1980 (3) TMI 125 - AT - Income Tax

Summary

Issues:
1. Disallowance of expenses - travelling and general charges.
2. Disallowance of police protection expenses.
3. Disallowance of general transport charges.
4. Disallowance of tea consumption by staff.

Issue 1: Disallowance of expenses - travelling and general charges
The appeal pertains to the assessment year 1974-75, where the assessee, a registered firm, contested several grounds. The assessee withdrew certain grounds during the hearing. The disallowance of travelling expenses and general charges was contested. The Income Tax Officer (ITO) disallowed expenses on an estimate basis, citing personal and non-trading nature. The Appellate Authority upheld the disallowance. However, upon review, the Tribunal restricted the disallowance to Rs. 1000, finding it to be more just and meeting the ends of justice.

Issue 2: Disallowance of police protection expenses
The ITO disallowed Rs. 19,500 claimed as "Police protection" expenses, contending it was for defending capital assets. The Appellate Authority also upheld the disallowance, stating the expenses were not related to income generation. However, the Tribunal reversed this decision, deeming the expenses necessary for safeguarding the business assets and allowing them as business expenditure.

Issue 3: Disallowance of general transport charges
The ITO disallowed Rs. 10,000 in general transport charges, questioning the lack of proper details and suggesting personal expenses. The Appellate Authority reduced the disallowance to Rs. 3,000. The Tribunal upheld this decision, finding the disallowance reasonable in light of the lack of trading relevance and personal nature of the expenses.

Issue 4: Disallowance of tea consumption by staff
The ITO disallowed the value of 1000 Kgs. of tea consumed by staff, estimating it as income. The Appellate Authority justified this disallowance based on consumption patterns. However, the Tribunal disagreed, noting the lack of justification for the disallowance and directed the deletion of the Rs. 6,000 income addition.

In conclusion, the Tribunal partially allowed the appeal, making adjustments to the disallowed expenses and income additions based on the merits of each issue presented before it.