VIKI INDUSTRIES PVT LTD, CHENNAI V. ACIT, CORP CIR-III(4), CHENNAI

ITA 3301/CHNY/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4128 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 03-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: D ANAND
• Keywords: Depreciation; Additional depreciation; Revenue expenditure
• Section: 40A(3); 143(3); 37(1); 32; 37

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I T.A. NO.3301/CHNY/2018 / ASSESSMENT YEAR :2011-12 M/S. VIKI INDUSTRIES PVT. LTD., NO.1, KRISHNA STREET, NUNGAMBAKKAM, CHENNAI-34. [PAN: AAACV 2003 P ] VS. ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE III (4), CHENNAI-34. ( /APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI D. ANAND, AR / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT / DATE OF HEARING : 06.03.2019 /DATE OF PRONOUNCEMENT : 13.03.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-11, CHENNAI DATED 21.08.2018 RELEVANT TO THE ASSESSMENT YEAR 2011-12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-11, CHENNAI, TO THE EXTENT OF CONFIRMING THE ORDER OF ASSESSMENT IS WRONG, ILLEGAL AND IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT (A)-LL ERRED IN LAW IN DIRECTING THE ASSESSING OFFICER TO CAPITALIZE THE EXPENSE RELATING TO ADVERTISEMENT AND BRAND PROMOTION DESPITE THE FACT THAT SUCH EXPENSES ARE INCURRED YEAR ON AND DO NOT HAVE CHARACTER OF ENDURING BENEFIT. THE LEARNED CIT(A) FAILED TO SEE THAT IT IS NOT I.T.A. NO.3301/CHNY/2018 2 THE CASE OF THE ASSESSING OFFICER THAT THE SAID EXPENSES ARE NOT REVENUE IN NATURE AND THAT THE ENTIRE EXPENSES WERE INCURRED BY THE APPELLANT DURING THE IMPUGNED YEAR. 3. THE LEARNED CIT(A) FAILED TO SEE THAT THERE IS NO CONCEPT OF REFERRED REVENUE EXPENDITURE UNDER THE INCOME TAX ACT AND THAT THE APPELLANT HAS MADE THE SAID CLAIM IN ACCORDANCE OF PROVISION OF THE ACT AND NOT ON THE BASIS OF ENTRY IN THE BOOKS. 4. THE LEARNED CIT(A) ERRED IN NOT FOLLOWING THE DECISION OF THE HON'BLE ITAT IN THE ASSESSES OWN CASE FOR THE A.Y.2012-13 ON A SIMILAR ISSUE DESPITE OBSERVING THAT THE FACTS IN THE IMPUGNED YEAR IS SIMILAR TO THE FACTS MENTIONED IN THE A.Y.2012-13. THE SAID ORDER OF THE LEARNED CIT(A) IS AGAINST THE WELL- ESTABLISHED CONCEPT OF JUDICIAL DISCIPLINE AND DOCTRINE OF STARE DECISIS. 5. THE LEARNED CIT (A)-11 OUGHT TO HAVE SEEN THAT THE ASSESSING OFFICER ERRED IN LAW IN DISALLOWING THE APPELLANTS CLAIM OF REVENUE EXPENDITURE RELATING TO ADVERTISEMENT AND BRAND PROMOTION ON THE BASIS THAT THE TREATMENT IS NOT IN LINE WITH THE MATCHING PRINCIPLES AND THAT THE DIFFERENTIAL TREATMENT GIVEN BY THE APPELLANT FOR BOOK PURPOSE AND INCOME TAX PURPOSE IS NOT ACCEPTABLE. THE CIT(A) FAILED TO SEE THAT THE SAID FINDING OF THE A.O IS AGAINST THE SETTLED PRINCIPLE OF LAW PROPOUNDED THE APEX COURT IN THE CASE OF TAPARIA TOOLS AND IN VARIANCE TO THE DECISION RENDERED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF BRILLIANT TUTORIALS REPORTED IN 292 ITR 399. 6. THE LEARNED CIT(A) ERRED IN SUSTAINING A DISALLOWANCE OF 3,61,857/- BEING DISALLOWANCE MADE BY THE A.O INVOKING SECTION 40A(3). 2. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF TMT CONSTRUCTION GRADE STEEL BARS AND DEALERS IN IMFL PACKING MATERIALS. THE ASSESSEE FILED ITS RETURN OF INCOME AND THE I.T.A. NO.3301/CHNY/2018 3 ASSESSMENT ORDER WAS MADE U/S 143(3) DATED 12.03.2014. THE A.O HAS MADE THE FOLLOWING ADDITIONS/DISALLOWANCES: A) DISALLOWANCE OF DEFERRED REVENUE EXPENDITURE AT 1,90,30,805/- B) DISALLOWANCE U/S 40A(3) AT 22,64,292/- 2.1. DISALLOWANCE OF DEFERRED REVENUE EXPENDITURE AT 1,90,30,805/-: THE ASSESSEE HAS FILED ITS RETURN OF INCOME AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT SUSTAINING THE TOTAL INCOME OF THE ASSESSEE AT .(-)5,09,86,215/- AFTER MAKING VARIOUS DISALLOWANCES/ADDITIONS. WITH REGARD TO THE DISALLOWANCE OF DEFERRED REVENUE EXPENDITURE BY GIVING BREAK- UP, THE ASSESSEE HAS DEBITED EXPENDITURE OF 19 LAKH TOWARDS DEFERRED REVENUE EXPENDITURE AND WRITTEN OFF AN AMOUNT OF 38,02,531/-. ON PERUSAL OF THE BREAKUP OF THE EXPENSES, THE A.O OBSERVED THAT THE EXPENSES ARE MAINLY INCURRED TOWARDS ADVERTISEMENT AND BRAND BUILDING OR THE I STEEL AND TO PROMOTE SALES IN THE INDIAN MARKET. FOR THE INCOME-TAX PURPOSES, THE ASSESSEE HAS CLAIMED THE ENTIRE EXPENDITURE DURING THE YEAR, WHEREAS, FOR THE BOOK PURPOSES, IT HAS AMORTIZED EXPENSES PROPORTIONATELY. THE ASSESSING OFFICER DID NOT ACCEPT THE DIFFERENTIAL TREATMENT GIVEN BY THE ASSESSEE FOR BOOK PURPOSES AND FOR INCOME TAX PURPOSES AND ACCORDINGLY, DISALLOWED THE AMOUNT OF 1,90,30,805/- AND BROUGHT TO TAX. 2.2 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) CONFIRMED THE ADDITION. I.T.A. NO.3301/CHNY/2018 4 2.3 ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT DISPUTED THAT THE REVENUE NATURE OF EXPENSES AND ALSO THE FACT THAT THE ENTIRE EXPENSES RELATING TO ADVERTISEMENT AND BRAND PROMOTION WERE INCURRED BY THE ASSESSEE DURING THE IMPUGNED YEAR, BUT, LEGALLY NOT JUSTIFIED IN REJECTING IN AMORTIZING THE EXPENSES OVER THE PERIOD OF 5 YEARS IN THE BOOKS OF ACCOUNT, EVEN THOUGH SUCH TREATMENT IS NOT RECOGNIZED IN THE ACT. BY RELYING UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. BRILLIANT TUTORIALS P. LTD. REPORTED IN 292 ITR 399 , THE LD. COUNSEL FOR THE ASSESSEE PRAYED FOR DELETING THE ADDITION. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT THE PRESENT CASE IS AGAINST THE MATCHING CONCEPT I.E., REVENUE VS. CORRESPONDING EXPENSES, THEREBY WARRANTING ADDITION EVEN THOUGH THE ASSESSING OFFICER OBSERVED THAT THE EXPENSES ARE REVENUE IN NATURE. 2.4 WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. A SIMILAR MATTER HAS BEEN DECIDED BY THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.852/CHNY/2017 DATED 18.06.2018 FOR ASSESSMENT YEAR 2012-13. WHILE DECIDING THIS ISSUE, THE COORDINATE BENCH OF THIS TRIBUNAL BY RELYING THE DECISION IN THE CASE OF CIT V. BRILLIANT TUTORIALS P. LTD. (SUPRA) AND ALSO THE TRIBUNAL HAS REFERRED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE I.T.A. NO.3301/CHNY/2018 5 OF MADRAS INDUSTRIAL CORPORATION LTD. V. CIT; 225 ITR 802. THE TRIBUNAL IN HIS ORDER IN ITA NO.852/CHNY/2017 HAS HELD AS UNDER: 2.5 IT IS NOT IN DISPUTE THAT ENTIRE EXPENSES RELATING TO ADVERTISEMENT AND BRAND PROMOTION INCURRED BY THE ASSESSEE DURING THE IMPUGNED YEAR ARE REVENUE IN NATURE. IN THIS CASE, IN THE BOOKS OF ACCOUNT, THE ASSESSEE HAS AMORTIZED EXPENSES PROPORTIONATELY AND ALSO CLAIMED DEDUCTION UNDER SECTION 37 OF THE ACT AS WELL. THE DEFERRED REVENUE EXPENDITURE IS ESSENTIALLY REVENUE IN NATURE AND THE DECISION TO TREAT THE SAME AS DEFERRED REVENUE ONLY REPRESENTS A MANAGEMENT DECISION TAKEN IN VIEW OF THE MAGNITUDE OF THE EXPENDITURE INVOLVED. FOR THE PURPOSE OF ALLOWABILITY OF ANY EXPENDITURE UNDER THE ACT, WHAT IS MATERIAL IS THE CLASSIFICATION BETWEEN THE CAPITAL AND REVENUE AND THE SAME DOES NOT RECOGNISE ANY CONCEPT OF DEFERRED REVENUE EXPENDITURE. THAT IS WHY THE ASSESSING OFFICER HIMSELF ALLOWED THE AMOUNT DEBITED IN THE PROFIT AND LOSS ACCOUNT. 2.6 IN THE INSTANT CASE, WE FIND THAT THE EXPENDITURE RELATING TO ADVERTISEMENTS, BRAND PROMOTION EXPENSES IS IN THE REVENUE FIELD AND NOT DISPUTED BY THE AUTHORITIES BELOW. THE ONLY ISSUE TO BE CONSIDERED IS WHETHER THE ASSESSEE CAN CLAIM THE ENTIRE EXPENDITURE IN THIS YEAR ITSELF, EVEN THOUGH IT HAD WRITTEN OFF THIS EXPENDITURE IN THE BOOKS OVER A PERIOD OF FIVE YEARS. IN THIS CONNECTION, WE MAY REFER TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. V. CIT 225 ITR 802 , WHEREIN, IT WAS HELD AS UNDER: SECTION 37(1) FURTHER REQUIRES THAT THE EXPENDITURE SHOULD NOT BE OF A CAPITAL NATURE. THE QUESTION WHETHER A PARTICULAR EXPENDITURE IS REVENUE EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS MUST BE DETERMINED ON A CONSIDERATION OF ALL THE FACTS AND CIRCUMSTANCES, AND BY THE APPLICATION OF PRINCIPLES OF COMMERCIAL TRADING. THE QUESTION MUST BE VIEWED IN THE LARGER CONTEXT OF BUSINESS NECESSITY OR EXPEDIENCY. IF THE OUTGOING OR EXPENDITURE IS SO RELATED TO THE CARRYING ON, OR CONDUCT OF THE BUSINESS, THAT IT MAY BE REGARDED AS AN INTEGRAL PART OF THE PROFIT- MAKING PROCESS AND NOT FOR ACQUISITION OF AN ASSET OR A RIGHT OF A PERMANENT CHARACTER, THE POSSESSION OF WHICH IS A CONDITION OF THE CARRYING ON OF THE BUSINESS, THE EXPENDITURE MAY BE REGARDED AS REVENUE EXPENDITURE. ANY LIABILITY INCURRED FOR THE BUSINESS OF OBTAINING A LOAN WOULD BE REVENUE EXPENDITURE. ORDINARILY, REVENUE EXPENDITURE WHICH IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS MUST BE ALLOWED IN ITS ENTIRETY IN THE YEAR IN WHICH IT IS INCURRED. IT CANNOT BE SPREAD OVER A NUMBER OF YEARS EVEN IF THE ASSESSEE HAS WRITTEN IT OFF IN HIS BOOKS, OVER A PERIOD OF YEARS. HOWEVER, THE FACTS MAY JUSTIFY AN ASSESSEE WHO HAS INCURRED EXPENDITURE IN A PARTICULAR YEAR TO SPREAD AND CLAIM IT OVER A PERIOD OF ENSUING YEARS. IN FACT, ALLOWING THE ENTIRE EXPENDITURE IN ONE YEAR MIGHT GIVE A VERY DISTORTED PICTURE OF THE PROFITS OF A PARTICULAR YEAR. ISSUING DEBENTURES IS AN INSTANCE WHERE, ALTHOUGH THE ASSESSEE HAS INCURRED THE LIABILITY TO PAY THE DISCOUNT IN THE YEAR OF ISSUE OF DEBENTURE, THE PAYMENT IS TO SECURE A BENEFIT OVER A NUMBER OF YEARS. THERE IS A CONTINUING BENEFIT TO THE BUSINESS OF THE COMPANY OVER THE ENTIRE PERIOD. THE LIABILITY SHOULD, THEREFORE, BE SPREAD OVER THE PERIOD OF DEBENTURES. THE AFORESAID JUDGEMENT CLARIFIES THAT THOUGH THE ASSESSEE MAY HAVE WRITTEN OFF THE EXPENDITURE IN ITS BOOKS OF ACCOUNT OVER A PERIOD OF FIVE YEARS, IT MUST BE ALLOWED IN ITS ENTIRETY IN THE YEAR IN WHICH IT WAS INCURRED, IF IT IS REVENUE EXPENDITURE, AND IF IT IS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSES OF BUSINESS. IN THE CASE UNDER CONSIDERATION, THERE IS NOTHING TO SUGGEST THAT WITH THIS EXPENDITURE, ANY ASSET, TANGIBLE OR INTANGIBLE, HAS BEEN I.T.A. NO.3301/CHNY/2018 6 CREATED. THERE IS NO EVIDENCE ON RECORD REGARDING ACCRUAL OF ANY SPECIFIC REVENUE IN THE YEARS UNDER CONSIDERATION OR SUBSEQUENTLY OVER A DEFINED PERIOD WITH THE INCURRING OF SAID EXPENDITURE. THE ASSESSING OFFICER HIMSELF ADMITTED THE PORTION OF EXPENDITURE DEBITED IN THE PROFIT AND LOSS ACCOUNT AS REVENUE EXPENDITURE. 2.7 MOREOVER, BY FOLLOWING THE ABOVE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. V. CIT (SUPRA), IN THE CASE OF AMAR RAJA BATTERIES LTD. V. ACIT 91 ITD 280, THE HYDERABAD BENCHES OF THE TRIBUNAL HAS HELD THAT A REVENUE EXPENDITURE, INCOME RELATABLE TO WHICH WILL ARISE FOR A NUMBER OF YEARS, MUST BE ALLOWED IN ITS ENTIRETY IN YEAR IN WHICH IT IS INCURRED EVEN THOUGH THE ASSESSEE PROCEEDS TO WRITE OFF THE SAID EXPENDITURE IN BOOKS OF ACCOUNT OVER A PERIOD OF YEARS. 2.8 FURTHER, IN THE CASE OF TAPARIA TOOLS LTD. V. JCIT [2015] 372 ITR 605, THE HONBLE SUPREME COURT WAS ALSO OF THE OPINION THAT THAT THE REVENUE EXPENDITURE INCURRED IN A PARTICULAR YEAR IS TO BE ALLOWED IN THAT YEAR, IS TO BE APPLIED. IF THE ASSESSEE CLAIMS THAT EXPENDITURE IN THAT YEAR, THE DEPARTMENT CANNOT DENY IT. THUS, ONCE IT IS NOT IN DISPUTE THAT THE ENTIRE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS ADVERTISEMENT & BRAND PROMOTION AS REVENUE IN NATURE, IN VIEW OF THE DECISIONS REFERRED HEREINABOVE, THE DISALLOWANCE OF .1,62,93,447/- MADE BY THE ASSESSING OFFICER STANDS DELETED. 3. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS WITH REGARD TO DISALLOWANCE OF ADDITIONAL DEPRECIATION CLAIMED AT .2,32,51,399/ -. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER OBSERVED THAT (I) THE ACQUISITION AND INSTALLATION OF THE NEW ASSET WAS NOT DONE IN THE SAME YEAR, WHICH WAS ACQUIRED IN THE PRECEDING YEAR (II) THE PRECONDITION FOR ALLOWANCE UNDER SECTION 32(1)(II) AND (IIA) OF THE ACT IS THAT THE CONCERNED ASSET MUST BE PUT TO USE, (III) THE ASSET IN CAPITAL WORK IN PROGRESS IS NOT CAPABLE OF BEING PUT TO BUSINESS USE; THE ASSESSING OFFICER DISALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF CRI PUMPS PVT. LTD. V. ACIT AS WELL AS IN THE CASE OF DCIT V. BRAKES INDIA LTD. [2012] (3) TMI 31-ITAT, CHENNAI. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ADDITION. 3.1 WE HAVE HEARD RIVAL CONTENTIONS. IT IS TRUE THAT, AS FOLLOWED BY THE ASSESSING OFFICER, IN THE CASE OF DCIT V. BRAKES INDIA LTD. IN I.T.A. NOS.249 & 1166/MDS/2010 & I.T.A. NO.1069/MDS/2010 DATED 06.01.2012, THE COORDINATE BENCHES OF THE TRIBUNAL OBSERVED THAT EACH ASSESSMENT YEAR IS SEPARATE AND INDEPENDENT ASSESSMENT YEAR AND THE PROVISIONS OF SECTION 32 OF THE ACT DO NOT PROVIDE FOR CARRY FORWARD OF THE RESIDUAL ADDITIONAL DEPRECIATION, IF ANY, AND ACCORDINGLY, DISMISSED THE GROUND RAISED BY THE ASSESSEE WITH REGARD TO ALLOWANCE OF ADDITIONAL DEPRECIATION. 3.2 AGAINST THE ORDER OF THE TRIBUNAL, THE ASSESSEE [BRAKES INDIA LTD.] PREFERRED FURTHER APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. BY DISTINGUISHING THE JUGDEMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF M.M. FORGINGS LTD. V. ADDL. CIT 349 ITR 673 AND BY REFERRING TO THE DECISION OF THE TRIBUNAL IN THE CASE OF FRESH & HONEST CAF LTD V. DCIT IN I.T.A. NO. 1373/MDS/2016 DATED 10.08.2016, WHEREIN, THE TRIBUNAL FOLLOWED ITS OWN DECISION IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEAR, IN WHICH, THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. RITTAL INDIA (P) LTD. 66 TAXMANN.COM 4 HAS BEEN REFERRED, IN THE CASE OF BRAKES INDIA LTD. V. DCIT IN T.C. A. NO. 551 OF 2013 DATED 14.03.2017, THE HONBLE MADRAS HIGH COURT, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY DULY AFFIRMING THE DECISION IN THE CASE OF CIT V. RITTAL INDIA (P) LTD. (SUPRA). FURTHER, IT WAS ALSO HELD THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. SHRI T.P. TEXTILES PVT. LTD. IN T.C.A. NO.157 OF 2017 VIDE ORDER DATED 06.03.2017. IN VIEW OF THE ABOVE JUDICIAL PRECEDENTS WITH REGARD TO GRANT OF ADDITIONAL I.T.A. NO.3301/CHNY/2018 7 DEPRECIATION IN THE SUBSEQUENT YEARS, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, THE ADDITION TOWARDS THE CLAIM OF ADDITIONAL DEPRECIATION OF .2,32,51,399/- STANDS DELETED. 2.5 AFTER CONSIDERING THE ABOVE DISCUSSION AND THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT AND HIGH COURTS MENTIONED ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2012-13. THEREFORE, WE DIRECT THE A.O TO DELETE THE DISALLOWANCE OF .1,90,30,805/- MADE BY THE A.O. 3. THE OTHER GROUND RAISED IN THIS APPEAL OF THE ASSESSEE RELATES TO DISALLOWANCE OF .22,64,292/- BY INVOKING PROVISIONS SECTION 40A(3) OF THE ACT. 3.1 ON VERIFICATION OF THE EVIDENCES OF THE ASSESSEE, THE A.O ISSUED THAT THE ASSESSEE MADE CASH PAYMENT ABOVE .20,000/- IN A DAY AGGREGATING .51,53,918/-. OUT OF THIS 28,89,626/- PAID TOWARDS SALARY AND WAGES AND 22,64,292/- TOWARDS OTHER CASH PAYMENTS. THE A.O ACCEPTED AN AMOUNT OF .28,89,626/- PAID TOWARDS SALARY AND WAGES THAT THE A.O DISALLOWED AN AMOUNT OF .22,64,292/- SINCE THE ASSESSEE FAILED TO PROVE THAT THE PETTY CASH EXPENSES DID NOT HAVE THE ELEMENT IN EXCESS OF PAYMENT OF 20,000/- BY CASH. THEREFORE, THE A.O MADE AN ADDITION OF .22,64,292/-. I.T.A. NO.3301/CHNY/2018 8 3.2 AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) HAS ALSO UPHELD THE DISALLOWANCE TO THE EXTENT OF .3,61,857/- SINCE THE ASSESSEE HAS NOT GIVEN ANY EXPLANATIONS. 3.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF AUTHORITIES BELOW. BEFORE US ALSO, THE ASSESSEE HAS NOT PLACED ANY MATERIALS TO SUBSTANTIATE HIS CLAIM. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND UPHOLD THE DISALLOWANCE TO THE EXTENT OF .3,61,857/-. THEREFORE, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THE 13 TH MARCH, 2019 AT CHENNAI. SD/ - SD/ - (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 13.03.2019 RS, SR. PS /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.