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TMI Blog2014 (5) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... delete the entire addition made on account of entertainment expenses – Decided in favour of Assessee. Disallowance of write off of deposits with MTNL – Held that:- The deposits were given to MTNL in the ordinary course of business - the CIT(A) has given a finding that the assessee itself has disallowed Rs. 78,000/- which was claimed by it being outstanding amount of telephone bills adjusted by MTNL from the refund - the deposits were given in the ordinary course of business, the write off deserves to be allowed as business expenditure – Decided in favour of Assessee. Disallowance of deduction of society charges – Held that:- Following The Commissioner of Income-Tax-V Versus RJ. Wood Pvt. Ltd [2011 (1) TMI 889 - DELHI HIGH COURT] - th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent expenses at Rs. 5,28,422/- as against business receipts of Rs. 26.25 lakhs. The assessee was asked to justify the claim of entertainment expenditures. It was explained that expenses have been incurred to extend hospitality and entertain the company s present and potential clients, business associates at different occasions. This explanation of the assessee was not found to be satisfactory. The AO disallowed 60% of the expenses claimed and made an addition of Rs. 3,17,053/-. 4. The assessee carried the matter before the Ld. CIT(A) and explained the facts in relation to the claim of expenditure under the head entertaining expenses. After considering the facts and the circumstances, the Ld. CIT(A) directed the AO to restrict the disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of entertainment expenses. Ground No. 3 is accordingly allowed. 8. Ground No. 4 relates to the disallowance of Rs. 1,65,671/- being write off of deposits with MTNL. 9. The assessee has claimed expenses of Rs. 2,69,023/-. The said expenses are write off of telephone deposits. The write off of telephone deposits was on account of adjustment of the outstanding telephone bills against the telephone deposits. . The AO was of the opinion that the assessee must have claimed telephone bills as expenditure in the year when it was incurred hence on account of the outstanding bills, the assessee is not entitled to adjust the liability against the telephone deposit by way of writing off the same. The AO disallowed Rs. 1,90,918/-. 10. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the ordinary course of business. Further, the Ld. CIT(A) has given a finding that the assessee itself has disallowed Rs. 78,000/- which was claimed by it being outstanding amount of telephone bills adjusted by MTNL from the refund. Reliance on the decision of the Co ordinate Bench of the Tribunal (supra) is well founded as the deposits were given in the ordinary course of business, the write off deserves to be allowed as business expenditure. We, accordingly direct the AO to delete the addition of Rs. 1,65,671/-. Ground No. 4 is accordingly allowed. 14. Ground No. 5 relates to the disallowance of deduction of society charges of Rs. 83,996/-. 15. The AO noticed that the assessee has claimed society maintenance charges at Rs. 2,36,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual letting value of the property. Drawing support from these decision, we direct the AO to allow the claim of society charges by the assessee. Ground No. 5 is accordingly allowed. 20. Ground No. 6 relates to the disallowance of deduction of Municipal taxes. The Municipal taxes are allowable deduction while computing the annual letting out value. We, therefore, restore this issue back to the files of the AO. The AO is directed to decide this issue afresh after verifying the payment of Municipal Taxes by the assessee and if found correct, payment of Municipal Taxes are to be allowed in the light of the provisions of Sec. 23 and 24 of the Act. This ground of the assessee is allowed for statistical purpose. 21. In the result, the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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