ITA No. 719/Mum/2010 Assessment Year : 2004-05 and ITA No. 1876/Mum/2010 Assessment Year : 2004-05. Case: 1. Abbott Healthcare Pvt. Ltd., Unit 4, Corporate Park, Sion-Trombay Road, Chembur, Mumbai-400071, 2. Income Tax Officer-2(1)(1), Aayakar Bhavan, M.K. Marg, Mumbai Vs 1. Income Tax Officer-2(1)(1), Aayakar Bhavan, M.K. Marg, Mumbai, 2. Abbott Healthcare Pvt. Ltd., Unit 4, Corporate Park, Sion-Trombay Road, Chembur, Mumbai-400071. ITAT (Income Tax Appellate Tribunal)

Case NumberITA No. 719/Mum/2010 Assessment Year : 2004-05 and ITA No. 1876/Mum/2010 Assessment Year : 2004-05
JudgesShri J. Sudhakar Reddy, A.M. and Shri V. Durga Rao, J.M.
IssueIncome Tax Act
Judgement DateNovember 25, 2011
CourtITAT (Income Tax Appellate Tribunal)

Order:

V. Durga Rao, J.M., (ITAT Mumbai 'A' Bench)

  1. These are the cross appeals and the same are directed against the order of CIT(A)-4, Mumbai, passed on 17/12/2009 for the assessment year 2004-05.

    ITA NO. 710/Mum/10 - appeal by the assessee

  2. Ground No. I is directed against the action of the CIT(A) in upholding the disallowance of sundry expenses amounting to Rs. 20,48,331/-, by the AO.

  3. Briefly the facts relating to raise this ground are that the AO noted in assessment order that the assessee had debited a sum of Rs. 20,48,331/- against sundry expenses under the Head Miscellaneous expenses. On being asked to furnish the details of these expenses by the AO, the assessee vide its letter dated 28/08/06 stated that these expenses represent the cost of temporary staff employed by the stockist on behalf of the assessee for the distribution related work at the stockist center to facilitate the movement of goods in connection with the sale and distribution work of the company. It was stated that number of stockists are avai lable across India and this expenditure was incurred by them on behalf of the assessee. Since the expenditure incurred wholly and exclusively for the purpose of assessee's business this is a normal business expenditure fully allowable as deduction in computing taxable income. It was further stated that these expenses constitute normal business expense only but since these items cannot be directly classified as falling under a particular defined account head, these are debited under sundry expenses head. The AO asked to the assessee to produce a copy of the agreement with the stockists for incurring the said expenditure on temporary staff. The assessee had not produced any confirmation from the stockist nor furnished any documentary proof to justify the said expenses. The AO, therefore, disallowed the said sum of Rs. 20,48,331/- u/s 37(1) of the Act, on the ground that the payment was made to temporary staff at the stockiest level for odd jobs which is occasional and they have to reimburse these costs. Aggrieved by the order of the AO, the assessee carried the matter in appeal before the CIT(A).

  4. Before the CIT(A), the learned AR of the assessee submitted that it is true that there is no written agreement between the assessee and stockiest for reimbursement of the expenses. However, it is also true that the AO did not call for any other documentary evidence in relation to sundry expenses claimed by the assessee which is clear from the questionnaire issued by the AO. He further submitted that all documentary evidences are avai lable and could be produced before the AO and some sample evidence was produced before the AO which covers nearly 20% of the expenditure of Rs. 20,48,331/-. After considering the submissions of the learned AR of the assessee, the CIT(A) held that "there is no written agreement between the assessee and the temporary staf f at stockiest level. Hence, the AO is justif ied in disallowing the expenses incurred by the asesssee as it is not clear that the recruitment was for the business of the assessee and not for the stokiest. Even no confirmation was f iled from...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT