IT: Where assessee failed to establish nexus between debited expense with business purpose, same was to be disallowed
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[2013] 38 taxmann.com 240 (Rajasthan)
HIGH COURT OF RAJASTHAN
Rajasthan Patrika (P.) Ltd.
v.
Joint Commissioner of Income-tax, Special Range -III*
MOHAMMAD RAFIQ AND DR. MEENA V. GOMBER, JJ.
D.B. IT APPEAL NO. 5 OF 2013†
MAY 16, 2013
Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of [Sales promotion expenses]- Assessment year 1998-99 - Tribunal recorded that assessee had failed to establish nexus on each and every expense debited in sales promotion head - Further, on one hand assessee was returning heavy losses while on other, was claiming heavy expense under various heads like travelling, printing, advertising, etc., separately - Whether in view of fact that documentary evidence put forth by assessee had been evaluated by competent authority and affirmed by first appellate authority as also by Tribunal, Tribunal was right in disallowing 10 per cent of expenses - Held, yes [Para 5] [In favour of revenue]
T.C. Jain for the Appellant.
ORDER
Dr. Meena V. Gomber, J. - Heard finally at admission stage.
2. In challenge is the order of Income Tax Appellate Tribunal passed on 31.3.2008 in IT Appeal No.942/JP/2005, whereby the order passed by Commissioner, Income Tax (A) on 16.9.2005, was upheld.
3. Facts in brief are that the appellant assessee is a daily newspaper who had filed a returns declaring a loss of Rs. l0,93,31,292/- on 30.11.1998 for the assessment year 1.4.1997 to 31.3.1998, wherein it claimed expenses under the heads - (i) sales promotion expenses, (ii) advertisement & publicity expenses, (iii) meeting & seminar expenses, (iv) staff welfare expenses, and (v) business expenses, amounting to Rs. 14,10,764/-, 51,93,836/-, 1,30,240/-, 8,37,347/- and 83,310/- respectively, which were disallowed by Assessing Officer, Jt. Commissioner of Income Tax Special Range-3, Jaipur on 23.2.2001 on the ground that assessee could not establish that the same had been incurred wholly and exclusively for the purpose of business. According to the Assessing Officer besides establishing that they have been incurred for business purpose, it is also to be within permissible limits and in case of absence of any of the two factors, the expenses could be disallowed and in the facts & circumstances of the case and the material placed before it, the nexus could not be established.
4. As against this order of Assessing Officer, appeal was preferred by assessee before Commissioner of Income Tax (A), who disallowed 20% of these expenses in before the Income Tax Appellate Tribunal, modifying the order of disallowance from 20% to 10%, the amount claimed in these heads was allowed to the extent of 90% instead of 80%, which has been assailed before us.
5. After having gone through the entire material placed on record, we are of the considered view that no substantial question of law arises in this case. The facts have been discussed by the competent authority as also by the appellate authority. Even the Tribunal has gone into the factual matrix and reasons for disallowing the expenses have been elaborately discussed holding that there was no business nexus of each and every expense debited in sales promotion head, because on one hand company was returning heavy losses and on the other hand it was claiming heavy expenses under various heads like travelling, printing, advertising etc. separately.
6. In view of the fact that the documentary evidence put forth by the assessee has been evaluated by the competent authority and affirmed by the appellate authority as also by the Tribunal and there being no substantial question of law in this case, we are of the view that the appeal deserves to be dismissed and is hereby dismissed in limine.
SBRegards
Prarthana Jalan
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