2011 (7) TMI 1385 - AT - Income Tax

Summary

Issues involved: Disallowance of expenses u/s 143(1) of the Income-tax Act, 1961 for assessment year 2006-07.

Issue 1 - Adhoc disallowance of Repair Machinery & Equipment expenses:
The Assessing Officer disallowed &8377; 10,000 out of Repair Machinery & Equipment Expenses due to lack of complete verification and reliance on self-made vouchers. The ld. CIT(A) upheld the disallowance. However, the ITAT found that all vouchers were available and the disallowance was unjustified. The ITAT noted the absence of supporting evidence from the Assessing Officer and deleted the disallowance.

Issue 2 - Adhoc disallowance of Running/Maintenance of Generator expenses:
The Assessing Officer disallowed &8377; 25,000 under Running & Maintenance of Generator Expenses based on self-made debit vouchers. The ld. CIT(A) affirmed this disallowance. The ITAT, after considering third-party vouchers and arguments presented, concluded that the disallowance lacked justification. Consequently, the ITAT deleted the disallowance.

Issue 3 - Disallowance under Running & Maintenance of Vehicle Expenses:
The Assessing Officer disallowed &8377; 61,959 for Running and Maintenance of Vehicle Expenses, depreciation, and interest on car loan, presuming ownership by another individual. The ld. CIT(A) upheld this disallowance. However, the ITAT reviewed documents proving ownership by the assessee and found the disallowance baseless. The ITAT allowed the appeal and deleted the addition.

In conclusion, the ITAT ruled in favor of the appellant, deleting all three adhoc disallowances made by the Assessing Officer and confirmed by the ld. CIT(A) for the assessment year 2006-07.