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TMI Blog2018 (12) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... f appeal: 1. The learned CIT(A) erred on the facts and circumstances of the case and in law in confirming the disallowance of Rs. 9,66,659/- (2% of Commission Income of Rs. 4,83,32,957/-) without appreciating that the Assessee has incurred Business Development Expense in true business sense and having commercial expediency which fulfills all the conditions mentioned under the section 37(1) as eligible business expenditure and once payment is made wholly and entirely for the business purpose, reasonableness of the quantum of expense not to be viewed. 2. The assessee is running General Insurance Agency business during the year from the office of the aforesaid company in which the assessee was one of the Directors. The assessee is also one o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In appeal, the Ld. CIT(A) disallowed a lump sum claim at @2% of the commission income derived by the appellant in the year under consideration which worked out to Rs. 9,656,659/- (2% of Rs. 4,83,32,957/-), Hence, the instant appeal before us. 5. At the time of hearing of the instant appeal, the assessee submitted before us that all the facts of claim for business development expenses has been mentioned before the authorities below supported by various documents and explanations, the disallowance made is unwarranted and non-justified and not tenable in the eye of law. He further added that the business development expenditure was incurred due to commercial expediency in the competitive market as per provisions of section 37(1) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cash discounts were made. Some of the vouchers having no signature at the appropriate place but illegible signature was found under the head "prepared", the name of the person who has signed was also not mentioned. The vouchers also sometimes do not speak about the amount in the appropriate column. The vouchers were narrated only at random basis. In fact, these vouchers were submitted to establish the claim of business development expenditure in the form of cash discount given to the persons whose vehicles were insured. Since those vouchers having no third party evidence and did not provide the genuineness of cash discount to the concerned person, could not be verified by the Ld. AO. The assessee by and under his written submissions befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the AY 2011-12 the business development expenditure was incurred to the tune of Rs. 10,15,310/-. Therefore, the increase in the renewal policies in comparison to AY 2011-12 in terms of percentage is 179.5% whereas increase in the business development expenditure in the relevant year is 308.89% which according to us is excessively high and disproportionate too. The Ld. CIT(A) while dealing so clearly observed as follows: "Having considered the facts and submissions it is noticed that in the year under consideration the claim of business development expenditure was at Rs. 41,51,580/- as compared to preceding year's business development expenditure at Rs. 10,15,310/-. Thus there was substantial increase in the claim of business expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration. Thus disallowance works out to Rs. 966659/- (2# of Rs. 4,83,32,957/-) which is confirmed. The relief is granted to the appellant on balance which works to Rs. 11,09,131/-. The ground of the appellant is partly allowed." 8. The assessee in support of his contention relied upon the judgement passed by the Co-ordinate Bench in ITA Nos.2648/Ahd/2011 & 2490/Ahd/2011 for AY 2008-09 (cross appeals) in the case of ITO vs. M/s.Buildcon Engineers passed on 21/08/2015, particularly paragraph No.6.1 of the said judgement which is as follows: "6.1. The AO had made disallowance of labour payments on the basis of estimation to the extent of 20% of the expenditure. The AO has not given any basis on which he has based his finding to disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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