Itta/645/2014 Of Commissioner Of Income Tax-Iii v. M/S Seshasayi Foods Private Limited

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAAND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. No.645 of 2014 DATED:29.10.2014 Between:Commissioner of Income Tax-III,Hyderabad. And … Appellant M/s. Seshasayi Foods Pvt. Ltd.,Secunderabad. ….Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAANDTHE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. No.645 of 2014 Judgment :(per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be preferred and admitted against the judgmentand order of the learned Tribunal dated 7.5.2014 in relation to the assessmentyear 2010-11, on the following suggested questions of law: 1. In the facts and circumstances of the case, whether the Hon’ble IncomeTax Appellate Tribunal is correct in law in holding that the payment ofsales promotion expenses to Bombino Agro Industries Limited (BAIL), asister concern on direct sales was allowable as expenditure of theRespondent-assessee ?Tax Appellate Tribunal is correct in law in holding that the payment ofsales promotion expenses to Bombino Agro Industries Limited (BAIL), asister concern on direct sales was allowable as expenditure of theRespondent-assessee ? 2. In the facts and circumstances of the case, whether the Hon’ble IncomeTax Appellate Tribunal is correct in law in holding that genuineness of thepayment was the only consideration for determining allowability withoutconsidering that the expenditure was unreasonable and excessive andnot allowable under Section 40A(2) of the Income Tax Act, 1961 (forshort ‘the Act’) and not for wholly and exclusively for the purpose ofbusiness as required under Section 37 of the Act ?Tax Appellate Tribunal is correct in law in holding that genuineness of thepayment was the only consideration for determining allowability withoutconsidering that the expenditure was unreasonable and excessive andnot allowable under Section 40A(2) of the Income Tax Act, 1961 (forshort ‘the Act’) and not for wholly and exclusively for the purpose ofbusiness as required under Section 37 of the Act ? We have heard Mr. B. Narasimha Sarma, learned counsel and have gonethrough the impugned judgment and order of the learned Tribunal. The learned Tribunal found on fact that the assessee has incurredexpenditure without any doubt for sale promotion, which was passed on to acompany called Bombino Agro Industries Limited (BAIL). Therefore, the pre-conditions as permitted by the learned Tribunal under Section 37 of the IncomeTax Act have been satisfied. Just because BAIL has earned certain amount ofmoney while undertaking the sale promotion, it does not dis-entitle theassessee to get the benefit under the aforesaid Section as the genuineness ofthe payment as well as the necessity of incurring expenses are not doubted atall. Hence, we do not find any element of law and the appeal is accordinglydismissed. The appeal is accordingly dismissed. No order as to costs. 29[th] October, 2014 Pnb __________________ K.J. SENGUPTA, CJ _________________ SANJAY KUMAR, J