2023 (8) TMI 279 - AT - Income Tax

Disallowance under transport segment and sanitization segment - Addition of repairs and maintenance expenses - As per AO no TDS has been deducted on balance expenses - HELD THAT - It is true that during the course of assessment proceedings itself the assessee has explained that repairs and maintenance expenses were incurred by it on its own vehicles and not on hired vehicles. Explanation of the assessee was supported by bills/vouchers. It is true that the Assessing Officer has neither pointed out any defect nor any infirmity in the explanation of the assessee. Considering the fact that addition has been made on adhoc basis, the same deserves to be deleted. We, therefore, direct the Assessing Officer to delete the impugned disallowance.

Summary

Issues involved:
The issues involved in this case are the confirmation of additions related to foreign travel expenditure, repair and maintenance expenses under Transport Segment, and the invocation of section 145(3) of the Act for adhoc disallowance.

Confirmation of Additions:
The assessee appealed against the order confirming the additions made by the Assessing Officer. The additions included foreign travel expenditure, repair and maintenance expenses under Transport Segment, and Sanitization Segment. The Assessing Officer noticed that tax was not deducted at source on a portion of the repair and maintenance expenses. The assessee explained that the expenses were incurred on owned vehicles, not hired ones. Despite supporting vouchers, the Assessing Officer made adhoc disallowances. The CIT(A) upheld these additions. However, the Tribunal observed that the Assessing Officer did not find any fault in the assessee's explanation and the disallowances were made on an adhoc basis. Consequently, the Tribunal directed the Assessing Officer to delete the disallowances, partially allowing the assessee's appeal.

Invocation of Section 145(3):
The assessee questioned the invocation of section 145(3) of the Act for confirming adhoc disallowance at 20% on repair and maintenance expenses under the Transport Segment. The Tribunal noted that the assessee had provided detailed explanations supported by vouchers during the assessment proceedings. The Tribunal found that since the Assessing Officer did not identify any deficiencies in the assessee's explanations and the disallowances were made on an adhoc basis, the invocation of section 145(3) was not justified. Consequently, the Tribunal directed the Assessing Officer to delete the impugned disallowance, partially allowing the appeal.