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TMI Blog2015 (8) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... asonable - Held that:- The order of CIT(A) is not sustainable because this is not the basis of the Assessing Officer that the expenses were incurred in cash. The main basis is that the expenses are abnormally high. When such abnormal increase in the expenses is considered in the light of the facts that majority portion of increase in expenditure is incurred in cash, the disallowance of 30% is not excessive and unreasonable. We, therefore, reverse the order of CIT(A) and restore that of the Assessing Officer. - Decided in favour of assessee. Disallowance of vehicle running & maintenance - CIT(A) restricted it to 10% of the total expenses - Held that:- We find force in the submissions of Learned A.R. of the assessee that no disallowance is called for in the case of the assessee out of vehicle running and maintenance on the basis that it was partly used for personal purposes by the Directors/ employees of the assessee company, the same can be included in the perquisites value of the concerned Director/ employee but the disallowance cannot be made in the hands of the assessee company. Hence, by respectfully following case of Sayaji Iron and Engg. Co. vs. CIT [2001 (7) TMI 70 - GUJA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refreshment for customers, typewriter repairing expenses as noted by the Assessing Officer in para 8 of the assessment order and incurring of such expenses in cash is quite normal and therefore, merely for this reason that the expenses are incurred in cash, no disallowance is justified. - Decided in favour of assessee. Disallowance on account of repairs & maintenance (building) - CIT(A) upheld the disallowance of 5% as against 10% made by the Assessing Officer - Held that:- expenses incurred is not dependent on turnover and the same can be very high in one year and very low in some other year and therefore, only for this reason that the expenses incurred on account of repairs & maintenance of building is very high, no disallowance can be made. Since no other reason is given for making the disallowance, we hold that no part of this disallowance can be confirmed - Decided in favour of assessee. Disallowance of generator expenses - CIT(A) upheld the disallowance of 5% - Held that:- no abnormal increase in the expenses in the present year and considering the ratio laid down by Hon'ble Gujarat High Court in the case of Sayaji Iron (supra), that for personal use of the assets/facil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee company, the same can be included in the perquisites value of the concerned Director/ employee but the disallowance cannot be made in the hands of the assessee company. Hence, by respectfully following this judgment of Hon'ble Gujarat High Court, we hold that no disallowance is justified out of telephone expenses on the basis that it was used for personal purposes by the Directors/employees of the assessee company. Accordingly, ground No. 2 of the assessee stands allowed and ground No. 2 of the Revenue stands dismissed. 7. Ground No. 3 of assessee s appeal and ground No. 3 of Revenue s appeal are inter connected, which read as under: Ground No. 3 of the assessee s appeal: That learned CIT(A) has erred in confirming the disallowance to the extent of ₹ 2,94,108.15 made on account of freight cartage (outward). Ground No. 2 of the Revenues appeal: The Ld. CIT(A) has erred in law and on facts in restricting the disallowance made by the AO of ₹ 17,64,649/- out of freight and cartage expenses to 5% of the total expenses without giving any reasons for restricting the disallowances and not appreciating the facts that most of the disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons for restricting the disallowances and not appreciating the facts that no log book was maintained by the assessee company. 12. Learned D.R. of the Revenue supported the assessment order whereas it was submitted by Learned A.R. of the assessee that the present issue is covered in favour of the assessee by the judgment of Hon'ble Gujarat High Court rendered in the case of Sayaji Iron and Engg. Co. vs. CIT [2002] 253 ITR 749 (Guj). 13. We have considered the rival submissions. We find force in the submissions of Learned A.R. of the assessee that no disallowance is called for in the case of the assessee out of vehicle running and maintenance on the basis that it was partly used for personal purposes by the Directors/ employees of the assessee company, the same can be included in the perquisites value of the concerned Director/ employee but the disallowance cannot be made in the hands of the assessee company. Hence, by respectfully following this judgment of Hon'ble Gujarat High Court, we hold that no disallowance is justified out of vehicle running and maintenance on the basis that it was used for personal purposes by the Directors/employees of the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eyance (Director). 18. Learned A.R. of the assessee reiterated the same contentions which were raised before CIT(A). Learned D. R. of the Revenue supported the orders of the authorities below. 19. We have considered the rival submissions. We find that it is noted by the Assessing Officer in the assessment order that the assessee has debited ₹ 2,60,605/- under the head travelling conveyance (Director) and when the Assessing Officer asked the assessee to explain this expenditure, the assessee could not produce any documentary evidence and the assessee shown its inability to produce any documentary evidence. Under these facts, the Assessing Officer made disallowance of 25%. The CIT(A) also held that the assessee could not produce any documentary evidence. Before us also, no documentary evidence was produced therefore, we do not find any reason to interfere in the order of CIT(A). This ground of assessee is rejected. 20. Ground No. 7 of the assessee and connected ground No. 7 of the Revenue are as under: Ground No. 7 of the assessee: That learned CIT(A) has erred in confirming the disallowance to the extent of ₹ 19,433.50/- made on account of general ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce (building). Ground No. 1 of Revenue: The Ld. CIT(A) has erred in law and on facts in restricting the disallowance made by the AO of ₹ 1,70,333/- out of repair and maintenance expenses to 5% of the total expenses without appreciating the facts that most of the disallowances were made on account of cash payment for which no records were maintained by the assessee company. 24. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee supported the order of learned CIT(A) with regard to the relief allowed by him. He also submitted that the disallowance made by the Assessing Officer is on ad hoc basis therefore, entire disallowance should be deleted. 25. We have considered the rival submissions. We find that in the assessment order, the Assessing Officer has noted that the assessee has claimed an amount of ₹ 17,03,329/- as against ₹ 5,10,095/- in the preceding year under the head repairs and maintenance of building . The Assessing Officer held that the expenses are not fully verifiable and made disallowance of 10%. When the assessee carried the matter in appeal before CIT(A). It was held by him that the expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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