M/s. Hinduja Group India Ltd Vs ACIT (ITAT Mumbai)
Submission of detailed submitted before AO in summarised & Tabular Form before CIT cannot be considered as submission of any new evidence
Power of the appellate authority clearly overrides the provisions of sub-rules (1), (2) and (3) of rule 46A and it is open to the said authority to look into any additional document if it considers the same as required to dispose of the appeal or for any other substantial cause. As a matter of fact, the principal reason for the Commissioner (Appeals) in allowing the appeal was the fact that the Assessing Officer had failed to issue specific notice with regard to the services provided and further, he has come to the conclusion that expenses were not incurred for the purpose of business on the basis of details of expenses, employment agreement and Form 16 and agreement with Group Companies for rendering the services filed during assessment proceeding itself. Further the agreement with the Group Companies already listed the services which assessee would have to provide under the retainership agreement and also the employment agreements listed the services which the employees would provide to the company. It was only to further verify that the expenses are incurred for the purpose of business that the CIT(A) asked the assessee to submit the details of service rendered in tabular form and employee wise. Knowledge of the Revenue to the documentary evidence adduced at the appellate stage, is per se apparent on the face of the record and assessee has not submitted any new evidence but has only summarised the details submitted before AO in tabular form and employee wise. Thus, it was a clear cut case of exercise of the overriding power under rule 46A(4) of the rules and not really a case of permitting an assessee to file fresh document on the prayer of the assessee. Thus there is no violation of provisions of Rule 46A.
Expenditure incurred wholly and exclusively for the purpose of business was allowable
It was not open to the department to prescribe what expenditure an assessee should incur and in what circumstances it should incur that expenditure. The expression ‘wholly and exclusively’ used in section 37(1) does not mean ‘necessarily’. Ordinarily, it is for the assessee to decide whether any expenditure should be incurred in the course of his or its business. Such an expenditure may be incurred voluntarily and without any necessity and if it is incurred for promoting the business and to earn profits, the assessee is entitled to deduction, even though there might not be compelling necessity to incur such an expenditure.
