2010 (10) TMI 1250 - AT - Income Tax

Summary

Issues involved: Appeal against order of Ld. CIT(A) for Assessment Year 2007-08 regarding deletion of addition of Rs.3,74,85,859 and confirmation of disallowances on account of personal use of motor car and communication devices.

Revenue Appeal (ITA No. 1513/Kol/2010): The revenue challenged the deletion of Rs.3,74,85,859 addition by Ld. CIT(A). The Assessing Officer noted a variance in total receipts admitted in P & L Account and TDS certificates. The revenue argued that the difference represented income and not mere receipts, urging to set aside Ld. CIT(A)'s order. The assessee, a firm of Advocates and Solicitors, maintained that the amount in question was reimbursement of out of pocket expenses by clients, not income. The Ld. CIT(A) held in favor of the assessee, citing the firm's accounting practices and treatment of expenses as out of pocket expenses. The Tribunal upheld Ld. CIT(A)'s decision, emphasizing that the expenses were not understated and the advances subject to TDS could not be treated as income.

Cross Objection (CO No. 127/Kol/2010): The assessee contested disallowances for personal use of motor car and communication devices. The Ld. CIT(A) confirmed the disallowances, but the assessee argued that expenses related to personal use were already deducted before debiting the firm's account. The Tribunal upheld the disallowance for motor car, telephone, and mobile phone expenses but deleted the disallowance for FAX expenses.

In conclusion, the Tribunal dismissed the revenue's appeal and partly allowed the assessee's Cross Objection, maintaining the Ld. CIT(A)'s decision on the deletion of addition and confirming disallowances except for FAX expenses.