WHOM CONFIRMA TIONS HAVE BEEN FILED HAVE NOT RESPONDED BEFORE THE ASSES SING OFFICER AND NO SUPPORTING EVIDENCE HAS BEEN FILED B Y THE APPELLANT IN SUPPORT OF HIS CLAIM. THE APPELLANT H AS NOT BEEN ABLE TO EXPLAIN THE TRANSACTIONS PERTAINING TO FY 04-05 IN RESPECT OF WHICH COMMISSION EXPENDITURE IS CLAIMED TO HAVE BEEN PAID DURING THE FY 05-06. FUR THER THAT THE APPELLANT HAS CREDITED THE ACCOUNTS OF THE SE PARTIES IN FY 05-06 WHEREAS THE LIABILITY IS CLAIMED TO BE PERTAINING TO FY 04-05 WHICH IS NOT REFLECTED IN TH E AUDITED BALANCE SHEET NOR THE SERVICES RENDERED ARE PROVED. THEREFORE I DECLINE TO INTERFERE WITH THE ORDER OF THE ASSESSING OFFICER AND THE ADDITION MADE BY ASSESSING OFFICER OF RS.5 12 675/- IS CONFIRMED. 4.4 AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US . THE ASSESSEE HAS FILED A PAPER BOOK CONSISTING OF 14 PAGES INTER ALIA CONTAINING COPY OF WRITTEN SUBMISSIONS COPY OF REMAND REPORT AND COPY O F CONFIRMATION FILED BY VARIOUS PARTIES. 4.5 THE LEARNED AR SUBMITTED THAT THE COMMISSION I S BASED ON THE VEHICLES SOLD BY THE AGENTS AND THE COMMISSIO N THAT IS PAID DURING THE RELEVANT ASSESSMENT YEAR IS BASED ON THE NUMBER OF V EHICLES SOLD DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 20 05-06. IT WAS PAGE 5 OF 12 ITA NO.9 04/BANG/2010 5 CLARIFIED THAT AS PER THE AGREEMENT THE COMMISSION IS PAYABLE ON THE TURNOVER OF A PARTICULAR FINANCIAL YEAR IN THE BEGIN NING OF THE NEXT FINANCIAL YEAR. IT WAS SUBMITTED THAT THE NUMBER OF VEHICLES THAT IS SOLD IN THE FINANCIAL YEAR 2004-05 IS THE CRITERIA FOR DETERMINI NG THE COMMISSION THAT IS PAID IN THE BEGINNING OF THE FINANCIAL YEAR 2005-06 . THEREFORE IT WAS SUBMITTED THAT SINCE THE COMMISSION HAS BEEN JUSTIF IABLY PAID IN THE FINANCIAL YEAR 2005-06 RELEVANT TO THE CONCERNED ASS ESSMENT YEAR THE SAME OUGHT TO BE ALLOWED AS DEDUCTION. IT WAS FURTHER S UBMITTED THAT THE INCOME TAX AUTHORITIES WERE NOT JUSTIFIED IN DISALLOWING T HE GENUINE COMMISSION PAYMENT WITHOUT MAKING PROPER ENQUIRY WITH THE PAYEES. IT WAS FURTHER CONTENDED THAT THE CONFIRMATIONS OF UMESH H N DEVA RAJ AND DINESH (RECIPIENTS OF COMMISSION) WERE RECEIVED BY THE ASSE SSING OFFICER SUBSEQUENT TO THE FORWARDING OF THE REMAND REPORT T O THE FIRST APPELLATE AUTHORITY. 4.6 THE LEARNED DR ON THE OTHER HAND HIGHLIGHTED T HE INCONSISTENCY THAT WAS NOTED BY THE CIT(A) WITH REFERENCE TO THE C ONFIRMATION FILED BEFORE HIM AND THE TWO CONFIRMATIONS FILED BEFORE T HE ASSESSING OFFICER IN THE COURSE OF REMAND PROCEEDINGS. THE LEARNED DR S TRONGLY RELIED ON THE FINDING/CONCLUSION OF THE INCOME TAX AUTHORITIES. 4.7 IN THE REJOINDER THE LEARNED AR SUBMITTED THA T THE INCONSISTENCY MENTIONED IN THE CIT(A)S ORDER IS OUT OF CONTEXT FOR DETERMINING AS TO WHETHER THE COMMISSION PAYMENT IS GENUINE OR NOT. IT WAS SUBMITTED THAT THE AUTHORITIES WERE NOT JUSTIFIED I N DISALLOWING THESE PAGE 6 OF 12 ITA NO.9 04/BANG/2010 6 EXPENSES WITHOUT VERIFYING THE SAME WITH THE PAYEES T O WHOM THE COMMISSION HAS BEEN PAID. 4.8 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THE ASSESSEE HAD PLACED BEFORE THE INCO ME TAX AUTHORITIES THE JOURNAL VOUCHER AND LEDGER ACCOUNT OF VARIOUS PAYEES TO WHOM THE COMMISSION IS CREDITED BY MAKING NECESSARY TDS AS PER LAW. BEFORE THE FIRST APPELLATE AUTHORITY CONFIRMATION LETTERS WERE ALSO FILED FROM THE FOLLOWING PAYEES TO WHOM THE COMMISSION IS PAID:- NET TDS 1. SANDESH AGENCY SORAB RS.1 29 206 RS.6 944 2. SANDESH AUTOMOBILES SHIKARIPURA RS.1 10 511 RS. 5 933 3. SANDESH SERVICE CENTRE BHADRAVATHI RS.1 04 912 RS.5 638 4. KATYAYINI MOTORS THIRTHAHALLI RS.1 08 874 RS.5 852 5. SANDESH ENTERPRISES RIPPONPET RS. 33 025 RS.1 775 RS.4 86 528 RS.26 148 TOTAL = RS. 5 12 675/- 4.9 IT IS THE CLAIM OF THE ASSESSEE THAT AS PER TH E AGREEMENT THE COMMISSION IS PAYABLE IN THE BEGINNING OF THE NEXT F INANCIAL YEAR. DURING THE COURSE OF REMAND PROCEEDINGS OUT OF THE FIVE PARTI ES TO WHOM THE COMMISSION HAS BEEN PAID ONLY TWO PARTIES HAD RESPO NDED IN TIME. THE OTHER THREE PARTIES DULY ACKNOWLEDGED THE RECEIPT OF COMMI SSION PAYMENT AND THE CONFIRMATION LETTERS WERE FORWARDED TO THE ASSESSIN G OFFICER VIDE LETTER DATED 8/6/2010. HOWEVER THE REMAND REPORT WAS REC EIVED BY THE FIRST APPELLATE AUTHORITY ON 7/6/2010. HENCE THE LETTERS OF THE THREE PARTIES WERE NOT NOTED BY THE ASSESSING OFFICER IN HIS REMAN D REPORT TO THE FIRST APPELLATE AUTHORITY. WE ARE OF THE VIEW THAT THE AU THORITIES OUGHT TO HAVE MADE ENQUIRIES WITH THE PAYEES BEFORE MAKING DISALLO WANCE OF THE PAGE 7 OF 12 ITA NO.9 04/BANG/2010 7 EXPENDITURE. THE CONTRADICTIONS THAT ARE NOTED BET WEEN THE TWO CONFIRMATIONS FILED BEFORE THE ASSESSING OFFICER IN THE COURSE OF REMAND PROCEEDINGS AND BEFORE THE FIRST APPELLATE AUTHORIT Y WERE NOT PUT TO THE ASSESSEE BEFORE ADVERSE ORDERS WERE PASSED AGAINST IT. IN THE INTEREST OF JUSTICE WE ARE OF THE VIEW; THIS MATTER NEEDS TO B E RESTORED TO THE ASSESSING OFFICER WHO SHALL EXAMINE THE ISSUE AFRE SH. THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTUNITY OF HEARING BEFORE T HE ISSUE IS DECIDED. IT IS ORDERED ACCORDINGLY. DISALLOWANCE OF EXPENSES UNDER VARIOUS HEADS AMOUNT ING TO RS.6 07 372/- 5. IN THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT THE ASSESSEE HAD DEBITED VARIOUS EXPEN DITURES TO THE TUNE OF RS.6 07 372/-. THE SAID EXPENSES UNDER DIFFERENT H EADS ACCORDING TO THE ASSESSING OFFICER WAS PERTAINING TO EARLIER FINANC IAL YEAR 2004-05. THE DETAILS OF THE EXPENDITURE ARE AS FOLLOWS:- SL. NO. DATE OF TRANSACTION PARTICULARS AMOUNT IN RS. 1. 01/04/2005 TRANSFERRED TO DISCOUNT 3 52 734 2. 01/04/2005 DISCOUNT PAYABLE FOR 2004-05 1 15 258 3. 01/04/2005 SALARY ADVANCE 2004-05 18 845 4. 31/03/2006 OFFICE EXPENSES BROUGHT FORWARD FROM PREVIOUS YEAR (2004-05) 19 535 5. 01/06/2005 PRESS ADS AT RS.500 PER VICTOR GX- FEB. 2005 1 01 000 TOTAL 6 07 372 5.1 THE ASSESSING OFFICER NOTICED THE ABOVE SAID E XPENSES WERE SHOWN AS OUTSTANDING LIABILITIES. FOR WANT OF ANY E VIDENCE OR PROPER EXPLANATION THE ASSESSING OFFICER DISALLOWED THE E XPENDITURE CLAIMED PAGE 8 OF 12 ITA NO.9 04/BANG/2010 8 PERTAINING TO THE EARLIER FINANCIAL YEAR 2004-05 AS NEITHER EXPLAINED NOR FOUND REFLECTED IN THE BALANCE SHEET AS ON 31/3/200 5. 5.2 AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. BEFORE THE FIRST APP ELLATE AUTHORITY IT WAS SUBMITTED THAT IN RESPECT OF TRADE DISCOUNT AND DIS COUNT THOUGH IT IS TERMED AS DISCOUNT IT IS IN THE NATURE OF BAD DEBT S. IT WAS SUBMITTED THAT THE VEHICLES WERE SOLD TO VARIOUS BUYERS DURING THE EARLIER PERIOD AND THIS ACCOUNT WAS OUTSTANDING AS SUNDRY DEBTORS AND DURING THE CURRENT YEAR IT IS WRITTEN OFF AS BAD DEBT. THEREFORE IT WAS SUBMITT ED THAT IT IS AN ALLOWABLE EXPENDITURE UNDER SECTION 36(VII) OF THE ACT. 5.3 THE CIT(A) HOWEVER REJECTED THE CLAIM OF THE A SSESSEE BY OBSERVING THUS :- ON CAREFUL EXAMINATION OF THE FACTS I DONT FIND SUBSTANCE IN THE SUBMISSIONS MADE BY THE APPELLANT. THE CLAIM OF THE APPELLANT IS THAT THE EXPENDITURE PERT AINS TO FY 04-05 REMAINS UNSUBSTANTIATED W.R. TO THE AUDITE D BOOKS OF THE APPELLANT FOR FY 04-05. THE EXPENDITU RE CLAIMED TO HAVE BEEN INCURRED IN THE NATURE OF DISC OUNT IS NEITHER PROVED BEFORE ASSESSING OFFICER NOR SUCH EXPENDITURE IS INCURRED IN THE RELEVANT FINANCIAL YE AR 2005-06. THE CONDITIONS STIPULATED UNDER SECTION 3 6(VII) ARE NOT SATISFIED IN THE CASE OF THE APPELLANT THE REFORE THE CLAIM OF THE APPELLANT CANNOT BE ALLOWED AS BAD DEBTS. THE ISSUE IS LARGELY IDENTICAL TO THAT OF THE ISSUE COVERED IN GROUND NO.1 ABOVE THEREFORE FOR THE DETAILED R EASONS GIVEN THEREIN I DECLINE TO INTERFERE IN THE ORDER OF THE ASSESSING OFFICER AND THE ADDITIONS MADE ARE SUSTAI NED FIRSTLY THAT THE EXPENDITURE IS CLAIMED TO BE PERTA INING TO EARLIER YEAR 2004-05 SECONDLY THAT SUCH EXPENSES PAGE 9 OF 12 ITA NO.9 04/BANG/2010 9 CLAIMED TO BE PERTAINING TO EARLIER FINANCIAL YEAR 2 004-05 HAVE NOT BEEN SHOWN AS LIABILITY IN THE BALANCE SHE ET AS ON 31/03/2005 AND THIRDLY THAT THE NECESSARY PROOF IN SUPPORT OF EXPENDITURE HAVING INCURRED WAS NOT PROD UCED BEFORE ASSESSING OFFICER AS WELL AS DURING APPELLAT E PROCEEDINGS. THEREFORE THE ADDITION MADE BY ASSESS ING OFFICER TO THE TUNE OF RS.6 07 372/- IS CONFIRMED. 5.4 THE LEARNED AR REITERATED THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORITIES. THE ESSENCE OF THE SAME RE ADS AS FOLLOWS:- DISALLOWANCE OF EXPENDITURE OF DISCOUNT OF RS.3 52 734/- AND RS.1 15 258/-. THE ASSESSEE HAS SOLD VEHICLES TO VARIOUS BUYERS D URING EARLIER YEARS. THE ACCOUNT WAS OUTSTANDING IN SUNDRY DEBTORS ACCOUNT. DURING THIS CURRENT YEAR THE SAME IS DEBITED TO DISCOUNT ACCOUN T. EVEN THOUGH THE WORD DISCOUNT IS USED IN OUR ACCOUNTING RECORDS TH E SAME IS IN THE NATURE OF BAD DEBTS ONLY AND ONCE THE DISCOUNT IS DEBITED TO P ROFIT AND LOSS ACCOUNT AS BAD DEBTS THE SAME IS ALLOWABLE AS EXPENDITURE UNDE R SECTION 36(VII) OF THE ACT. IN EARLIER YEARS THE AMOUNT WAS NOT TRANSFERR ED TO DISCOUNT ACCOUNT OR BAD DEBT ACCOUNT WITH THE EXPECTATION THAT SAME AMOUNT MAY BE RECOVERED OUT OF THE DEBIT BALANCE. NOW DURING TH IS YEAR THE SAME IS WRITTEN OFF AS BAD DEBT AND TRANSFERRED TO DISCOUNT ACCOUNT. AS SUCH THE EXPENDITURE IS ALLOWABLE UNDER SECTION 36(VII) OF T HE ACT WITHOUT ANY FURTHER PROOF. THE DEBIT BALANCE HAS ARISEN BECAUSE OF SALES MAD E TO BUYERS IN EARLIER YEARS. THE SALE PROCEEDS ARE CREDITED TO PR OFIT AND LOSS ACCOUNTS ONLY. PAGE 10 OF 12 ITA NO. 904/BANG/2010 10 NOW WE ENCLOSE THE PARTICULARS OF NAME OF THE PA RTY INVOICE NUMBER AND DATE OF SALE AMOUNT OUTSTANDING AND WRI TTEN OFF DURING THE ASSESSMENT YEAR 2006-07. WE ALSO ENCLOSE SOME OF TH E INVOICE COPIES FOR REFERENCE. DISALLOWANCE OF SALARY ADVANCE OF RS.18 845/- THE SALARY ADVANCE WAS GIVEN TO VARIOUS EMPLOYEES. MAJORITY OF THE EMPLOYEES HAVE LEFT THEIR EMPLOYMENT AND THE SAME IS DEBITED TO PROFIT AND LOSS ACCOUNT AS LOSS AND AS SUCH THE SAME IS A LLOWABLE AS BAD DEBT UNDER SECTION 36(VII) OF THE ACT. OFFICE EXPENSES RS.19 535/- THESE EXPENSES INCURRED ARE AS UNDER:- A) PURCHASE OF COMPUTER STATIONERY FROM DIVINE TECHNICAL RS. 9935.00 B) SECURITY CHARGES PAID TO GARDEN SECURITY AGENCY RS. 9600.00 RS.19 535.00 EVEN THOUGH THE EXPENDITURE IS NOT VOUCHED THE S AME IS ALLOWABLE. MARKETING EXPENDITURE RS.1 01 000/- TVS MOTOR COMPANY HAS DEBITED OUR ACCOUNT ON 1/6/ 2005 AS OUR SHARE OF MARKETING EXPENDITURE AND THE SAME IS DEBITED TO MARKETING EXPENDITURE IN OUR BOOKS. AS A PROOF OF THIS EXPEN DITURE WE HAVE ALREADY SUBMITTED THE LEDGER ACCOUNT OF TVS MOTOR CO. BEFOR E THE AUTHORITIES. THE AUTHORITIES WITHOUT MAKING ANY CROSS VERIFICATION WI TH OUR PRINCIPALS IS ERRED IN DISALLOWING THIS EXPENDITURE. WE ENCLOSE HEREWI TH THE DEBIT ADVICE PAGE 11 OF 12 ITA NO. 904/BANG/2010 11 RECEIVED FROM TVS MOTOR CO. AND LEDGER ACCOUNT. TH E AMOUNT DEBITED BY OUR PRINCIPALS ITSELF IS SUFFICIENT PROOF OF SUCH E XPENDITURES AND THE AUTHORITIES OUGHT TO HAVE ALLOWED THE EXPENDITURE. 5.5 THE LEARNED DR ON THE OTHER HAND RELIED ON THE CONCLUSION/FINDING OF THE INCOME TAX AUTHORITIES. 5.6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS ON RECORD. THE ENTIRE SUM OF RS.6 07 372/- WAS ADD ED BACK TO THE ASSESSEES TOTAL INCOME AS THE ASSESSEE WAS NOT AB LE TO PRODUCE EVIDENCE/PROOF WITH REFERENCE TO INCURRING OF THIS EXPENDITURE DURING THE CONCERNED ASSESSMENT YEAR. THE VIEW TAKEN BY THE ASS ESSING OFFICER WAS AFFIRMED BY THE FIRST APPELLATE AUTHORITY BY HOLDING THAT THE EXPENDITURE CLAIMED WHICH PERTAINS TO THE EARLIER FINANCIAL YEAR NAMELY 2004-05 HAS NOT BEEN SHOWN AS A LIABILITY IN THE BALANCE SHEET A S ON 31/3/2005 AND ALSO FOR THE REASON THAT NECESSARY PROOF IN SUPPORT OF TH E EXPENDITURE HAS NOT BEEN PRODUCED. IT IS THE CLAIM OF THE ASSESSEE THA T THE VEHICLES WERE SOLD IN THE PREVIOUS YEARS AND THE OUTSTANDING AMOUNTS COULD NOT BE RECOVERED THE SAME WAS WRITTEN OFF AS BAD DEBT. IT WAS SUBMITTED THAT THE SAID AMOUNTS WERE WRITTEN OFF IN THE BOOKS OF ACCOUNT DURING THE RELEVANT ASSESSMENT YEAR AND THE ASSESSEE HAS SATISFIED THE CONDITIONS S TIPULATED UNDER SECTION 36(VII) OF THE ACT. WITH REFERENCE TO THE EXPENDIT URE SUCH AS SALARY ADVANCE OFFICE EXPENSES ADVERTISEMENT EXPENSES W E FIND THAT THERE IS NO DISCUSSION BY THE FIRST APPELLATE AUTHORITY WHILE SU STAINING THE ASSESSMENT ORDER. THE FACTS ARE NOT VERY ELABORATELY CONSIDERED WITH REFERENCE TO EACH OF THE EXPENSES WHICH ARE DISALLOWED. THEREF ORE IN THE INTEREST OF PAGE 12 OF 12 ITA NO. 904/BANG/2010 12 JUSTICE WE ARE OF THE VIEW THAT THE ISSUE OF CLAIM OF EXPENDITURE TO THE TUNE OF RS.6 07 372/- REQUIRES RE-EXAMINATION. ACC ORDINGLY WE RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER. HE SH ALL DISPOSE OF THE MATTER AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IT IS ORDERED ACCORDINGLY. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DAY OF FEBRUARY 2012 SD/- SD/- (N K SAINI) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO:- 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONC ERNED 4. THE CIT(A) CONCERNED 5. THE DR 6. GF MSP/- BY ORDER ASST. REGISTRAR ITAT BANGALORE.