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TMI Blog2016 (5) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income-tax (Appeals) was not justified in law in retaining a disallowance of Rs. 1,00,000 out of the disallowance made under the head 'staff welfare expenses' of Rs. 73,790 and 'repair and maintenance' expenses of Rs. 1,52,736 made by the Assessing Officer totalling to Rs. 2,26,526 even after appreciating that no businessman can be prevented from spending money on the staff member employed by him, and for non-production of bills and vouchers by the assessee or the fact that some of them as produced were not original, were handmade does not mitigate against the fact that these were actually incurred. (2) That once the learned Commissioner of Income-tax (Appeals) followed the ratio of the Madras High Court in the case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the appeal. 4. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed the expenses of Rs. 73,790 under the head "staff welfare". The Assessing Officer asked the assessee to explain with supporting evidences like bills and vouchers. Since the assessee could not explain the same, the Assessing Officer added Rs. 73,790 to the total income of the assessee. Likewise, the Assessing Officer also noticed that the assessee claimed the expenses of Rs. 15,27,361 under the head "repair and maintenance". The Assessing Officer noticed from the expenditure ledger and bills vouchers that the assessee has not produced the original bills and vouchers for all the expenses and in some cases handmade v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like nature of payment, nature of claimant, nature of payee, place of payment, amount of payment, etc. In such an organisation there is suitable internal check and control. Business is carried in a professional manner. There is delegation of powers for incurring of expenditure, approval of the same and then payment is made by authorised cashiers. Therefore, in such a case, disallowance of any expenses is not justified. It is true that there can become personal element of expenses but such expenses are incurred by employees. For example, while entertaining the bank customers with tea and snacks, a bank officer also participate, some phone calls may be made to home by officers, sometime banks car may be used for personal purposes. However, al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reliance in the case of Pushpanjali Dyeing and Printing Mills P. Ltd. v. Joint CIT [2001] 72 TTJ (Ahd) 886 and S. Gurlal Singh Tuli v. Asst. CIT [2000] 73 ITD 365 (Nagpur) and Lavrids Knudsen Maskinfabrik (India) Ltd. v. Addl. CIT [2006] 102 TTJ (Pune) 882. In the case of Pushpanjali Dyeing and Printing Mills P. Ltd. v. Joint CIT [2001] 72 TTJ (Ahd) 886 it was held that the assessee having maintained complete books of account in accordance with the provisions of the Income-tax Act which are audited by the auditor and no adverse observations having been pointed out by the auditor, there was no justification for rejection of books of account merely because there was decline in gross profit and net profit rates. Similarly, in the case of S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... realities. There should not have tendency of always having some suspicion, doubt and should not draw unreasonable inference based on some unreasonable apprehensions. The hon'ble High Court even observed that if there is some personal expenses incurred for personal use, it is for saving of time. Further, in this case, regular books of account have been maintained and audited under section 44AB of the Act. No adverse inference has been drawn by the auditor. Taking the guidance of various judicial pronouncements, we concur with the findings of higher judicial authority that the tax authorities must consider the claims in reasonable and practical manner. The disallowance of petty nature of expenses makes hardly any impact on overall revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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