THE DY. CIT, ANAND CIRCLE, ANAND vs. M/S. ANUPAM INDUSTRIES LTD., ANAND

The brief fact of the case is return of income declaring income of Rs. 8,70,75,800/- was filed on 30th Nov, 2014. Subsequently, the case was I.T.A No. 1624/Ahd/2017 A.Y. 2014-15 Page No 2 DCIT vs. M/s. Anupam Industries Ltd.

The assessing officer has not noticed that assessee has debited sales promotion expenses by the amount of Rs. 2,04,592/- for various kinds of gifts given by the assessee. The assessing officer has disallowed the whole expenses of Rs.2,04,592/- on the ground that assessee has failed to substantiate its claim with supporting evidences that these expenses were incurred for the business.

Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has partly allowed the appeal of the assessee by restricting the disallowance to the 50% of these expenses to the amount of Rs. 1,02,296/-.

We have heard the rival contentions and perused the material on record carefully. We have noticed that out of sale promotion expenses, the assessee has incurred the aforesaid expenses towards various gifts and presentations made to clients. The ld. CIT(A) has restricted the disallowance to the 50% of such expenses considering the turnover and income of the assessee shown during the year under consideration. After considering detailed findings of ld. CIT(A), we are inclined with the decision of restricting the disallowance of aforesaid expenses incurred in the form of gifts without supporting with specific evidences, therefore, we do not find any merit in this ground of appeal of the revenue and the same is dismissed. Disallowance u/s. 14A r.w. Rule 8D

During the course of assessment, the assessing officer observed that section 14A of the income tax act, 1961 provides for disallowance of expenditure in relation to income not includible in total income. The assessing officer was of the view that Rule 8D r.w.s. 14A of the act provides for disallowance of the expenditure even where the assessee in particular year had not earned any exempt income. Therefore, the assessing officer has computed disallowance as per section 14A r.w. rule 8D to the amount of Rs. 3,20,25,739/- and added to the total income of the assessee.

The assessee has preferred appeal before the ld. CIT(A). The ld. CIT(A) has restricted the addition to the amount of Rs. 2 lac on the ground of administrative expenses.

We have heard the rival contentions and perused the material on record . It is noticed that assessee has not earned any exempt income during the year under consideration and the Hon’ble Gujarat Hugh Court in the case of CIT vs. Corrtech Pvt. Ltd. (2014) 45 taxman.com 16 held that where assessee has not shown any exempt income there cannot be any expenses to be disallowed. In the light of the above facts and judicial findings, we do not find any merit in the ground of appeal, therefore, the same is dismissed.

In the result, the appeal of the revenue is dismissed.