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TMI Blog2016 (3) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... ies of his passport and those of his family members. This is settled position of law that when the assessee makes claim of deduction of an expenditure, he has to establish that the expenditure was in fact incurred and the same was for business purposes. When the assessee has not furnished the copy of passport of self and family members and has not explained the purpose of travel, it cannot be accepted that the expenses incurred are for business purpose. Hence, on this issue also, we find no infirmity in the order of learned CIT(A) in making disallowance Disallowance of depreciation - Held that:- Disallowance of depreciation on old assets i.e. computer and generator is not justified when the business was not closed in the present year and it was carried out by way of sale of pending stock. Hence, this disallowance is deleted but disallowance of depreciation on furniture is confirmed because this is the claim of the assessee that the addition of ₹ 64,46,016/- was made to furniture in the present year and the entire payment was made in cash. The objection of the Assessing Officer is quite strong that when the assessee is closing down the business then what is the purpose of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 2008-09. 2. The grounds raised by the assessee are as under: 1. That the Learned CIT(A) erred in law as well as on facts in confirming the following additions made by the A.O.: i. Extra Profit Addition R s.9,30,587.00 ii. Out of telephone expenses ₹ 57,988.00 iii. Out of traveling expenses Rs.3,92,660.00 iv. Disallowance of Depreciation Rs.1,67,608.00 v. Legal Professional Expenses .. (1,85,000 (out of 2,17,000 claimed) vi. Disallowance u/s 40 a(ia) Rs.2,56,000.00 vii. Difference in Capital A/c Rs.1,25,030.00 2. That the authorities below failed to appreciate the material evidences brought on record and chose to rely on issues which were irrelevant and immaterial. 3. That the authorities below gave a verdict which was one sided, imaginary and altogether irrelevant without appreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee on 21/01/2016. 4. Learned D. R. of the Revenue supported the orders of the authorities below. 5. We have considered the submissions of Learned D.R. of the Revenue, perused the material available on record and gone through the orders of the authorities below. The main issue regarding addition of ₹ 9,30,587/- has been decided by CIT(A) as per Para 3.2 of his order, which is reproduced below for the sake of ready reference: 3.2 I have considered the matter. I find that in the profit and loss account the appellant has shown opening stock at ₹ 2,79,22,747/- which has been sold for ₹ 2,84,12,800/-. At the end of the year there is no closing stock. The sundry debtors shown at ₹ 1,97,03,842/- in the balance sheet as on 31.03.2007 has increased to ₹ 4,02,12,000/- as on 31.03.2008. It means that payments for 70% of sales have not been received during the year. The appellant has also not provided the details of such debtors and sales made to them. It is also noted that in the immediately two preceding AYs 2006- 07 2007-08 the appellant has declared gross profit rates of 6.88% and 7.44% respectively. The only explanation given by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplained the purpose of the travels undertaken nor submitted the copies of his passport and those of his family members. This is settled position of law that when the assessee makes claim of deduction of an expenditure, he has to establish that the expenditure was in fact incurred and the same was for business purposes. When the assessee has not furnished the copy of passport of self and family members and has not explained the purpose of travel, it cannot be accepted that the expenses incurred are for business purpose. Hence, on this issue also, we find no infirmity in the order of learned CIT(A) and decline to interfere with the same. 5.4 The next issue is regarding confirming of disallowance of ₹ 1,67,608/- on account of depreciation. It is noted by the Assessing Officer in the assessment order that as per copy of ledger account of furniture filed by the assessee, all the payments to the tune of ₹ 64,46,016/- towards addition in furniture account has been shown to be made in cash. The Assessing Officer further noted that the purpose of investing such an amount when the business was being closed down, remained unexplained. Therefore, the Assessing Officer made the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial year immediately preceding the financial year in which such sum credited or paid to a contractor is liable to deduct TDS u/s 194C. Hence, the provision of section 194C was applicable to the assessee because a clear finding has been given by CIT(A) that in financial year 2006-07, the assessee was liable to get his accounts audited u/s 44AB. On this issue, we do not find any infirmity in the order of CIT(A). 5.7 The next issue relates to the addition of ₹ 1,25,030/- on account of difference in capital account. In this regard, we find that the Assessing Officer has noted in Para 8 of his order that as per capital account of the assessee, submitted by assessee s counsel Shri Swadhin Mishra, Chartered Accountant on 10/12/2010, the amount of net profit transferred to capital account is ₹ 10,39,279/- while as per profit loss account, the net profit has been shown at ₹ 9,14,248/- resulting in difference of ₹ 1,25,030/-. Neither before the Assessing Officer nor before CIT(A), this difference could be reconciled by the assessee and the same was not explained by the assessee. Under these facts, we do not find any reason to interfere in the order of CIT(A) on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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