M/S. NIMBARK GEMS,MUMBAI vs. ACIT-16(3), MUMBAI

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ITA 58/MUM/2019Status: DisposedITAT Mumbai14 October 2020AY 2009-102 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee's plea that these expenses were capital in nature, not revenue, was not properly considered by the lower appellate authority. The issue was restored to the CIT(A) for fresh adjudication.

What were the facts?

The assessee made cash payments for factory premises expenses, representative charges, and foreign travel expenses totaling Rs. 2,45,250. The lower authorities disallowed these expenses under Section 40A(3) of the Income Tax Act.

What were the issues?

Whether cash payments for factory premises expenses, representative charges, and foreign travel expenses are revenue or capital in nature and if Section 40A(3) disallowance is applicable.

Which sections of the Income-tax Act were involved?

Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VIRTUAL COURT

Before: SHRI S.S. GODARA & SHRI M.BALAGANESH

For Respondent: Smt. Kavita P. Kaushik, Sr.DR
Hearing: 14/10/2020Pronounced: 14/10/2020

PER S.S.GODARA (J.M): This Assessee’s appeal for A.Y.2009-10 arises from Mumbai’s order of Commissioner of Income Tax (Appeals)-30, in case No.CIT(A)-30/ACIT 19(3)/277/2011-12 dated 30/11/2018, in proceedings u/s.143(3) of the Income Tax Act, 1961 [hereinafter referred to as Act].

2.

None appears at the assessee’s behest. We have proceeded with the learned departmental representative’s arguments that both the lower authorities have rightly involved section 40A(3) disallowance after holding this tax payer to have made cash payments of factory premises expenses, representative charges and foreign travel expenses involving sums of Rs.1,81,600/-, Rs.30,000/-and Rs.33,650/-, respectively, totaling to Rs.2,45,250/-. The assessee’s first and foremost plea before the lower authorities was that impugned statutory provision does not apply in facts of the instant case since all these sums form part of the capital than revenue account. This aspect appears to have missed the learned lower appellate authority’s consideration as per its order under challenge. We therefore deem it appropriate to restore the issue back to CIT(A) for his appropriate adjudication as per law within three effective opportunities of hearing.

3.

The assessee’s appeal is allowed for statistical purpose in above facts.

Order pronounced in the open court on this 14/10 /2020

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