1991 (1) TMI 181 - AT - Income Tax

Summary

Issues: Disallowance of travelling expenses and membership fees deduction

Travelling Expenses Disallowance:
The appeal concerns the disallowance of Rs. 6,240 out of travelling expenses by the Income Tax Officer (ITO), which was partially upheld by the first appellate authority. The appellant, an individual deriving income from various sources, argued that the entire expenditure was incurred strictly for business purposes. The appellant contended that a part of the expenditure was required to be disallowed but should be restricted to a token figure. The Dispute Resolution Tribunal noted that the disallowance was on the higher side, considering the details provided and subjected to check. The Tribunal ordered a disallowance of Rs. 2,000 to account for personal expenditure, unvoiced items, and those exceeding statutory limits.

Membership Fees Deduction Disallowance:
The second issue pertained to the disallowance of Rs. 2,000 being the membership fees paid by the appellant to an association. The ITO disallowed the deduction, stating it lacked a close and direct nexus to the business. The appellant argued that the membership provided various services related to legal advice, breakdown service, repairers, touring facilities, and more, which were essential for business purposes. The Tribunal accepted the appellant's argument, emphasizing that the membership services were directly related to the business due to the necessity of vehicle ownership. The Tribunal upheld a partial disallowance of 1/3rd for personal use, allowing relief for the remaining amount. The appeal was partly allowed based on these findings.