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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 ..... respect of disallowance of entertainment expenses. 3. During the course of the assessment proceedings, the Assessing Officer noticed that the assessee has claimed entertainment 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 relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the wrong appreciation of fact therefore such findings cannot be upheld. Considering the facts in totality, we direct the AO to delete the entire addition made on 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the findings of the AO. 13. We have carefully perused the orders of the lower authorities. It is not in dispute that the deposits were given to MTNL 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 disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on record by the Revenue, the society charges paid by the assessee in respect of the let out property are allowable while computing the annual 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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