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TMI Blog1980 (6) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1976-77 as entertainment expenses. Total expenditure incurred by the assessee was Rs. 5,158 in the former year and Rs. 4,784 in the latter. The ITO disallowed the entire amount as entertainment expenses under the misconception that it was incurred wholly for providing meals etc. to the customers. Before the ld. AAC it was urged that the disallowance made by the ITO was not justified at all since the expenditure was incurred largely on the members of the staff and, therefore, it was not correct to treat it an entertainment expenditure. Details of the expenses were furnished to the ld. AAC to show that the expenditure was incurred mainly for the staff members. The ld. AAC considered these submissions but he allowed benefit to the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 5,000 under s. 41(2) of the Act. In so far as the disallowance out of travelling is concerned, it appears that the total expenditure claimed by the assessee this year was Rs. 4,701 against Rs. 4,440 last year. It was found that the expenditure included travelling expenditure etc. done by the Directors. The ITO telt that the personal expenditure of the Directors while on tour must have been included in the expenditure claimed and on that ground on estimate basis he disallowed Rs. 500. The ld. AAC upheld the disallowance. It is urged by the ld. counsel for the assessee that the disallowance made was highly excessive. We are inclined to agree. We feel that the disallowance should be restricted to the same figure i.e. Rs. 200 as was dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of these assets is sold. With regard to the estimate of the WDV, it was urged, that the ITO had no alternative but to estimate the WDV on estimate. The inclusion made by the ITO and upheld by the AAC, it was submitted, was justified. 6. We have considered the facts and the rival submissions. We have before us the decision of the Andhra Pradesh High Court in the case of Sirpur Paper Mills. Dealing with s. 41(2), their Lordships observed in paragraph 22. "It may be that separate parts of such machinery can be sold, but then we do not say that the machinery is sold. What we say is that a part of the machinery is sold and not the machinery. Similarly, if a part is damaged or found unworkable, we replace it. We may have discarded that p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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