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2012 (11) TMI 794 - AT - Income TaxDisallowance of transportation expenses Held that - Assessing Officer has also allowed the claim of above expenses, but by mistake in the computation of income added the above amount - addition of Rs.2,39,802 made on the above account delete Disallowance of telephone expenses Held that - Disallowance of 20% of telephone expenses made by AO on the ground that the payment was made in cash for which bills / vouchers were not available with the assessee. We, however, feel that the disallowance is on higher side and therefore, we restrict this disallowance to 10% of the expenses incurred by the assessee - appeal filed by the assessee is partly allowed for statistical purpose
Issues:
1. Disallowance of transportation expenses 2. Disallowance of telephone expenses Disallowance of Transportation Expenses: The appeal was against the disallowance of transportation expenses by the Assessing Officer (AO). The AO disallowed Rs. 20,59,480/- of transportation expenses based on the unavailability of the transporters at the given addresses. The assessee contended that it provided manpower services and paid extra for transportation, submitting supporting documents. The AO rejected the explanation, citing non-traceability of transporters and past disallowances. The CIT(A) partly allowed the appeal, disallowing expenses paid to three transporters but allowing Rs. 2,39,802/- for services confirmed by one transporter. The Tribunal referred to a previous order and remanded the issue back to the CIT(A) for fresh consideration, following the same direction. Disallowance of Telephone Expenses: The AO disallowed Rs. 14,316/- out of Rs. 71,578/- claimed as telephone expenses due to cash payments without bills/vouchers. The CIT(A) upheld the disallowance. The Tribunal, considering the lack of bills/vouchers, reduced the disallowance to 10% of the expenses, finding the initial disallowance excessive. In conclusion, the Tribunal partially allowed the appeal on both issues, remanding the transportation expenses matter back to the CIT(A) for reconsideration and reducing the disallowance of telephone expenses from 20% to 10%.
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