1997 (4) TMI 102 - AT - Income Tax

Summary

Issues:
1. Allowability of loss by theft of ornaments
2. Disallowance of labor expenses
3. Disallowance of traveling, Dharmada, and telephone expenses

Analysis:

Issue 1: Allowability of loss by theft of ornaments
The appellant contested the addition of Rs. 2,20,488 on account of loss by theft of ornaments. The theft occurred during a business tour when gold ornaments were stolen from the appellant's belongings. The Assessing Officer (AO) disallowed the loss as it pertained to a different assessment year. The CIT(A) upheld the AO's decision, stating that the police had given clear findings of non-recovery of the stolen ornaments in a previous year. However, the appellant argued that he waited for the police inquiry outcome before writing off the amount. The Appellate Tribunal noted that the theft was genuine, and the appellant had disclosed the value of the stolen goods in his stock year after year. The Tribunal held that the loss was actual and present, and the appellant genuinely believed in the chance of recovery. Therefore, the claim of the appellant for the year under appeal was allowed.

Issue 2: Disallowance of labor expenses
The AO disallowed Rs. 5,000 out of the total labor expenses claimed by the appellant, citing unverifiable expenses related to Milan Jewellers. The CIT(A) confirmed the disallowance. The appellant argued that there was no justification for the disallowance and presented the bill of Milan Jewellers before the Tribunal. However, the Tribunal declined to admit the additional evidence and upheld the disallowance of Rs. 5,000. The Tribunal found the disallowance to be in order and dismissed the appellant's grievance.

Issue 3: Disallowance of traveling, Dharmada, and telephone expenses
The AO disallowed Rs. 4,500 for personal use of the telephone, Rs. 1,000 for Dharmada expenses, and Rs. 2,600 for traveling expenses claimed by the appellant. The CIT(A) confirmed these disallowances. The Tribunal agreed with the authorities below, stating that personal use of the telephone could not be ruled out. Similarly, the disallowances of Dharmada and traveling expenses were deemed justified. The Tribunal found no reason to interfere with these disallowances.

In conclusion, the appeal was allowed in part concerning the loss by theft of ornaments, while the disallowances of labor, traveling, Dharmada, and telephone expenses were upheld.