Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of Where assessee manufacturer of cold drinks claimed deduction of as sum as discount, etc., allowed to dealers for breakage, leakage, etc., disallowance of a part thereof was not justified as revenue authorities cannot assume role of assessee and decide what should be appropriate expenditure [A/Y. 1998-99] The assessee carried on the business of manufacturing and sale of soft drinks, 21-claimed a sum as discount, etc. allowed to dealers for breakage, leakage, etc. The Assessing Officer disallowed the entire amount. The Commissioner (Appeals) did not dispute the transactions but came to the conclusion that because in the earlier year the net discount given by the assessee was 0.635 per cent of the total sales, in the current relevant assessment year also the net discount should be 0.635 per cent of the total sales as against 1.25 per cent worked out by the assessee. The allowing of the discount, it was not in doubt that discount was allowed. It was only the quantum which was required to be considered. The Tribunal allowed the assessee's claim in full Held that the Tribunal had rightly noted that the Commissioner (Appeal) could not assume the role of the assessee and decide what should have been the appropriate expenditure towards discount, etc. As held by this court in CIT v. Dalmia Cement(B.) Ltd. [2002] 254 ITR 377 such an action was not permissible. Consequently, the Tribunal was right in setting aside the order passed by the Commissioner (Appeals) and granting full relief to the assessee. JUDGMENT 1. The Revenue is aggrieved by an order dated June 21, 2005, passed by the Income-tax Appellate Tribunal, Delhi Bench "B", in ITA No. 1667/Delhi/02 relevant for the assessment year 1998-99. 2. The assessee carries on the business of manufacturing and sale of soft drinks. For the relevant assessment year the assessee claimed breakage, leakage and burst, etc., of bottles and debited an amount of Rs. 1,38,54,100 under this head. Out of this amount the assessee voluntarily added back a sum of Rs. 85,52,347 leaving a balance of Rs. 53,01,853 which was claimed as discount, etc., allowed to…

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