Commissioner of Income Tax vs Electrolux Kelvenatro Ltd.

CM No. 6837 of 2011 (for condonation of delay)

There is a delay of 412 days in re-filing of the appeal. Learned counsel for the respondent submits that they have no objection if the delay in re-filing the appeal is condoned.

The application is, accordingly, allowed.

I.T.A. No. 618 of 2011

Despite repeated directions, the appellant has not been able to produce the record.

In the present case, the Tribunal has upheld the order of the Commissioner of income tax (Appeals) deleting penalty imposed by the Assessing Officer u/s 271(1)(c) of the income tax Act, 1961 (for short, "the Act"). The assessee had made payment of non-compete fee amounting to Rs. 36,66,663 and claimed it as a revenue expense. Payment was monthly. The Assessing Officer observed and held that it was a capital expense. The issue was clearly debatable and not free from doubt. It is not the case of the Revenue that there was an affirmative decision of the High Court or the Supreme Court on the subject matter, when the return of income was filed or an affirmative opinion of the Tribunal or the High Court in the case of the assessee.

The second issue pertains to disallowance of petty miscellaneous expenses. The respondent-assessee had debited Rs. 1,40,83,937 in his profit and loss account as miscellaneous expenses. The Assessing Officer by a letter dated August 19, 1999, asked the respondent to file details of all miscellaneous expenses exceeding Rs. 5,000. Details were filed by the assessee, vide letter dated February 1, 2000, but in respect of two heads petty miscellaneous expenses and miscellaneous balances written off amounting to Rs. 19,04,980 and Rs. 15,85,685, the respondent could not file full details. The respondent-assessee agreed to the said addition on the ground that it was difficult to collect details from their offices all over India for all expenses over Rs. 5,000. However, some details were furnished, vide letter dated October 29, 1999. In the penalty proceedings, the respondent-assessee reiterated and submitted their explanation, and had stated that their explanation was bona fide. It was highlighted that turnover of the assessee was substantial, nearly Rs. 68 crores. Rs. 34.9 lakhs was a trivial amount, only 0.5 percent of the total turnover. The respondent had suffered substantially high losses of Rs. 372 crores in last ten years and, therefore, addition of Rs. 34.9 lakhs was not material as the respondent-assessee was not to pay any tax. The expenses were in fact incurred but the problem and difficulty was in procuring documents/papers from different offices all over India.

It has been accepted by the Tribunal that the expenses claimed were day-to-day expenses and written off balances. The corporate office of the respondent at Delhi had kept consolidated accounts and books of account were kept in the regional offices. The first appellate authority and the Tribunal have accepted the explanation given by the respondent-assessee and were satisfied about the bona fides of the said explanation.

We do not think any substantial question of law arises for consideration. The appeal is, accordingly, dismissed.