GNB MOTORS (P) LTD. ,KOLKATA vs. ITO,WD-13(1), KOLKATA, KOLKATA

O R D E R

PER DR. MANISH BORAD, ACCOUNTANT MEMBER:

“1. For that on the facts and in the circumstances of the case the Ld CIT(Appeals) NFAC was wrong in confirming the disallowance of Rs 25,99,097/- break up of which as follows : a) U/S 37 (2b) in respect of advertisement - Rs 25,38,991/- b) U/S 36(l)(va) in respect of delay in payment of provident Fund- Rs 2,40,106/- Assessment Year: 2022-23 GNB Motors Private Limited 2 2. For that on the facts and in the circumstances of the case the Ld. ClT(Appeals) was wrong in not considering submissions made before him by the appellant in respect of disallowance of advertisement expenses of Rs 25,38,991/- and the certificate of the Auditor stating that the expenses were not made to the political parties.

3. First issue for our consideration is regarding disallowance u/s 37(2b) of the Act at Rs.25,38,991/- paid towards advertisements to political party. We have heard rival contentions and perused the record placed before us. We notice that the assessee is a private limited company engaged in business of dealing in commercial vehicles and its accessories and furnished its return of income for Assessment Year 2022- 23 on 05/11/2022. Case processed u/s 143(1)(a) of the Act. In the said processing, which was carried out after considering the observation of the auditor in the tax audit report prepared u/s 44AB of the Act, the CPC noticed that in column 21(b), under the head advertisement expenditure in any souvenir, brochure, tract, pamphlet or the like published by a political partly a sum of Rs.25,38,991/- was mentioned. Based on this noting of the auditor, the alleged disallowance was made. When the assessee challenged the issue before the ld. CIT(A), it filed the details claiming that no amount was paid to political party and it was an inadvertent mistake committed by the auditor. However, the ld. CIT(A) did not give any relief.

Assessment Year: 2022-23 GNB Motors Private Limited 3 4. Before us, the assessee has now challenged the said issue. Reference has been made to various details filed in the paper book containing 79 pages. At page 10, the auditor K. Prasad & Company, vide certificate dt. 28/12/2022 admitted that it was an apparent mistake and the assessee has not made any payment towards political party. Our attention was also drawn at page 12-13 of the paper book which provide for the details of expenses incurred during the year. Perusal of the same indicates that they have been incurred mostly for purchase of signage for workshop, gifts for financers, purchase of panels and posters etc.. All these details show that none have been incurred for a political party. Under these given facts and circumstances, and the revenue being unable to controvert this fact, we are inclined to hold that typographical/inadvertent mistake of the auditor led to the alleged disallowance u/s 37(2b) of the Act made by the CPC. Since no such expenditure have been incurred which are liable to be disallowed u/s 37(2b) of the Act, the finding of the ld. CIT(A) set aside and disallowance of Rs.25,38,991/- is deleted. Effective Ground No. 2 raised by the assessee is allowed.