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Issues Involved:
1. Annual Letting Value of Agra Building 2. Depreciation on Barge 3. Tug Hire Charges 4. Deduction of Unreimbursed Expenses 5. Disallowance of Diwali Gifts 6. Disallowance of Security Deposits 7. Disallowance of Club Fees 8. Depreciation on Tractors/Trailers 9. Disallowance of Telephone Expenses 10. Disallowance of Motor Car Expenses Detailed Analysis: 1. Annual Letting Value of Agra Building The assessee challenged the annual letting value of the Agra building, arguing that the municipal taxes paid by sub-tenants should not be included in the rental income. The Tribunal noted that the Assessing Officer did not consider the issue of municipal taxes paid directly by sub-tenants. The Tribunal set aside this issue to the Assessing Officer for verification and examination of facts, referencing a previous Tribunal decision that the building is covered under the Bombay Municipal Rent Control Act and cannot have a fair market value above the standard rent. 2. Depreciation on Barge The assessee did not press this ground during the hearing. Consequently, the Tribunal dismissed this ground as not pressed. 3. Tug Hire Charges The assessee claimed tug hire charges for 34 months, but the Assessing Officer allowed only a proportionate amount, considering the payment to a sister concern as a sham transaction. The Tribunal allowed the hire charges for 13 months, aligning with the contract period, but rejected the claim for an additional three months for demobilization, as the contract was not executed. 4. Deduction of Unreimbursed Expenses The assessee claimed expenses not reimbursed by M/s. Stovec Industries Ltd. The Tribunal noted that the assessee failed to produce sufficient evidence before the lower authorities. The Tribunal set aside this issue to the Assessing Officer for verification and examination of relevant evidence. 5. Disallowance of Diwali Gifts The Assessing Officer disallowed 50% of the expenses on Diwali gifts due to missing vouchers and cash payments. The Tribunal upheld this disallowance, agreeing that the assessee failed to substantiate the claim with proper evidence. 6. Disallowance of Security Deposits The assessee claimed security deposits paid to executive engineers as civil work expenses. The Assessing Officer disallowed these expenses as they pertained to a previous year and were not substantiated with evidence. The Tribunal upheld the disallowance, noting the lack of relevant evidence and the time gap in claiming the expenses. 7. Disallowance of Club Fees The Tribunal allowed the club membership fee of Rs. 10,000 as a business expense, referencing jurisdictional High Court decisions. However, it disallowed Rs. 8,100 paid against receivables due to lack of evidence that it was incurred wholly and exclusively for business purposes. 8. Depreciation on Tractors/Trailers The Tribunal allowed the higher rate of depreciation at 40% for tractors and trailers used in the business of transportation of goods on hire, referencing Circular No. 652 dated June 14, 1993. 9. Disallowance of Telephone Expenses The Tribunal deleted the disallowance of Rs. 24,112 for telephone expenses reimbursed to executives, treating it as perquisites in the hands of the employees. 10. Disallowance of Motor Car Expenses The Tribunal modified the disallowance of motor car expenses, limiting it to 10% of the expenditure on petrol and current repairs, instead of a flat 25% disallowance. Conclusion: The Tribunal allowed some grounds for statistical purposes, requiring further verification by the Assessing Officer, while upholding or modifying other disallowances based on the evidence and legal principles. The order was pronounced in the open court on January 21, 2011.
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