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2012 (2) TMI 195 - AT - Income TaxTraveling Expense - Personal OR Business - CIT(A) expenses were related only to travel & conveyance undertaken by the employees - Held That - No evidence was brought on record by revenue to controvert the finding of CIT(A). Appeal of revenue rejected. Export Promotion - CIT(A) reduced dis allowance to 20% against 25% made by AO - Held That - In respect of foreign tours, keeping full details, bills & vouchers is impossible. When in past years above position (20% disallowance) was accepted there is no reason to interfere with the same. Bogus Purchases - Held That - Payments made by A/C payee cheque, copies of ledger has been filed with paper book. CIT(A) rightly deleted additions. Undisclosed Income - Donations shown as gifts - Held That - Assessee has filed copies of statement of donations with relevant receipts issued by the donees - personal bank account with HSBC Bank reflecting donations made - and balance sheet with Income & Expenditure account and Receipts & Payment Accounts etc. Donation made by A/C payee cheque same are duly reflected in the assessee s individual accounts. Decided in favour of assessee.
Issues:
1. Disallowance of expenses on traveling and conveyance 2. Disallowance of export promotion expenses 3. Addition related to transactions with M/s. SES Enterprises 4. Addition of undisclosed income related to donations Issue 1: Disallowance of expenses on traveling and conveyance - The department appealed against the deletion of an addition of Rs.1,90,147, representing 20% of the total expenses claimed on traveling and conveyance by the assessee. - The Assessing Officer (A.O.) disallowed the amount presuming personal expenditure by the assessee, but the assessee contended that the expenses were reimbursed to employees who incurred them for business purposes. - The Commissioner of Income Tax (Appeals) found the explanation satisfactory, ruling that the expenses were related to employees' travel and conveyance only. - The Tribunal upheld the decision, noting the absence of evidence supporting the A.O.'s presumption of personal expenses and confirming the deletion of the addition. Issue 2: Disallowance of export promotion expenses - The department contested the reduction of disallowance from 25% to 20% of the export promotion expenses claimed by the assessee. - The A.O. disallowed 25% of the expenses due to lack of complete bills and vouchers for foreign trips. - The assessee argued for the reduction based on past assessments where disallowance was restricted to 20% for similar reasons. - The Commissioner upheld the reduction to 20%, citing the impossibility of maintaining full details for foreign tours and the consistency in previous years' disallowances. - The Tribunal affirmed the decision, finding no reason to deviate from the past practice and upholding the reduction to 20%. Issue 3: Addition related to transactions with M/s. SES Enterprises - The department challenged the deletion of an addition of Rs.31,332 related to purchases from M/s. SES Enterprises. - The A.O. deemed the purchases bogus as verification with the company was unsuccessful. - The Commissioner, after reviewing evidence provided by the assessee, found the purchases genuine based on account payee cheques and bank records. - The Tribunal supported the Commissioner's decision, noting the payment evidence and lack of evidence from the department contradicting the genuineness of the purchases. Issue 4: Addition of undisclosed income related to donations - The department appealed the deletion of an addition of Rs.21,00,000 as undisclosed income from donations made by the assessee. - The A.O. disbelieved the donations due to lack of reflection in financial documents but the Commissioner found them duly reflected in the documents. - The Tribunal, after reviewing donation statements, bank accounts, and financial records, upheld the deletion of the addition, as the donations were verified and no evidence was presented to support them being unexplained income. - Consequently, the Tribunal dismissed the department's appeal, affirming the Commissioner's decision to delete the addition of Rs.21,00,000. In conclusion, the Tribunal dismissed the department's appeal, upholding the decisions of the Commissioner on all issues raised, including the disallowance of expenses, reduction of export promotion expenses disallowance, transactions with M/s. SES Enterprises, and addition related to undisclosed income from donations.
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