2011 (6) TMI 797 - AT - Income Tax

Summary

Issues Involved: Deletion of disallowance on account of repairs, Deletion of addition of staff welfare expenses, Deletion of disallowance of miscellaneous expenses, Deletion of disallowance on foreign travel expenses, Exclusion of excise duty from total turnover for deduction u/s 80HHC.

Deletion of Disallowance on Account of Repairs:
The Assessing Officer disallowed a provision for repairs claimed under "repairs and maintenance of factory building" totaling to Rs. 16,82,836, as the vouchers were billed in the next accounting year. The assessee contended that the work was completed before March 2003, and bills were received subsequently. The CIT(A) allowed the amounts as allowable during the year. The Tribunal upheld the order, stating that even though bills were dated later, the work was completed before March 2003, and provision was made accordingly. Ground No. 1 was rejected.

Deletion of Addition of Staff Welfare Expenses:
The AO disallowed 50% of staff welfare expenses, stating lack of details on amounts incurred in excess of IT Rules. The CIT(A) deleted the addition, citing past history and business purposes. The Tribunal confirmed the order based on previous findings for the assessment year 2001-02. Ground No. 2 was dismissed.

Deletion of Disallowance of Miscellaneous Expenses:
The AO disallowed Rs. 16,28,850 as miscellaneous expenses. The CIT(A) deleted the disallowance, emphasizing that reliance on earlier years' confirmation is insufficient. The Tribunal upheld the CIT(A)'s order, stating there was no scope for adhoc disallowance. Ground No. 3 was dismissed.

Deletion of Disallowance on Foreign Travel Expenses:
The AO disallowed Rs. 3,54,954 on foreign travel expenses. The CIT(A) deleted the addition, and the Tribunal dismissed the ground, following the decision in the assessee's own case for the assessment year 2001-02. Ground No. 4 was dismissed.

Exclusion of Excise Duty from Total Turnover for Deduction u/s 80HHC:
The AO included excise duty in total turnover for deduction u/s 80HHC. The CIT(A) deleted the addition based on relevant case law. The Tribunal upheld the order, citing a Supreme Court decision. The argument on excise duty in export turnover was not considered as it was not part of the issue before the Tribunal. The AO was directed to follow the Supreme Court principles. The appeal was partly allowed for statistical purposes.