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TMI Blog2012 (10) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... e to restrict the disallowance made on this issue to 25% of the total expenses. Issue partly allowed Ad-hoc disallowance bulk survey material expenses - Absence of proper documentary evidence – Held that:- As concluding from facts and ledger book, bulk survey expenses shows that most of the payments appearing therein were made by cheques and even TDS was also deducted from the said payments. Assessee firm had earned income of about Rs.22 lakhs from the survey activity, there was no reason for the authorities below to make any disallowance out of bulk survey expenses. Issue decides in favour of assessee Disallowance of professional expense – Held that:- As the onus is on the assessee to establish that expenses incurred on professional fees paid were wholly and exclusively for the purpose of its business and this onus cannot be said to be discharged merely by showing that such professional fees was paid by cheque and TDS was also deducted from such payment. Upheld the disallowance and issue decides in favour of revenue Disallowance of telephone & conveyance expense – Nature of expense official or personal – FBT has been paid on said expense - Held that:- Once FBT is levied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irect expenses, the learned CIT(Appeals) agreed with the stand of the assessee that some expenses at ports were required to be incurred by the assessee keeping in view the nature of its business. He held that in the absence of proper documentary evidence, the claim of the assessee for direct expenses, however, was not fully verifiable. Accordingly the disallowance of Rs.2,07,965/- made by the assessee on account of direct expenses was sustained by him to the extent of 50%. 4. The learned counsel for the assessee submitted before us that there was no reason for the authorities below to doubt the genuineness of the contract fees paid by the assessee for the purpose of its business especially when the said payment was subjected to deduction of tax at source. As regards the direct expenses, he submitted that even though the said expenses incurred by the assessee at ports were paid in cash, the disallowance sustained by the learned CIT(Appeals) to the extent of 50% out of direct expenses is excessive and unreasonable keeping in view the nature of the assessee s business. 5. The learned DR, on the other hand, submitted that disallowance out of contract fees and direct expenses was ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he extent of 50% of the total expenses due to unverifiable element involved in the said expenses. In our opinion, the disallowance so sustained by the learned CIT(Appeals) is on the higher side keeping in view the nature of the expenses incurred by the assessee which are essentially required to be paid in cash by way of self made voucher. We, therefore, find it fair and reasonable to restrict the disallowance made on this issue to 25% of the total expenses. Ground No. 1 of the assessee s appeal is thus partly allowed. 7. The issue raised in ground No. 2 relates to the disallowance of Rs.1,68,925/- made by the AO and confirmed by the learned CIT(Appeals) being 50% of the total bulk survey material expenses claimed by the assessee. 8. The assessee had claimed bulk survey material expenses to the tune of Rs.3,37,849/-.It was explained by the assessee before the AO that it had outsourced their bulk survey activities to one concern, namely, M/s A.K. Marine. It was submitted that the said concern was carrying on activity of unloading the oil from ship into oil tanker at port on behalf of the assessee and the expenses pertaining to the said activity as incurred by M/s A.K. Marine we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to M/s A.K. Marine by cheques and even tax at source was also deducted from the said payments. In our opinion, having regard to these facts of the case as well as the fact that the assessee firm had earned income of about Rs.22 lakhs from the survey activity, there was no reason for the authorities below to make any disallowance out of bulk survey expenses. In this view of the matter, we delete the disallowance made by the AO and confirmed by the learned CIT (Appeals) on this issue and allow ground No. 2 of the assessee s appeal. 11. The issue raised in ground No. 3 relates to the disallowance of Rs.80,000/- made by the AO and sustained by the learned CIT(Appeals) out of professional fees. 12. Under the head Administrative expenses , the assessee had claimed a sum of Rs.1,83,500/- incurred on professional fees. The said amount was comprising of a sum of Rs.1,60,000/- paid on account of fees for carrying out office administration and business promotion work. During the course of assessment proceedings, the assessee failed to furnish any details whatsoever regarding the fees of Rs.1,60,000/- claimed to be paid for carrying out office administration and business promotion wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofessional fees was paid by cheque and tax at source was also deducted from such payment. We, therefore, find ourselves in agreement with the learned CIT(Appeals) that the disallowance of Rs.80,000/- out of professional fees was rightly made by the AO due to the failure of the assessee to establish the business expediency of the said payment and upholding the impugned order of the learned CIT(Appeals) on this issue, we dismiss ground No. 3 of the assessee s appeal. 16. The issue raised in ground No. 4 and 5 relates to the disallowance made by the AO and confirmed by the learned CIT(Appeals) out of conveyance and telephone expenses of Rs.4,818/- and Rs.17,224/- respectively. In its profit loss account, the assessee firm had debited a sum of Rs.24,088/- on account of conveyance expenses and a sum of Rs.86,120/- on account of telephone expenses. In the absence of any record maintained by the assessee in the form of log book or call register to establish that the said expenses were wholly and exclusively for the purpose of its business, the same were disallowed by the AO to the extent of 20%. Before the learned CIT(Appeals), the assessee submitted that the conveyance expenses an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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