9911796707
TMI Blog2012 (2) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... parents in attending to foreign work at a stall booked by the assessee-firm. The AO disallowed the said amount on the ground that both were neither partner of the firm nor employees of the firm. The expenditures claimed are personal expenditure. The AO disallowed the said expenditure. The CIT(A) confirmed the said disallowance observing that only sons of the partners were taken abroad and not any of the employees who were experienced and were in the service of the firm. The CIT(A) has observed that the sons of the partners were taken because of close relationship with the partners of the firm and it had nothing to do with the business of the firm. 4. We have heard the learned representatives of the parties, record perused. find that the assessee has failed to prove that expenditure incurred were for the purpose of business merely saying that the assessee has booked a stall and the sons of the partners were attending is not sufficient as the revenue authority has doubted the reasons for not taking abroad employees of the firm. The circumstances exhibits that the sons of partners were taken as those were in close relationship of partners and nothing to do with the business of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises stipulated hence, it was revenue expenditure. 8. The ld. D.R. relied upon the order of revenue authorities. 9. We have heard the learned representatives of the parties. In the case under consideration, we find that the repairing work on which carried out was the building not owned by the assessee-firm but it was taken on hire. The expenditure of repairing of building was required as the same was damaged due to earthquake and on account of normal war and tear. The AO did not found that the entire expenditure was capital in nature. He simply doubted that some of the capital nature of expenditure may be included in the expenditure claimed by the assessee. In view of the AO, it was 80% capital in nature whereas, the CIT(A) modified the view of the AO and held that the entire expenditure was capital in nature. In the light of the facts of the case under consideration and in the light of law laid down, by the Apex Court in the case of Madras Auto Service (P.) Ltd. (supra), we are of the considered view that the repairing expenses carried out on a rental building are revenue in nature and same are allowable, we allowed the same as revenue expenditure. The AO is directed to allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed." 11. The ld. A.R. reiterated the submission made before revenue authorities and submitted that AO has compared the quantity of blades mentioned in the job work bills raised by the sister concern with the total production data of sharpeners of the assessee-firm. The quantity of blades mentioned in the job work bills are in units/gross whereas quantity reported in Annexure "F" of the tax audit report are in pieces/numbers. The ld. A.R. submitted that the AO made comparison without applying converter as well as without considering the fact that one blade of sharpener undergoes more than one process and the fact that some type of job of sharpeners contains two or three blades. The ld. D.R. on the other hand, relied upon the order of CIT(A). 12. We have heard the learned representatives of the parties, record perused. The AO during the course of examination has gone on presumptions that bogus bills have been issued by the sister concern to create documentary evidence with a view to claim the bogus claim of labour charges as the bills were in 100 rupees and not in rupee or paisa. The AO made presumptions on the basis of 1/3rd bill produced by the assessee. The AO was very m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooked the labour expenses on the basis of bogus bills issued by the sister concern then entire expenditure is required to be disallowed. There is no basis how the AO has come to a conclusion that 10% of the expense was reasonable. Though, the CIT(A) disallowed entire expenditure but without comparing fair market rate. When the AO and CIT(A) both failed to point out comparison with fair market value of the services for which payment was made, we therefore, of the considered view that for the purpose of invoking section 40A(2)(a), one of the important and basic condition to be satisfied is that the expenditure claimed by the assessee is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made. In the case under consideration, this basic condition has been fulfilled. Therefore, the AO has wrongly exercised the power u/s. 40A(2)(a) of the Act which has been confirmed by the CIT(A). The order of revenue authorities is set aside and claim of the assessee is allowed. 13. The fifth ground is in respect of 10% disallowance out of car repairing expenses, mobile expenses and telephone expenses on account of personal u ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
