1995 (6) TMI 70 - AT - Income Tax

Summary

Issues:
1. Disallowance of expenditure on purchase of medicines for a medical practitioner for assessment years 1989-90 and 1990-91.
2. Disallowance of miscellaneous expenses claimed by a clinic running at the residence.
3. Addition of cash found during a search operation.
4. Disallowance of professional receipts and expenses related to the purchase of medicines.
5. Disallowance of relief under section 80C of the Act.

Analysis:
1. The first issue revolves around the disallowance of expenditure on the purchase of medicines by a young medical practitioner. The Assessing Officer (AO) made an addition due to discrepancies in the claimed expenditure. The Dy. CIT(A) allowed a higher amount but still imposed a partial disallowance. The Tribunal upheld the Dy. CIT(A)'s decision, considering the lack of vouchers and the estimate nature of the expenses.

2. The second issue concerns the disallowance of miscellaneous expenses claimed by the clinic. The AO had disbelieved the expenses, leading to an addition. The Dy. CIT(A) allowed certain expenses but sustained disallowances on specific items. The Tribunal found the Dy. CIT(A)'s estimate of expenses to be appropriate, given the lack of complete evidence.

3. The third issue involves the addition of cash found during a search operation. The AO added a certain amount, which was later deleted by the Dy. CIT(A) considering the nature of the profession and the reasonable expectation of cash availability. The Tribunal agreed with the Dy. CIT(A)'s reasoning and rejected the appeal.

4. The fourth issue pertains to the disallowance of professional receipts and expenses related to the purchase of medicines. The Tribunal upheld the Dy. CIT(A)'s decision on the estimate of expenses, considering the arguments presented by both parties.

5. The final issue relates to the disallowance of relief under section 80C of the Act. The Revenue authorities denied the deduction claimed under section 80C due to the investment being made from borrowed funds. However, the Tribunal held that since the investment was attributable to the assessee's income chargeable to tax, the deduction should have been allowed, leading to partial success for the assessee in the cross-objection.

This judgment highlights the importance of maintaining proper documentation and providing sufficient evidence to support claimed expenses, while also emphasizing the need for a reasonable estimation of expenses in certain situations.