9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (1) TMI 184 - AT - Income TaxDisallowance of expenditure - Tribunal in the first round of the proceedings have already given its finding on the issue of allowability of expenditure relating to manufacturing activity and upheld the cutoff date 20.1.1996 - Held that - So far as the Manufacturing expenditure incurred prior to the cut off date of 20 May of the Financial year is concerned, AR fairly quantified the same at Rs. 1,54,789/-. Therefore, despite the objection of the DR for bringing finality to the longstanding litigation (nearly 14 years), the argument of the Counsel should be accepted notwithstanding the assessee s failure to produce any bills and vouchers for the reasons of lost in transit . To the extent of Rs 1,54,789/-, as consented by the Counsel, revenue succeeds and thus, relevant ground of the assessee is dismissed. Genuineness of the general expenditure for the period subsequent to the cut off date 20.5.1996 - Held that - Perusing the individual accounts of travelling expenses it is found that the spouse of Mr. D.C. Patil, incurred a sum of Rs. 1,00,523/- towards the foreign travel (from New York to London) in December, 1996 and incurred an expenditure of Rs.1,00,523/- and the business purposes of the same are not ascertainable. It is a trite law that the onus is on the assessee to discharge when a claim of deduction is made in the books of accounts, thus the said expenditure should not be held as the business expenditure. Telephone expenditure on the telephone installed at director s home and use of the car (repairs, fuel and depreciation) - Held that - Assessee reliance on Sayaji Iron & Engg. Co. vs. CIT (2001 (7) TMI 70 - GUJARAT HIGH COURT) for no disallowance is not acceptable as case is distinguishable on the facts that cars in question were outsourced by the Company and placed them at the disposal of the Directors of that company. Whereas, in the present case, the car in question was owned by the assessee and use of the vehicles wholly and exclusively was not demonstrated with the help of log book to support the nature of use of the cars - the assessee does not have evidences in its possession as they are lost in transit and in effect, the assessee failed to discharge its legal responsibility before the AO. No justification in making any disallowances on account of remuneration and benefit as they relate to the employees account and they are needed for running of the business and conducting of business of earning commission income is undisputed in this case - disallowance @ 1/10th on the expenditure incurred on residential telephone at the premises of the assessee and also 1/10th of the motorcar expenses (for fuel, repairs and depreciation on car) will meet the both ends of the justice - appeal of the assessee partly allowed.
Issues Involved:
1. Disallowance of 50% of Travelling Expenses. 2. Disallowance of 50% of Employees Remuneration and Benefits. 3. Disallowance of 50% of Telephone Expenses. 4. Disallowance of 25% of Vehicle Expenses. Detailed Analysis of the Judgment: 1. Disallowance of 50% of Travelling Expenses: The assessee claimed Rs. 10,40,154/- as travelling expenses, which included expenses for the Director and the Managing Director's wife. The Assessing Officer (AO) disallowed 50% of these expenses due to the lack of supporting bills and vouchers, a decision upheld by the Commissioner of Income Tax (Appeals) [CIT (A)]. The Tribunal confirmed the disallowance of Rs. 1,54,789/- incurred prior to the commencement of business (20.5.1996) and the foreign travel expenses of the Managing Director's wife amounting to Rs. 1,00,523/-. 2. Disallowance of 50% of Employees Remuneration and Benefits: The assessee claimed Rs. 6,91,630/- for employee remuneration and benefits, but could not produce the salary register. The AO disallowed 50% of these expenses, a decision confirmed by the CIT (A). The Tribunal found no justification for disallowing these expenses as they were necessary for running the business and earning commission income. 3. Disallowance of 50% of Telephone Expenses: The assessee claimed Rs. 3,87,893/- for telephone expenses, including a telephone installed at the Director's residence. The AO and CIT (A) disallowed 50% of these expenses due to lack of evidence. The Tribunal, however, found the percentage of disallowance unreasonable and reduced it to 1/10th for the residential telephone. 4. Disallowance of 25% of Vehicle Expenses: The assessee claimed Rs. 2,14,402/- for vehicle expenses, including repairs, running expenses, and depreciation. The AO and CIT (A) disallowed 25% of these expenses for non-business purposes. The Tribunal reduced the disallowance to 1/10th, as the assessee failed to provide a log book or other evidence to support the exclusive business use of the vehicles. Conclusion: The Tribunal partly allowed the appeal of the assessee. It confirmed the disallowance of Rs. 1,54,789/- for pre-commencement expenses and Rs. 1,00,523/- for the Managing Director's wife's foreign travel. It reduced the disallowance of telephone and vehicle expenses to 1/10th of the claimed amounts. The disallowance of employee remuneration and benefits was not justified and thus not upheld. The appeal was adjudicated accordingly, providing part relief to the assessee.
|
