TMI Blog2010 (1) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... owance on account of personal expenses and non business expenses, we feel that such estimate of personal and non business expenses at 50% of expenses is excessive and we are of the considered opinion that to meet the ends of justice, the disallowance should be of 25% of such expenses for which supporting vouchers and details could not be produced by the assessee. Prior period expenses - payment of electricity charges - held that:- in a letter dated 13.8.2003 written by Sharma Cooperative Group Housing Society, it is mentioned that the payment is due from 1.5.2002 to 30.6.2003. - no where it is mentioned that the demand is ascertained during the present year. - the assessee has not filed any reply to show that the demand has crystallized during this year. - Decided against the assessee. - I.T.A. No. 3113/Del/2009, - - - Dated:- 8-1-2010 - R.P. Tolani, A.K. Garodia, JJ. Salil Aggarwal, Adv. for the Appellant Anusha Khurana, Sr. DR. for the Respondent ORDER A.K. Garodia, Accountant Member:- 1. This is an assessee's appeal directed against the order of Ld. CIT(A)-VI, New Delhi dated 16.4.12009 for assessment year 2004-05. 2. Ground No.1 of the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year expenses i.e. Rs.1,49,400/- and total comes to Rs.2,68,857/-. It is also submitted that in earlier years also, similar expenses were accounted for and debited to PandL A/c on similar basis and in assessment year 2001-02, the same was allowed as per the assessment order passed by the Assessing Officer u/s 143(3) and as per the principle of consistency, the same should be allowed in the present year also. Regarding principle of consistency, reliance was placed on the judgment of Hon'ble Apex Court rendered in the case of CIT vs. J K Charitable Trust as reported in 308 ITR 161 (SC). Reliance was also placed on the Tribunal decision rendered in the case of Mahanagar Telephone Nigam Ltd. v. Addl. CIT as reported in 100 TTJ (Del.) 1 in support of this contention that any expenses incurred in connection with obtaining license is allowable revenue expenses. 5. Ld. DR of the revenue supported the orders of the authorities below. 6. We have heard the rival submissions and have gone through the material available on record. We find that as per the details available on Page No.75-76 of the paper book, out of total expenses of Rs.4,48,200/- incurred during the present year, an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year, the assessee has claimed research and development expenses of Rs.1,99,939/- under the head Misc. expenses in PandL A/c. The Assessing Officer asked the assessee as to why the same should not be treated as capital expenditure. In reply, it was submitted by the assessee before the Assessing Officer that these expenses pertain to research and development work on upgradation of company's products and conducting trial for field efficacy and such expenses are allowable under section 37 of the Act. The Assessing Officer was not satisfied and he disallowed the same. Being aggrieved, the assesee carried the matter in appeal before Ld. CIT(A) but without success and now the assessee is in further appeal before us. 9. It is submitted by Ld AR of the assessee that these expenses are merely pertaining to maintenance of quality of products and conducting trial for field efficacy of product as a matter of business and commercial expediency. It is submitted that this expenditure has not resulted in any new product and hence the same cannot be treated as capital expenditure. It is also pointed out that these expenses are basically for marketing and demonstration of product for customers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitle the assessee to claim that the entire foreign exchange was spent for business purposes. The Assessing Officer was of the view that 50% of the amount for which the bills and vouchers were not furnished should be disallowed and on this basis he disallowed an amount of Rs.6,32,628/-. Being aggrieved, the assesee carried the matter in appeal before Ld. CIT(A) and apart from other arguments, it was submitted before Ld. CIT(A) that only Rs.11,66,329/- has been spent towards boarding, lodging and other expenses and 50% of the expenses for which the bills and vouchers were not furnished comes to only Rs.583105/- and not Rs.613281/-. Ld. CIT(A) has directed the ITO to take the correct amount from the records for working out the disallowance. Now, the assessee is in further appeal before us. 14. It was submitted by the Ld AR of the assessee that in respect of expenses relating to boarding, lodging, conveyance and other expenses, it was not practical to maintain bills and vouchers as these expenses were of routine nature and were connected with various meetings and conferences. It is also pointed out that the assessee has refunded the foreign currency to the extent of Rs.1,47,200/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d bills/vouchers may not be available but it cannot be accepted that for entire amount of such expenses, no details/vouchers and bills etc. will be available. Under these facts, we are of the considered opinion that in the absence of proper details and vouchers, some part of such expenses has to be disallowed because in the absence of proper details, it is not possible to point out the exact amount of personal and non business expenses. 17. Now, we consider and discuss the judgments cited by Ld AR of the assessee. First judgment is of Hon'ble Gujarat High Court rendered in the case of Sayaji Iron and Engg. Co. Ltd. (supra). In this case, it is noted by Hon'ble Gujarat High Court that once it is accepted that the expenditure in question are in terms as provided in section 309 and 198 of the Companies Act, 1956, there cannot be any non business purpose in so far as the assessee company is concerned. It is noted by Hon'ble Gujarat High Court in that case that the expenditure incurred by the assessee company on maintenance of vehicles which were available to the directors for their personal use would fall within the meaning of remuneration as defined in the explanation to section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt that apart from coming to the conclusion that the material placed before him by the assessee were not realiable, the Asstt. Collector has given no reason for enhancing the assessment. 19. It is also noted that his order does not disclose the basis on which he has enhanced the assessment. We are of the considered opinion that this judgment is also of no help to the assessee in the present case because the facts are different. In the present case, no details/supporting bills and vouchers were produced by the assessee, regarding the amount incurred by the assessee by way of purchase of foreign currency and on hotel accommodation etc. and hence the Assessing Officer had no option but to make estimated disallowance. It is not a case of arbitrary assessment. It was held by Hon'ble Apex Court in this case that the assessment must be based on some relevant material. In the present case, the relevant material is that the assessee has claimed deduction on account of expenses on foreign traveling of directors for which no details/supporting vouchers were produced by the assessee before the authorities below and before us and hence it is not possible to verify and examine the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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