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TMI Blog2013 (10) TMI 1124X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, hence, for the sake of convenience both the appeals are disposed off with this common order. ITA No.5178/M/11 Disallowance of Credit Card Expenses of Rs.3,37,245/- This issue has been raised in both the appeals as ground No.1. The assessee has challenged the retention of disallowance of 50% of the total disallowance made by the AO amounting to Rs.3,37,245/- whereas the Revenue has challenged the deletion of the 50% of the disallowance made by the AO. 2. During the assessment proceedings, it was noticed by the AO that the assessee had incurred expenses on various dates by way of direct debit through credit card totaling Rs.26,97,960/-. The AO called for the details of the expenses from the assessee and noticed that the ledger account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the deletion of 50% out of the disallowance made by the AO was not justified. He has brought our attention to the various bills which have been annexed in the paper book filed by the assessee at pages 32 to 281 in order to show that most of the bills pertain to purchase of wine & liquor, food and hotel expenses. Even, there are bills of general purchases at shoppers stop and purchase of garments from Raymond Company. We have perused the paper book on the file and have gone through the various samples of bills attached by the assessee. We agree with the contention of the ld. D.R. that most of the bills relate to purchase of wine and liquor, general purchases at shoppers stop, hotel stay and air travel etc. A perusal of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he accounts submitted by the assessee. Date Amount 28.02.2006 Rs.70,48,933/- 03.03.2006 Rs.18,62,840/- 10. He further noticed that although the said reversal had resulted into deduction of expenses, however, in the absence of details it was not possible to verify the justification of the expenses. He further noticed that the assessee had incurred net business promotion expenses of Rs.2,79,75,456/-. He therefore disallowed 25% of the net business promotion expenses amounting to Rs.69,93,864/-. 11. In appeal the ld. CIT(A) observed that though the contention of the assessee was right that by reversing the excess provision it has offered income for tax. Hence the disallowance on account of reversal entries could not be made. However, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as the disallowance was made by the AO on account of non reconciliation of reversal entries. He has further contended that the AO did not record any finding to the effect that the expenses were not for business purposes. He has further submitted that from the ledger accounts, it is evident that the said expenses were wholly and exclusively incurred for the purpose of business. On the other hand ld. D.R. has relied upon the A.O. 14. In our view, though the disallowance made by the AO on account of non reconciliation of reversal entries does not seem to be justified, as by making reversal entries the assessee has offered the income for the tax. The AO was required to record his findings as to whether the expenses were incurred for one purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said expenses were relating to 'Victory Flag Contest' which was held during the previous financial year. However, no invoice/bill was received by the assessee in the preceding year. The assessee could not ascertain its liability for the aforesaid expenses and as such it did not provide for the said expenses in its books of account in the preceding year. The bills for the above said expenditure were received by the assessee only on 30.09.05 i.e. during the previous year relating to the assessment year in question i.e. 2006-07. Hence, the assessee claimed the said amount during this year. He has further contended that the liability was known and made ascertain only during the year relating to assessment year in question. Hence the same was a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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