9911796707
TMI Blog2013 (12) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... count, there cannot be any reason to invoke the provisions of section 69C. Notional income out of reimbursement - The CIT(A) is of the view that the assessee must have saved 20% out of such reimbursement - It is for the principal companies to verify the actual expenditure incurred by the assessee on their behalf and then make reimbursement of the same – The authority tried to step into the shoes of the principals for verifying the correctness of the claim lodged by the assessee towards reimbursement of expenses - When the principal companies have reimbursed the expenditure to the tune of Rs.2.29 crore there cannot be any presumption that the assessee must have saved some money out of the same – Decided in favour of assessee. - ITA No.46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessee did not file any appeal against the disallowance made by the A.O. in the immediately preceding year. When we consider the facts of the instant case vis- -vis those of the preceding year, it is found that the learned CIT(A) has reduced the addition by around 50% of that made by the A.O., which, in turn, was at the rate of 10%, being the same rate as was applied for disallowing some expenses for the assessment year 2004- 2005. In our considered opinion the view taken by the learned CIT(A) on this issue does not require any interference because of the fact that the assessee itself admitted before the learned CIT(A), as reproduced above, that certain expenses were not supported by third party vouchers. These grounds are, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incipal companies. On going through the accounts of principal companies, the Assessing Officer noticed that certain expenses were incurred during the year which were later reimbursed. The assessee was required to produce sample bills/vouchers in order to verify these expenses. The assessee submitted the necessary bills/supports attached along with Debit notes issued by it. The A.O. observed that in many cases supports were provided by the principal companies themselves and signed by the assessee. It was also noticed that many of these expenses were incurred in cash. It was in this backdrop that the A.O, inter alia, disallowed 10% of freight expenses amounting to Rs.4,13,543 and 10% of other expenses amounting to Rs.6,22,885/-. On appeal, ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 69C of the Act. In that view of the matter it is held that the provisions of section 69C were wrongly resorted to by the A.O. for making this addition. 8. Now coming to the second contention of the Revenue being the incurring of such expenses by the assessee in cash etc. calling for disallowance, we find that there is no force in making or sustaining any such disallowance in this regard. The essence of the matter is that the Assessing Officer started working out sum ofRs.5.36 crore by considering the accounts of the principals in respect of which the assessee had issued Debit notes. It, therefore, transpires that by issuing Debit notes, the assessee credited the income account or the respective expenditure account to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% out of such reimbursement is unfounded because it is for the principal companies to verify the actual expenditure incurred by the assessee on their behalf and then make reimbursement of the same. By adopting such a view and sustaining the disallowance at Rs.27.03 lakh, the ld. CIT(A), in fact, stepped into the shoes of the principals for verifying the correctness of the claim lodged by the assessee towards reimbursement of expenses incurred on their behalf. Obviously this course of action is not permitted. When the principal companies have reimbursed the expenditure to the tune of Rs.2.29 crore, in our considered opinion, there cannot be any presumption that the assessee must have saved some money out of the same. We, therefore, order fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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