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TMI Blog2015 (4) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, CIT(A) was not justified in reducing the same to 50,000/-. - Decided in favour of revenue Shop repair 4,00,000/- merely on the basis that 20 times increase in repair & maintenance is not properly explained by the assessee before the Assessing Officer but we are not satisfied with this logic of CIT(A) because the increase or decrease in repair expenses is not dependent on turnover. For wear and tear in so many years, many a times, repairing takes place in one year and the expenses may be like this i.e. 20 times of the preceding year. In the absence of any specific finding to show that any expenditure was of capital nature or of non business nature, such ad hoc disallowance is not justified. Therefore, we delete the entire disallowance out of shop repair & maintenance expenses. -Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ess withdrawal made at ₹ 57,75,444/- and disallowed the same out of interest debited to profit & loss account. Being aggrieved, the assessee carried the matter in appeal before the CIT(A) who has deleted this disallowance and now, the Revenue is in appeal before us. 4. Learned D.R. of the Revenue supported the assessment order. Reliance was placed by him on the judgment of Hon'ble Apex Court in the case of S. A. Builders Ltd. Vs. CIT as reported in 288 ITR 1. 5. As against this, Learned A.R. of the assessee supported the order of CIT(A). He also submitted that the balance sheet of the assessee AOP is available on page No. 37 of the paper book and from the same, it can be seen that as on 31/03/2008, there is net credit balance in members capital account and details as per Schedule-A are on page No. 39 of the paper book. He further submitted that admittedly, some of the members were having minus balance on this date and also in the opening balance but there is overall credit balance in members capital account at the time of beginning of the year and also at the end of the year. He further submitted that these facts show that even if there is excess withdrawal by some memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restricting the additions on account of disallowed expenditure under the above four heads even though he accepted that such expenditure was not fully supported by bills and vouchers and even though the assessee could not produce any material or evidence to the contrary during the appellate proceedings." 8. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of CIT(A). He also submitted that there was ad hoc disallowance made by the Assessing Officer for ₹ 1,00,000/- out of freight inward and outward and ₹ 6,34,245/- out of shop repair & maintenance expenses, which has been reduced by CIT(A) to ₹ 50,000/- and ₹ 4,00,000/- respectively. He further submitted that the issue regarding this part disallowance upheld by CIT(A) is also raised by the assessee as per ground No. 2 of the Cross Objection. He submitted that such ad hoc disallowance is not justified at all. 9. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the disallowance of ₹ 1,00,000/- out of freight inward and outward was ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of CIT(A) and restore that of the Assessing Officer. 10. Regarding the second disallowance out of shop repair & maintenance expenses, we find that it is noted by the Assessing Officer that the assessee has debited a sum of ₹ 63,42,450/- under the head shop repair & maintenance expenses as against expenditure of only ₹ 5,40,220/- in the immediately preceding year. It was explained by the assessee before the Assessing Officer that this increase in expenditure is because of renovation of the shop for next financial year under in anticipation that the assessee will secure all the existing business as in past but the assessee lost wholesale business at Kanpur and Banda. It was also submitted before the Assessing Officer that these expenses are fully verifiable as the details have already been submitted. Thereafter, the Assessing Officer has noted his objection that the assessee could not justify the increase of almost 20 times under this head. There is no specific finding given by the Assessing Officer that any expenditure is of capital nature and the Assessing Officer has merely made a disallowance of 10% on ad hoc basis. In our considered opinion, in the absence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cross objector craves leave to modify any one or more of the grounds of appeal given above and add any new grounds of appeal, if and when need for doing so arises." 13. Regarding ground No. 1 of the Cross Objection, we find that this ground is merely in support of the issue decided by CIT(A) in favour of the assessee and on this aspect, we have already taken a decision while deciding the appeal of the Revenue. Therefore, this ground has become infructuous and rejected accordingly. 14. Regarding ground No. 2 also, we find that ground No. 4 & 5 raised by the Revenue in its appeal were inter connected with ground No. 2 in the Cross Objection. While deciding ground No. 4 & 5 of that appeal, we have already held that disallowance out of freight inward charges of ₹ 1,00,000/- is justified but disallowance made by the Assessing Officer out of shop repair & maintenance expenses is not justified. Hence, out of ground No 2 in the assessee's Cross Objection, we delete the part disallowance of ₹ 4,00,000/- upheld by CIT(A) out of shop repair & maintenance expenses but the disallowance made by the Assessing Officer out of freight inward charges is upheld in full. 15. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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