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TMI Blog2007 (12) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... han the last year. The assessee keeps the generator set on stand by and it is not possible to prove on record that electrical supply was erratic during relevant year. I do not agree with learned CIT(A) that there cannot be any co-relation of generator expenses with the quantity of seeds processed. Rather, these are directly related to each other. It is an admitted fact that the books of accounts of the assessee were not rejected and the production is more in this year. The small amounts of diesel expenses were not verifiable. The lump sum addition of Rs. 70,000 is not based on any logic. Therefore, legally it is not possible to sustain this addition as the two years are not comparable and the reasoning of the assessee are plausible. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and reduce this addition to just half. Therefore, ground No. (4) is partly allowed. Disallowance out of vehicle maintenance expenses - 1/5th of total expenses - disallowance is on higher side and, therefore, I restrict the same to 1/10th and reduce the same to just half in the interest of justice and fair play. As a result, ground No. (5) is also partly allowed. In the result, the appeal of the assessee is partly allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ound of appeal No. 1 the learned CIT(A) has erred in law and in facts in maintaining the disallowance of Rs. 5,252 made by the learned AO out of general expenses." 2. Ground No. (1) is general in nature and the same does not require any adjudication. 3. The facts of ground No. (2) are that the assessee filed its return of income on 7th Oct., 2002 declaring income of Rs. 2,78,470 from his business of manufacturing and trading of guwar gum, tamarind seeds and other herbal products. The assessee has declared GP rate of 11.65 per cent on total turnover of Rs. 18.18 crores as against GP rate of 12.63 per cent on turnover of Rs. 20.65 crores in the preceding asst. yr. i.e., asst. yr. 2001-02. The assessee has claimed generator running expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee keeps the generator set on stand by and it is not possible to prove on record that electrical supply was erratic during relevant year. I do not agree with learned CIT(A) that there cannot be any co-relation of generator expenses with the quantity of seeds processed. Rather, these are directly related to each other. The other important factor which has been pointed out by the learned Authorised Representative is that liability of Rs. 6,00,000 which included the generator running expenses was paid during relevant year and this was not the case in the earlier year. The learned CIT(A) has considered this fact but still he had maintained the lump sum addition of Rs. 70,000. It is an admitted fact that the books of accounts of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the entire factual matrix, I am of the opinion that the rationale of impugned disallowance is not logical. By comparing the expenses of one year with the other year is not a valid basis at least for making disallowances of travelling expenses unless these expenses are found to be unexplained or unvouched. The assessee has claimed that these were spent wholly and exclusively towards his business of export. There is no iota of evidence on record which can point out that any part of these expenses was incurred except than for business purposes. In these circumstances, in my considered opinion it is not justifiable to make ad hoc disallowance on the pretext that personal user must have been involved therein. In this regard, Tribunal order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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