INCOME TAX ACT, 1961

Section 37(1)

Business competition - Administrative expenses - AO restricted assessee's claim without affording opportunity of being heard to assessee -

Assessee claimed deduction of administrative expenses amounting to Rs. 5 crores. AO restricted assessee's claim to Rs. 4 crores, however, without seeking assessee's explanation. Held: AO did not discuss anything about disallowance of Rs. 1.00 crore, i.e., by way of restricting amount of administrative expenses to Rs. 4 crores as against claim of Rs. 5.77 crores. Assessee had furnished Annual Report and Schedule H of Annual Report containing break-up of administrative expenses. Hence it was not a case of non-furnishing of details by assessee and it was bounden duty of AO to adhere to Principles of Natural Justice. Assessee should have been given proper opportunity by AO to explain its case before AO took any action adverse to the assessee. Accordingly, there was no reason to reduce claim of administrative expenses by Rs. 1 crore.

Relied:Kishinchand Chellaram v. CIT (1980) 4 Taxman 29 (SC) : 1980 TaxPub(DT) 1130 (SC), Sona Electric Co. v. CIT (1984) 19 Taxman 160 (De) : 1985 TaxPub(DT) 359 (Del-HC), Nathu Ram Prem Chand v. CIT (1963) 49 ITR 561 (All) : 1963 TaxPub(DT) 278 (All-HC), Andaman Timber Industries v. CCE (2015) 62 Taxmann.com 3 (SC) : (2015) 52 GST 355 (SC) : 2015 TaxPub(DT) 5186 (SC) and Suraj Mall Mohta and Co. v. A.V. Visvanatha Sastri (1954) 26 ITR 1 (SC) : 1954 TaxPub(DT) 104 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12 & 2012-13

INCOME TAX ACT, 1961

Section 37(1)

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