Case Law Details
Today Retail Network Pvt Ltd Vs ITO (ITAT Delhi)
ITAT Delhi held that disallowance of expenditure on adhoc basis, as a percentage of gross profit, without any specific findings is baseless and liable to be deleted.
Facts- AO noticed that commission of Rs. 4,46,72,186/- was paid to Today Merchandise Pvt. Ltd. (fellow subsidiary). AO was of the opinion that the entire payment of commission was not for business reasons and basis the gross profit earned by the assessee, AO allowed 25% of commission and disallowed the balance.
CIT(A) directed AO to delete the disallowance stating that adhoc disallowance of any expenditure is not permissible and AO has to give specific findings as to the effect that either the expenditure is not supported with bills/vouchers or not recorded in the books of account or it is bogus and excess claim of expenditure in question is barred by provisions of the Act.
Conclusion- Held that that the disallowance has been made on adhoc basis, as a percentage of gross profit, we are of the considered view that such disallowance is baseless and the ld. CIT(A) has rightly deleted the same, which calls for no interference. Common grounds in both the appeals of the Revenue are dismissed.
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