- (1.) This order shall dispose of I.T.A. Nos. 112, 113, 115 and 116 as these appeals arise out of a consolidated order dated October 31, 2012. However, the facts are being extracted from I.T.A No. 112 of 2013. I.T.A. No. 112 of 2003 has been preferred by the assessee under section 260A of the Income-tax Act, 1961 (in short, "the Act"), against the order dated October 31, 2012, annexure A.3 passed by the Income-tax Appellate Tribunal, Delhi, Bench "D" in I.T.A. No. 734/DEL/2011 for the assessment year 2004-05, claiming the following substantial questions of law: "I. Whether, under the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in concurring with the authorities below and thereby upholding the disallowance of Rs. 2,50,000 out of advertisement and sales promotion expenses having incurred wholly and exclusively for business purposes being allowable under section 37 of the Income-tax Act, 1961 ? II. Whether, under the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in concurring with the authorities below and thereby upholding the disallowance of Rs. 15,334 in respect of assets written off and amounts receivables to the extent of Rs. 19,254 which were actually written off in the books of account as per the decision of the management after due consideration of the facts and circumstances, the assets having become redundant, obsolete and unusable while various amounts receivable being old amounts and there being no possibility of any recovery of the same were written off as a prudent business man for which duly audited books of account and balance-sheets produced before the authorities below ? III. Whether, under the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in concurring with the authorities below and thereby upholding the disallowance of one-fourth of car expenses and depreciation at Rs. 21,055 being car expenses and depreciation as per the actual user being wholly and exclusively used/incurred for business of the appellant firm which needs to be allowed in toto as per the provisions of section 37(1) of the Income-tax Act ? IV. Whether, on the facts and in the circumstances of the case, the findings of the Income-tax Appellate Tribunal are perverse and against the evidences on record thus unsustainable in law ? V. Whether the Income-tax Appellate Tribunal has misdirected itself in being influenced by irrelevant factors and applying erroneous criteria while deciding the issue under the Income-tax Act, 1961 ?"
(2.) Briefly, the relevant facts as narrated in the appeal are that the assessee is a firm based at Karnal. It is engaged in getting shoes manufactured from outside parties and paying for job charges. On October 29, 2004, the assessee filed return of income for the assessment year 2004-05 declaring an income of Rs. 2,60,40,244 which was processed under section 143(1) of the Act on March 31, 2005. Notice under section 143(2) of the Act was issued on May 10, 2005. Up to the assessment year 2003-04, the firm was engaged in the business of trading of footwear and other goods. On March 31, 2003, the firm entered into franchise agreement with M/s. Liberty Shoe Ltd., Karnal, for a period of seven years. The agreement was effective with effect from April 1, 2003. Under the agreement, the appellant agreed that the brand name Liberty shall be available exclusively to M/s. Liberty Shoe Ltd., Kamal, and the trade marks can be used globally on and in connection with the goods manufactured or sold by or for M/s. Liberty Shoe Ltd., Karnal, in accordance with Liberty Footwear Co.'s minimum quality standards and manufacturing specifications. M/s. Liberty Shoe Ltd. agreed to pay licence fee as per terms. The Assessing Officer raised objections on certain issues. The appellant submitted that the expenses were incurred wholly and exclusively for business purposes. The Assessing Officer disallowed the advertisement and sales promotion expenses of Rs. 2,50,000 on the ground that no details of the said expenses had been filed to justify the claim made. Similarly Rs. 15,334 in respect of written off assets, Rs. 19,254 in respect of receivables, car expenses of Rs. 68,462 and depreciation at Rs. 15,760 were disallowed by the Assessing Officer in the absence of any proof. Aggrieved by the order, the appellant filed appeal before the Commissioner of Income-tax (Appeals) (CIT(A)). Vide order dated December 2, 2010, annexure A.2, the aforesaid disallowances were upheld. Still not satisfied, the appellant filed an appeal before the Tribunal. Vide order dated October 31, 2012, annexure A.3, these disallowances were maintained. Hence, the present appeals. The details of expenses under different heads which were disallowed in these appeals in a tabulated form are as under:
(3.) Learned counsel for the appellant submitted that the authorities below had misinterpreted and mis-appreciated the evidence and disallowance of various expenses have been erroneously made.;