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Issues involved: Appeal against CIT (A) order on disallowance of processing loss, general expenses, motor car expenses, telephone expenses, and other expenses under section 40(a)(ia).
Processing Loss Disallowance (Ground No.1): Assessee explained process loss as reason for stock shortage. AO disallowed 20% of loss, CIT (A) restricted to 15%. Tribunal found no basis for disallowance, considering low loss percentage and lack of previous disallowances by AO. Ground No.1 allowed, addition to be deleted. General Expenses Disallowance (Ground No.2): AO disallowed 20% of general expenses due to lack of details, CIT (A) restricted to 10%. Tribunal found no need for disallowance considering small amount and proper maintenance of vouchers. Ground partly allowed, &8377; 10,000 disallowed. Motor Car and Telephone Expenses (Ground Nos. 3 & 4): Expenses already considered for Fringe Benefit Tax, paid and filed in return of income. Tribunal followed precedent and principles, disallowance of 10% for personal use not justified. Ground Nos. 3 and 4 allowed, disallowances to be deleted. Other Expenses Disallowance (Ground No.5): TDS not made on stipend and retainer ship salary, disallowed under section 40(a)(ia). Assessee failed to justify payments as non-professional services, disallowance upheld. Ground No.5 rejected, appeal partly allowed. *Order pronounced on 31st January, 2013.*
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