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2021 (8) TMI 2 - AT - Income TaxClaim of SMU admission expenses - assessee has explained that the nature of these expenses are discount, referral bonus, waiver of late fees etc given to existing and new students to increase enrollment for various courses/progammes of Sikkim Manipal University through the distant education centre which is being run by him - HELD THAT - All that has been submitted by the assessee to this effect is a ledger account of SMU admission expenses and affidavit of four students which to our mind is not sufficient enough in support of the claim of the expenses. As we have noted above, there are matters which needs to be examined in detail and relevant facts brought on record. Therefore, we are of the considered view that it would be just and appropriate that the matter is set-aside to the file of the AO to examine the same a fresh after providing reasonable opportunity to the assessee. In the result, the ground of appeal no. 3 is allowed for statistical purposes. Disallowance of computer AMC expenses - AO has disallowed the same for the reason that no proper vouchers have been maintained and expenses have been incurred in cash - HELD THAT - Even before the ld CIT(A) or during the present proceedings, nothing has been brought on record in support of said claim of expenses in form of terms of AMC arrangement/contract and the invoices/bills raised by the vendor towards the AMC. Inspite of the same, we find that the AO has been reasonable enough in disallowing a sum of ₹ 35,000/- only out of total expenses of ₹ 3,86,352/- and which has already been restricted to ₹ 17,500/- by the ld CIT(A). Therefore, we donot find any infirmity in the findings of the lower authorities and the disallowance so made and sustained by the ld CIT(A) is hereby confirmed. Disallowance of visiting faculty expenses - non-production of the faculty members for examination and the fact that the amount has been paid to them in cash - HELD THAT - Faculty member couldn t be representative of 26 faculty members and the assessee could have ensured presence of few more faculty members to give credence to his claim and the AO could have been requested to examine them and only in a situation, where the AO is not fully satisfied, other faculty members could have been asked for appear or in the alternative, any other credible verifiable documentation in terms of their engagement with the assessee as part of his distant learning centre could have been submitted to the satisfaction of the AO, however, we find that there is nothing on record. In such facts and circumstances of the case, where the AO has only disallowed a sum of ₹ 90,375/- out of ₹ 400,100/- and which has further been restricted to ₹ 45,187/- by the ld CIT(A), we find that the authorities below have been more than reasonable in their approach and keeping the entirety of facts and circumstances, we are of the considered view that such findings are just and proper and we are not inclined to interfere with the said findings. The addition so made and confirmed by the ld CIT(A) amounting to ₹ 45,187/- is accordingly confirmed. Disallowance of vehicle running and maintenance expenses - HELD THAT - In the instant case, where the AO has recorded a finding that the vehicles have not been used exclusively for the purposes of business, a finding which remain unrebutted before us, and has determined and restricted the depreciation claim, we donot see any infirmity in the said findings of the AO. On appeal, we find that the ld CIT(A) has held the quantum of disallowance to be excessive and has already restricted the same to ₹ 15,000/- and in the facts and circumstances of the present case, we therefore are not inclined to interfere with the said findings and the same are hereby confirmed. Birthday celebration expenses - personal or business expenses - HELD THAT - These expenses are undisputedly incurred on birthday celebration of various staff members employed by the assessee, the same are in nature of staff welfare expenses and cannot be termed as personal expenses and are thus allowable expenses. The disallowance is thus directed to be deleted.
Issues Involved:
1. Delay in filing the appeal. 2. Validity of the assessment order. 3. Rejection of books of accounts. 4. Disallowance of business expenses, specifically: - SMU admission expenses. - Computer installation expenses. - Visiting faculty expenses. - Vehicle running and maintenance expenses. - Telephone/mobile expenses. - Birthday celebration expenses. Detailed Analysis: 1. Delay in Filing the Appeal: The assessee submitted that the delay in filing the appeal was due to a mistake by the earlier counsel, and the new counsel discovered the oversight. The tribunal condoned the delay, stating that "substantial justice should prevail over procedural or technical aspects." 2. Validity of the Assessment Order: The assessee argued that the assessment order was invalid as the AO did not make any inquiries. The tribunal found no merit in this argument, stating that specific expenses could be disallowed even without rejecting the books of accounts. 3. Rejection of Books of Accounts: The assessee contended that the disallowance of expenses was unjustified as the books of accounts were not rejected. The tribunal dismissed this ground, emphasizing that disallowance of specific expenses does not necessarily require rejection of books of accounts. 4. Disallowance of Business Expenses: A. SMU Admission Expenses: The assessee claimed expenses for discounts, referral bonuses, and waiver of late fees to students. The AO disallowed these expenses due to lack of verification and unusual practice. The tribunal noted the necessity to examine the authorization by Sikkim Manipal University and the nexus of such expenses with actual admissions. The matter was remanded to the AO for fresh examination. B. Computer Installation Expenses: The AO disallowed a portion of these expenses due to lack of proper vouchers and cash payments. The tribunal upheld the disallowance, noting that the assessee failed to provide supporting documents. C. Visiting Faculty Expenses: The AO disallowed a part of these expenses due to non-production of faculty members for verification and cash payments. The tribunal upheld the disallowance, stating that the assessee failed to substantiate the claim and produce necessary documentation. D. Vehicle Running and Maintenance Expenses: The AO disallowed a portion of these expenses due to lack of logbook and potential personal use. The tribunal upheld the disallowance, noting that the assessee did not provide sufficient evidence to rebut the AO's findings. The tribunal also confirmed the restriction of depreciation claim as per section 38(2). E. Telephone/Mobile Expenses: The tribunal did not specifically address this issue separately, implying that the disallowance by the lower authorities was upheld. F. Birthday Celebration Expenses: The tribunal found these expenses to be in the nature of staff welfare and allowable. The disallowance of ?36,270 was directed to be deleted. Conclusion: The appeal was partly allowed for statistical purposes, with specific remands and confirmations on various disallowances. The order emphasized the need for substantial evidence and proper documentation to substantiate business expenses.
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