Disallowance of exp. being of business nature held incorrect by ITAT.

Facts in Brief:

1. Assessee is a partnership firm and earning income from coordination commission received from Shaw Wallace Distilleries Ltd. (in short SWDL).

2. In assessment AO held, assessee failed to furnish any explanation in respect to this excess receipt of Rs.78,59,892/- as revealed from the audit report.

3. Thus, AO added this receipt of Rs.78,59,892/- as the assessee failed to furnish any explanation for non-disclosure of these receipts.

On appeal CIT(A) confirmed AO order:

4. We find that exactly similar expenses on account of business promotion was allowed in immediately preceding assessment year 2003-04 by the AO himself.

5. The AO in the immediately preceding year has clearly held that these are business expenses relatable to the business of the assessee for the reason that the assessee being the sale coordinator for supplies to Canteen Stores Department (of Military Wing) from SWDL and such expenditure is allowable as business expenditure. We find that similar expenses were allowed by Coordinate Bench in the case of JCIT Vs. ITC Ltd. 299 ITR 341 (AT)(Kol).

6. Thus, Court held expenses are allowable expenditure, first on the principles of consistency and even otherwise the CIT(A) has admitted the expenses to be business in nature but disallowed 50% on the basis of estimate.

7. That cannot be the basis for disallowance. Accordingly, we delete the disallowance and this issue of assessee's appeal is allowed.

8. In the result, the appeal of assessee is partly allowed.

Case Reference- Income Tax Appellate Tribunal - Kolkata Damani & Co., Kolkata vs Assessee