ACIT Vs Balmer Lawrie Van Leer Limited (ITAT Mumbai)
Mumbai ITAT Deletes Ad Hoc 10% Disallowance of Business Expenses – No Addition Sustainable Without Specific Defects in Audited Books
The Mumbai ITAT upheld the deletion of an ad hoc disallowance of ₹6.61 crore, being 10% of “Other Expenses”, holding that such an addition cannot be sustained merely because the Assessing Officer sought more details. The Tribunal noted that the assessee had furnished extensive details, including ledgers, sample invoices, and other supporting documents, and its books of account were duly audited and accepted without any rejection or specific adverse finding. The Assessing Officer had not identified any particular bogus or non-business expenditure, nor pointed out any defect in the books. The Tribunal further observed that similar expenditure had been consistently allowed in earlier scrutiny assessments and that the expenses were commensurate with the turnover. Accordingly, the deletion of the ad hoc disallowance by the CIT(A) was affirmed.
However, on the issue of government grant of ₹2,29,300, claimed by the assessee as a capital subsidy for setting up a plant in Uttarakhand, the Tribunal found that the Assessing Officer had not examined the relevant subsidy scheme as the necessary documents were not produced during assessment. Since the assessee itself requested a fresh examination of the Central Capital Investment Scheme, the Tribunal restored the matter to the Assessing Officer to verify the nature of the subsidy and decide the issue in accordance with law. Consequently, the Revenue’s appeal was partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
