THE PR. COMMISSIONER OF INCOME TAX, PANAJI. vs. M/S. PUTZMEISTER INDIA PVT. LTD.,

TXA/28/2016HC BombayHCBM05003326201526 September 2016Author: F. M. REIS,HON'BLE KUM. JUSTICE NUTAN D. SARDESSAI3 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that there were no substantial questions of law arising for consideration under Section 260A of the Income Tax Act. The Court noted that the CIT(A) concluded that the disallowance of expenses was not warranted because the Revenue had failed to challenge the authenticity of the vouchers and the agreement produced by the assessee. The ITAT confirmed these findings, agreeing that since the Revenue had not disputed the genuineness of the advertisement payments, the expenses could not be disallowed. The Court found that the fact-finding authorities had categorically concluded that the amounts were actually spent on advertisements, as their genuineness was not disputed by the Revenue. The Revenue's counsel was unable to demonstrate any misreading or overlooking of specific material that would indicate the payments were doubtful. As there was no perversity in the findings of fact, no substantial questions of law arose. The appeal was accordingly rejected.

What were the facts?

The appeal by the Principal Commissioner of Income Tax, Panaji (the Revenue) challenges the orders of the Commissioner of Income Tax (Appeals) dated 22/11/2013 and the Income Tax Appellate Tribunal (ITAT) dated 10/06/2015. The dispute concerns the disallowance of advertisement expenses amounting to Rs. 22,42,303/- incurred by M/s. Putzmeister India Pvt. Ltd. (the assessee) for the assessment year not specified. The Assessing Officer disallowed these expenses, deeming them unreasonable compared to previous years and the assessee's business activities. The CIT(A) allowed the expenses, finding no challenge to the vouchers and agreement. The ITAT confirmed the CIT(A)'s findings.

What were the issues?

1. Whether there is a substantial question of law arising from the ITAT's order confirming the CIT(A)'s decision to allow advertisement expenses of Rs. 22,42,303/-, when the Assessing Officer had made a categorical finding that such expenses were doubtful. Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The Revenue argued that the Assessing Officer had made a categorical finding that the advertisement expenses were doubtful due to their huge amount and the assessee's business value. The CIT(A) erroneously justified these expenses based on an agreement. The ITAT confirmed the CIT(A)'s findings without considering the Assessing Officer's categorical finding of doubtfulness, thus raising substantial questions of law under Section 260A of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 28 OF 2016 THE PR. COMMISSIONER OF INCOME TAX, PANAJI. ... Appellant Versus M/S. PUTZMEISTER INDIA PVT. LTD., ... Respondent Ms. Asha A. Desai, Advocate for the appellant. Coram:- F. M. REIS & NUTAN D. SARDESSAI, JJ. Date:- 26th September, 2016 P.C.: Heard Ms. Asha Desai, learned Counsel appearing for the appellant.

The above appeal challenges the Order passed by the Commissioner of Income Tax (Appeals) dated 22/11/2013 and the Order passed by the Income Tax Appellate Tribunal dated 10/06/2015 whereby the appeals preferred by the appellant herein came to be dismissed.

Ms. Asha Desai, learned Counsel appearing for the appellant has taken us through the assessment carried out by the Assessing Officer to point out that the expenses incurred towards advertisement amounting in a sum of Rs.22,42,303/- were found unreasonable considering the expenses incurred during the previous

2 TXA/28/2016 years. The learned Counsel further points out that there is a categorical finding arrived at by the Assessing Officer to the effect that such expenses could not be allowed considering the huge amount claimed and the value of the business activities of the respondent-assessee. The learned Counsel further points out that the CIT(A) has erroneously justified such expenses, on the basis of the agreement produced on record. The learned Counsel further points out that the Income Tax Appellate Tribunal has confirmed the findings of the CIT(A) without considering that there was a categorical finding by the Assessing Officer to the effect that such expenses were doubtful in the facts and circumstances of the case. The learned Counsel, as such, submits that there are substantial questions of law on that count which require consideration in the present appeal.

We have considered the submissions of the learned Counsel. With the assistance of the learned Counsel, we have also gone through the record. The learned CIT(A) while examining the challenge to the disallowing of such expenses claimed by the respondent has come to the conclusion that as the appellant-Revenue has failed to challenge the authenticity of the vouchers produced by the respondent, as well as the agreement between the parties, the question of disallowing such expenses would not arise. The CIT(A) has examined the materials on record to come to the conclusion that there was no challenge to the genuineness of the expenses incurred

3 TXA/28/2016 by the respondent which are stated to be towards advertisements. The ITAT, whilst examining the appeal preferred by the appellants has confirmed such findings of fact arrived at by the CIT(A) to come to the conclusion that as the appellant-Revenue has not disputed the genuineness of such payment, the question of disallowing such expenses would not at all arise. In such circumstances, we find that the fact finding Authorities have categorically come to the conclusion that the amounts were actually spent towards advertisements as the genuineness thereof was not disputed by the appellant and, as such, there are no substantial questions which arise for consideration in the above appeal under Section 260A of the Income Tax Act. The learned Counsel appearing for the appellants, based on the material on record, was unable to point out that such findings of fact arrived at by the Authorities were by misreading or overlooking any specific material which would disclose that the genuineness of such payments were doubtful. In such circumstances, as there is no perversity in such findings of fact, there are no substantial questions of law for consideration in the present appeal under Section 260A of the Income Tax Act. The appeal stands accordingly rejected. NUTAN D. SARDESSAI, J. F. M. REIS, J. ssm.

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