Allowing the appeal of the assessee the Court held that once it is established that there was nexus between the expenditure and the purpose of business, which need not necessarily be the business of the assessee itself, the Revenue cannot justifiably claim to put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. It is further been held that the Income- tax Authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. On the facts it is evident that the Assessing Officer has not doubted the books of accounts of the appellant . Followed Sassoon J. David and Co. Pvt. Ltd. v. CIT (1979 ) 118 ITR 261 (SC), S.A. Builders Ltd. v. CIT (A ) (2007) 288 ITR 1 (SC). (AY. 2004-05)
Tristar Motors v. ACIT (2020) 196 DTR 209 (Karn) (HC)
S. 37(1) : Business expenditure – Discount to custoners – Higher percentage than discount granted earlier year – Disallowance is arbitrary – Income- tax Authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act -Books of account not rejected – Allowable as business expenditure .