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2014 (3) TMI 722 - ITAT HYDERABADDisallowance of entire expenditure Entire expenses treated as income Genuineness of the expenses - Held that:- There are some employees who are regularly paid over a period of 12 months and some of them for some period - Most of them are having bank accounts with continuous numbers - This indicate that these persons must have employed in group concerns and at the instance of the management, they may be called in to work in different places and their salaries were paid by different firms at the convenience of the management - There are many inconsistencies in the disbursement of salaries as the same person is not figuring in next month's list consistently - Due to influx of time it is not possible to examine each and every amount as the assessee has done business only in one year and has closed down its operations by the end of March, 1997 - 30% of the expenditure claimed is allowed, other than the expenditure on dealers meet and interest, could justify in the facts of the case and accordingly thus, the AO is directed to disallow 30% of the various expenditure claimed, other than interest and expenditure on dealers meet which are separately dealt with. Claim of Interest Held that:- Interest was paid to the partners along with an amount to Dhanalakshmi Bank - The amount paid to bank can be allowed in full - The amount paid to partners would get taxed separately in their hands, so there is no need to disallow as it was only appropriation. Dealers meet expenses Held that:- The whole arrangement was a make believe arrangement as observed by the A.O. and confirmed by the CIT(A) - the claim of dealers meet in its entirety, disallowance of 30% of various expenditure claimed (other than interest) would meet the ends of justice on the given set of facts - The order should not be taken as a basis for considering the allowance of expenditure in the hands of the company, which we were informed is pending for adjudication Decided partly in favour of Assessee.
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