2012 (7) TMI 399 - AT - Income Tax

Disallowance of general expenses - expenditure claimed is u/s. 37(1) of the Act Held that - Expenses, apart from those that are not allowable have, it would appear, been disallowed on the ground that the same are not properly vouched - Revenue doesn t doubt the actual incurring of the expenditure; it itself allowing the balance 75%. The expenditure incurred under the said head (tea expenses) for the preceding year/s has not been mentioned - incurring of the expenditure for most part is not doubted, as well as the nature of expenditure. We, therefore, restrict the disallowance to be extent of the sum not eligible for being allowed u/s. 37(1) Disallowance of petrol expenses - on account of the entire claim being not supported by proper bills - CIT(A) has restricted the disallowance to 25%, allowing the assessee s partial relief - assessee has not again explained the reason/s for the same, only stating that no personal element is involved as the assessee is busy doctor, working 12 to 15 hours per day Held that - There is no reference to the expenditure claimed in the preceding year/s - disallowance restricted to Rs. 10,000/- as some personal element is inevitable, with nothing on record to show that the expenditure for the same has been separately incurred. Disallowance of expenditure on account of depreciation on car - personal as well as non-business user of the said vehicle/s - assessee, with reference to the relevant provisions of the Act, contends that the provision of section 38(2) does not apply to the depreciation u/s 32(1)(i) of the Act, but only to intangible assets as specified u/s. 32(1)(ii) of the Act Held that - There could be no disallowance u/s. 38(2) of the Act in respect of the depreciation on motor car, a tangible asset, covered u/s 32(1)(i) of the Act - disallowance is thus deleted - Needless to add, the written down value of the relevant block of assets would stand to be adjusted downward and restored to its correct value In favor of assessee Disallowance of expenditure on tour and travel Held that - There are no details/particulars of the expenditure incurred. The date/s of travel, of the conferences, of the meetings attended, etc.; the mode of conveyance; the places/doctors (in contradistinction to the stations) visited, etc., nay, there is no evidence of the expenditure having been incurred on travel and the concomitant boarding and lodging - it may not be possible to vouch every expenditure, and that some travel for professional purposes may have been incurred by the assessee, a senior doctor, restrict the disallowance to Rs. 25,000 - assessee gets the partial relief for Rs. 6,215 Claim in respect of water and electricity expenses - assessee is using his premises as his home as well as clinic, for which no separate connection for water and electricity had been taken Held that - Assessee s claim was disallowed at 1/3rd Against assessee Telephone and mobile expense - representing user for personal/non-business purposes Held that - No details of the expenditure claimed were furnished by the assessee, and even as much as the place where the telephone is installed, though called for, not provided - no scope for relief for the same reasons Against assessee Rent expenditure - rented premises stood used by the assessee during the relevant period for his clinic as well as for residence. The assessee, however, has not at any stage furnished any details/particulars of the space hired and the manner of its utilization, much less substantiate its claim/s in its respect Held that - No infirmity in the Revenue restricting the assessee s claim for rent to 50% of the total rent paid

Issues involved:
1. Disallowance of general expenses
2. Disallowance of petrol expenses
3. Disallowance of depreciation on car
4. Disallowance of expenditure on tour and travel
5. Disallowance of water and electricity expenses
6. Disallowance of telephone and mobile expenses
7. Disallowance of rent expenditure

Detailed Analysis:
1. The first issue pertains to the disallowance of general expenses. The Assessing Officer disallowed a portion of the claimed general expenses due to lack of proper vouchers and non-allowability as business expenses. The Commissioner of Income-tax (Appeals) upheld the disallowance. However, the ITAT considered the nature of expenses and the onus on the assessee to prove the claims. The ITAT restricted the disallowance to the extent not eligible under section 37(1) of the Income Tax Act, allowing partial relief to the assessee.

2. The second issue involves the disallowance of petrol expenses. The Assessing Officer disallowed a portion of the claimed petrol expenses for lack of proper bills. The Commissioner of Income-tax (Appeals) partially allowed the claim. The ITAT considered the lack of proper evidence for the expenses and restricted the disallowance further, taking into account the personal element involved. The ITAT made a final decision to restrict the disallowance to a specific amount.

3. The third issue concerns the disallowance of depreciation on a car. The Assessing Officer disallowed a portion of the claimed depreciation based on personal and non-business usage of the vehicle. The Commissioner of Income-tax (Appeals) confirmed the disallowance. However, the ITAT analyzed the relevant provisions of the Income Tax Act and concluded that no disallowance could be made under section 38(2) for depreciation on a tangible asset like a motor car. The ITAT deleted the impugned disallowance and adjusted the written down value of the assets accordingly.

4. The fourth issue revolves around the disallowance of expenditure on tour and travel. The Assessing Officer disallowed the entire claim due to lack of supporting evidence for professional purposes. The Commissioner of Income-tax (Appeals) upheld the disallowance. The ITAT considered the lack of details and evidence provided by the assessee, restricting the disallowance to a specific amount based on the possibility of some professional travel being undertaken.

5. The fifth issue relates to the disallowance of water and electricity expenses. The Assessing Officer disallowed a portion of the claimed expenses for premises used both as a home and clinic. The Commissioner of Income-tax (Appeals) confirmed the disallowance. The ITAT found no infirmity in the lower authorities' orders, as the primary facts were undisputed, and decided accordingly.

6. The sixth issue involves the disallowance of telephone and mobile expenses. The Assessing Officer disallowed a portion of the claimed expenses for personal/non-business usage. The Commissioner of Income-tax (Appeals) upheld the disallowance. The ITAT found no scope for relief due to lack of details and evidence provided by the assessee, and decided accordingly.

7. The seventh issue pertains to the disallowance of rent expenditure. The Assessing Officer disallowed a portion of the claimed rent for premises used for both residence and clinic. The Commissioner of Income-tax (Appeals) confirmed the disallowance. The ITAT considered the lack of details and substantiation provided by the assessee, upholding the Revenue's decision to restrict the claim for rent. The ITAT partially allowed the appeal by the assessee.

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