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TMI Blog1984 (3) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO turned down his plea for allowing these expenses against the income derived under different heads. He observed : 'I do not find any section in the Income-tax Act, under which expenses of the nature mentioned by the assessee are allowable'. Having failed before the ITO, the assessee went in appeal before the Commissioner (Appeals) and contended that he had incurred the aforesaid expenditure for deriving income under various heads. It was also explained by him that a similar claim for expenses had been allowed in the preceding years. Therefore, the claim for expenses should be allowed in this year also. The Commissioner (Appeals) considered the plea of the assessee but he could not be persuaded to accept the claim of the assessee fully. He allowed the assessee a deduction of Rs. 5,771, only out of his total claim of Rs. 13,130. It is in respect of the claim for the balance amount of Rs. 12,543 that the assessee is in appeal before us. 3. According to the learned counsel for the assessee, these expenses were spent towards earning of income derived under different heads including business. He also pointed out that his similar claim for expenses was allowed for the preceding year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and pronouncement of the Supreme Court in the aforesaid case, the Commissioner (Appeals) was plainly misdirected insisting upon the evidence of work, done for earning the income. Keeping proper accounts of earning is also a part of the earning of income and if for that purpose an establishment is maintained which requires employment of a chowkidar and a peon, we cannot hold that no nexus has been found between the expenditure and earning of the income. Therefore, in our view, the finding of the Commissioner (Appeals) is not liable to be accepted as the correct finding on the issue. Except for the expenditure of Rs. 1,075 incurred on trade subscription, we do not find that the claim of the assessee can be turned down in respect of the remaining expenditure as an outgoing of business. However, we would further hold that an amount of Rs. 1,000 should be treated as an expenditure incurred on inadmissible items. This would leave Rs. 10,000 incurred by the assessee which, in our view, should be considered as necessary outgoing, incurred for earning income from business. 5. In the result, the appeal is partly allowed. Per Shri P.K. Mehta, Accountant Member --- I would not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. The question referred to the Supreme Court was a question of the legal aspect of the controversy only and not about the substantiation of the claim of an assessee to have incurred the expenditure for the purpose he was claiming to have incurred it. The question before the Supreme Court was as under : " Whether the expenses incurred by the assessee (who was not carrying on any independent business of his own), in earning income from various firms in which he was a partner, are allowable in law as deductions ?" The Supreme Court went into the aspect whether the expenditure was allowable in accordance with the provisions of law. As stated earlier, it had not to go into the question of either the establishment of the expenditure having been incurred for the purposes claimed or the lack of evidence relating thereto. The Bombay High Court has considered the decision of the Supreme Court in Ramniklal Kothari's case while dealing with a similar situation in the case of Phiroze H. Kudianavala v. CIT [1978] 113 ITR 873. After considering the Supreme Court authority in Ramniklal Kothari's case and the Patna High Court authority in CIT v. Atma Ram Modi [1969] 71 ITR 199, the Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pts and expenditure with details showing the nature of these items have been recorded. In fact, if such records were available, most of the problems of the assessee would have been over. Again about travelling, what travelling could be done by spending Rs. 1,578 only to supervise the business operation on remote sites in forest where the business of the two firms was carried on. It is also to be noted that when the car was being maintained, it was used for personal purposes too and in this connection it is relevant to refer to the assessment order of the earlier year where one-third of car expenses was disallowed for personal use. The Judicial Member has also held that expenditure of Rs. 1,075 incurred on trade subscription was not allowable and he also made a further estimate of another Rs. 1,000 for inadmissible expenditure. However, another head where maximum expenditure is claimed is depreciation. A claim for depreciation on typewriter, furnitures, electric fans and motor car, etc., of Rs. 5,850 is made. It is not possible to allow depreciation claim on typewriter, furnitures, electric fans and motor car unless it is brought out by suitable evidence that some work was carried o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee relates to the extent of disallowance of expenditure in the particular case. While the learned Judicial Member has set a figure as Rs. 11,000 as the allowable expenditure and the learned Accountant Member Rs. 2,400, the extent of allowance which I as a Third Member can work out may not necessarily be either of the above two. It would not be proper for the Third Member to be compelled to adopt one of the figures of allowance either. Having regard to the facts in the present case, the parties have agreed that the extent of allowability the Third Member fixes may be treated as corresponding to the higher figure either the differing members have fixed. 2. The assessee-HUF derives income from property, interest on securities, share profits from three firms and dividends. The assessee claimed a sum of Rs. 10,985 by way of expenditure from the above items of income. The assessee was maintaining books of account in which were incorporated the receipts from the various sources as well as the impugned expenditure claimed. These items of expenditure came under the head salaries' traveling, repairs, bank charges, postage, etc. Depreciation was also included. The ITO analysed these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as relevance to the earning of income have not been proved. 4. The Commissioner (Appeals) and both the learned members of the Tribunal have allowed some expenditure out of the overall claim. None of these authorities have also referred to the failure of the assessee to properly allocate any item of expenditure to any particular item of income. Even though the learned Accountant Member has made out his case for disallowing the entire expenditure, he has allowed a part of it. Certain items of expenditure like legal fees allowed by the Commissioner (Appeals) have not been challenged by the department. That the assessee is maintaining books of account and has incurred this expenditure cannot be denied. That there would be some personal expenditure cannot also be denied. The question, therefore, is one of, as the question referred to me clearly indicates, the extent of expenditure to be allowed. Having analysed in detail the items and the heads under which the expenditure is claimed, I would hold that a sum of Rs. 7,000 should be allowed out of the overall claim of Rs. 13,000. Since this merges with the allowance made by the learned Judicial Member, to this extent I agree with hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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