2013 (6) TMI 50 - HC - Income Tax

Genuineness of expenses claimed as deduction - 5 out 17 sample vouchers given by assessee were not bearing any signature of recipient & most of payments were in cash - freight & transportation expenses - held that - On being satisfied that there was cogent material available on the record to sustain the say of the assessee and in absence of any reason to disallow such claim when both (CIT(A) and ITAT) of them concurrently held such an issue in favour of the assessee, we see no reason to interfere. - The entire issue is based on factual matrix with no perversity in the findings of these authorities. - No question of law much less any substantial question of law arises. - Decided against the revenue. Payment to drivers and helpers - held that - CIT(A) and ITAT have dealt with the issue of disallowance of 10% daily allowance given to the drivers appropriately on the basis of substantive material available in support thereof. It can also further be noted that the Tribunal was right in holding that it is next to impossible to expect these drivers and helpers to maintain supporting evidences and vouchers in respect of their food and miscellaneous expenses. Again with nothing on record to hold such expenses as non-genuine or not for the business, both the authorities have is also rightly concluded. - Decided against the revenue. Clearing and forwarding expenditures - held that - With regard to the clearing and forwarding expenses and general labour charges, the truck association fees, etc. were not required to be recovered from the end-users. However, those which were paid towards clearing and forwarding charges, were necessarily recovered from the end-users. Eloquently, the facts vindicated the stand taken by both the CIT (Appeals) and the Tribunal in setting aside the conclusion of the Assessing Officer. We see absolutely no reason to interfere with as both the authorities have given cogent reasonings while concluding the said issue. - decided against the revenue.

Summary

Issues involved:
1. Disallowance of freight and transportation expenses.
2. Disallowance of daily allowance to drivers.
3. Disallowance of clearing and forwarding expenses.

Detailed analysis:
1. Disallowance of freight and transportation expenses:
The case involved a challenge to the judgment of the Income-Tax Appellate Tribunal regarding the disallowance of a portion of freight and transportation expenses claimed by the assessee. The Assessing Officer had added back 2% of the total expenses due to lack of authentic evidence. The CIT (Appeals) reviewed the evidence and found that the expenses were supported by vouchers with complete details, leading to the deletion of the disallowance. The Tribunal concurred with the CIT (Appeals), emphasizing that there was no justification for the disallowance as the expenses were adequately substantiated. Both authorities extensively examined the evidence and concluded in favor of the assessee, leading to the dismissal of the Revenue's challenge.

2. Disallowance of daily allowance to drivers:
The issue revolved around the disallowance of 10% daily allowance given to drivers by the Assessing Officer. The CIT (Appeals) and the Tribunal found that the payments were genuine and not excessive, considering the nature of the transport business and the challenges faced by drivers in maintaining detailed records. Both authorities concluded that the disallowance was not justified as there was no evidence to suggest non-business purposes or excessive payments. The Tribunal highlighted the practical difficulties faced by drivers in record-keeping and supported the deletion of the disallowance. The decision was based on substantive material and factual analysis, with no legal questions arising.

3. Disallowance of clearing and forwarding expenses:
The Assessing Officer had disallowed clearing and forwarding expenses claimed by the assessee, alleging non-payment to forwarding agents based on incorrect understanding of financial transactions. The CIT (Appeals) overturned the disallowance, explaining that the expenses were legitimate and recovered from end-users. The Tribunal upheld the CIT (Appeals) decision, emphasizing the clear distinction between different types of expenses and the recovery process. Both authorities provided detailed reasoning and factual analysis to support their conclusions, leading to the dismissal of the Revenue's challenge. No legal issues or substantial questions of law were identified in this matter.

In summary, the judgment addressed the challenges to the disallowance of various expenses claimed by the assessee, with the CIT (Appeals) and the Tribunal ruling in favor of the assessee based on thorough examination of evidence and factual analysis. The decisions were supported by detailed reasoning, highlighting the legitimacy of the expenses and the lack of justification for disallowance. The judgment ultimately dismissed the Tax Appeal as it did not raise any substantial questions of law.