2013 (2) TMI 126 - AT - Income Tax

Consultancy charges & expenditure towards repairs and maintenance disallowed - CIT(A) allowed the claim - Held that - As found from the orders of the authorities below that they decided the issue without recording the findings properly in a cryptic manner. The grievance of the AO while making the disallowance is that the assessee had not filed proper evidence to corroborate its claim. Therefore, deem it fit and proper to remit the issue to the file of the AO to decide the issue afresh after examining the issue elaborately - in favour of revenue for statistical purposes. Disallowance of transport charges - CIT(A) restricted the disallowance - Held that - no proper findings have been given by the CIT(A) while restricting the disallowance except mentioning that certain transportation vouchers had not been provided to the AO. Since the lorry receipts and proof of expenditure had not been furnished, the AO made the disallowance. In these circumstances, we set aside the order of the CIT(A) and remit the issue to the file of the AO to decide the issue afresh by recording proper findings and in accordance with law. Disallowance of adhoc portion of 40% of the temple expenditure while accepting the genuineness of the expenditure - Held that - Do not find any infirmity in the order of the CIT(A) in sustaining the 40% of the disallowance, out of the disallowance of Rs. 14,55,868/- made by the AO on account of temple expenditure by holding that even though the employees use the temple, yet it is not open only for the employees, but for others as well, therefore, all the expenditure cannot be attributable to employees welfare. Disallownace of selling expenses to the extent of Rs. 10 lakhs - Held that - The disallowance made by the lower authorities on this count is that the assessee has not furnished proof for the expenditure incurred on account of selling expenses. Neither the AO nor the CIT(A) dealt the issue by giving elaborate findings. Hence, set aside the order of the CIT(A) and remit the issue to the file of the AO with a direction to decide the issue afresh in accordance with law. The assessee is directed to furnish the evidence for the expenditure incurred in support of its claim. In favour of assessee for statistical purposes.

Summary

Issues:
- Disallowance of consultancy charges without complete information on services rendered
- Disallowance of repairs and maintenance expenses without proper verification
- Disallowance of transport charges without verification of exact transport charges
- Disallowance of temple expenditure
- Disallowance of selling expenses

Issue 1 - Consultancy Charges:
The AO disallowed a portion of consultancy charges as full information related to services rendered was not furnished. The CIT(A) found no missing details in the ledger account and deemed the disallowance adhoc. The ITAT remitted the issue to the AO for proper examination with detailed findings.

Issue 2 - Repairs and Maintenance Expenses:
The AO disallowed 50% of repairs and maintenance expenses due to insufficient vouching. The CIT(A) found all entries detailed and directed the AO to delete the addition, as no unvouched expenditure was identified. The ITAT remitted the issue to the AO for fresh examination.

Issue 3 - Transport Charges:
The AO disallowed a portion of transport charges due to lack of specific details. The CIT(A) reduced the disallowance based on the provided ledgers but mentioned missing transportation vouchers. The ITAT remitted the issue to the AO for proper findings and directed the assessee to provide lorry receipts and proof of expenditure.

Issue 4 - Temple Expenditure:
The AO disallowed temple expenditure not related to business activities. The CIT(A) sustained 40% of the disallowance, considering the temple was not solely for employees. The ITAT upheld the CIT(A)'s decision, dismissing the appeal.

Issue 5 - Selling Expenses:
The AO disallowed 50% of selling expenses due to lack of proof. The CIT(A) restricted the disallowance but noted insufficient evidence provided. The ITAT remitted the issue to the AO for a fresh decision, directing the assessee to provide supporting evidence.

The ITAT allowed the revenue's appeal for statistical purposes and partly allowed the assessee's appeal for statistical purposes. The judgments were pronounced on 9.1.2013 by the ITAT Hyderabad.