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TMI Blog2016 (4) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance made by the Assessing Officer to the extent of ₹ 8.00 lakh out of ₹ 10.00 lakh but he confirmed the disallowance of ₹ 2.00 lakh on this basis that Assessing Officer has mentioned that some of the expenses claimed were found to be not allowable or were personal in nature. Ld. CIT(A) has also not pointed out even a single instance of expenses which is not allowable or which is personal in nature. Under these facts, in our considered opinion, adhoc disallowance confirmed by the Ld. CIT(A) is not justified - Decided in favour of assessee Disallowance on account of electricity expenses of Directors’ residence - Held that:- Regarding the expenses incurred in respect of electricity expenses for the residence of the Directors, the judgment of the Hon’ble Gujarat High Court rendered in the case of Sayaji Iron and Engg. Co. Vs. CIT [2001 (7) TMI 70 - GUJARAT High Court ] supports the case of the assessee because it was held in this case that for the alleged personal use by Directors, expenditure cannot be disallowed in the hands of the assessee company although the claim may be added in the hands of the concerned Directors/ employees as perquisite. Respectfully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further the AO has not mentioned instance of any such expense was not justified either on facts or in law to sustain the disallowance out of advertisement and circulation expenses , to the extent of ₹ 2 lacs. 3. BECAUSE the authorities below have erred in law and on facts in disallowing/upholding the disallowance of expenses claimed under the heads; (Rs.) i) Electricity expenses for the Directors residence ' 7,57,080 ii) Insurance premium paid for mediclaim policy of the Directors 1,62,591 on the ground that the same were in the nature of represented personal expenditure of the directors incurred by the assessee 4. BECAUSE the appellant had incurred the said expenditure as per terms of employment of the directors as approved by the Board of Directors, and during the course of and for the purposes of carrying on of its business and no part of the same could have been disallowed. 5. BECAUSE otherwise also, looking to the business exigencies, the directors are required t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticed where the expenses were apparently found to be not allowable. He has further noted that it was explained by the assessee that the expenditure claimed as mentioned here in before were incurred wholly for the business purpose but as per the Assessing Officer, the submission of the assessee were not found convincing as very nature of the expenses mentioned above establishes beyond doubt the same were personal in nature. After making these observations, the Assessing Officer has made adhoc disallowance of ₹ 10.00 lakh but it is surprising that even after stating this that the nature of expenses is personal in nature as per various instances noticed of the Assessing Officer, the Assessing Officer has not mentioned even a single instance of the expenses which are personal in nature. Ld. CIT(A) has deleted the disallowance made by the Assessing Officer to the extent of ₹ 8.00 lakh out of ₹ 10.00 lakh but he confirmed the disallowance of ₹ 2.00 lakh on this basis that Assessing Officer has mentioned that some of the expenses claimed were found to be not allowable or were personal in nature. Ld. CIT(A) has also not pointed out even a single instance of expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer as has been noted by the Assessing Officer in Para 13 of the assessment order that on his return to India Mr. Rahul Gupta under obligation to provide solution based support for marketing/distribution/circulation strategies of Danik Jagran in general and the tabloid bilingual I-next in particular. But as per Para 14 of the assessment order, disallowance was made by the Assessing Officer on this basis that Shri Rahul Gupta is no way associated with the assessee company. Ld. AR of the assessee placed reliance on the judgment of the Hon ble Allahabad High Court in the case of CIT Vs. U.P. Asbestos Ltd. reported in 79 DTR 105 (Alld.) it was held by the Hon ble High Court in this case held that being a legal entity a company can take a decision to secure its interest by sending anyone on contract basis for higher education and training abroad who is to join the company after returning back to the country. He also submitted an affidavit under Rule 10 of the Income Tax (Appellate Tribunal) Rules, 1963 that in the present case Mr. Rahul Gupta is providing consultancy to the assessee company free of charge after returning back to the country and therefore, the issue involved in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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