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2013 (7) TMI 880 - AT - Income TaxDisallowance of loom expenses - revenue v/s capital - CIT(A) confirmed the addition - Held that:- The admitted facts of the case are that the assessee booked the looms expenditure on the basis of self-made vouchers. It is also admitted facts as admitted by the Commissioner of Income-tax (Appeals) that such expenditures are necessary for the purpose of the business. Once it is found that such expenditures are necessary for the purpose of business, the entire expenses claimed by the assessee cannot be disallowed. In the light of the fact, the orders of the Revenue authorities cannot be sustained. It is also a fact that the expenditure accounted for and claimed by the assessee on account of looms is not verifiable. Therefore, the case under consideration is a reasonable estimation of such expenses. If we consider comparative trading account for the year ended March 31, 2007, year under consideration and the last year ended March 31, 2006, we noticed that the last year the assessee claimed ₹ 12,60,374 as loom expenses and gross profit shown was ₹ 1,45,00,622 and for the year ended March 31, 2007 gross profit shown is ₹ 2,12,79,434. Thus, proportionate loom expenditure should be ₹ 18,50,000 (rounded off) (1260374/14500612 x 2,12,79,434). It is stated that in last year the loom expenses have been accepted by the Department. Under the circumstances loom expenses to the extent of ₹ 18,50,000 is allowable as expenditure. We accordingly allow the same and the balance amount of ₹ 4,12,695 is confirmed. The assessee gets relief of ₹ 18,50,000 out of addition of ₹ 22,62,695.- Decided partly in favour of assesse. Disallowance of interest expenses - Held that:- Details of the own funds and others are not available on record. In the absence of relevant details available on record, we are sending back this matter to the file of the Assessing Officer with direction to decide the issue in the light of the above order of the Income-tax Appellate Tribunal, Mumbai Bench, after providing reasonable opportunity of hearing to the assessee. - Decided in favour of assesse by way of remand. Disallowance of depreciation on car - Held that:- the assessee has failed to furnish supporting evidence that the car was purchased in the name of partner Shri Lalit Jain and it was used for the purpose of business. The assessee has failed to furnish any evidence in this regard. Once it is found that the car was not used for the purpose of business, depreciation is not allowable. The assessee has failed to furnish any evidence to show that the car was used for the purpose of business. - Decided against assesse. Disallowance of food and beverages expenses - CIT(A) confirmed disallowance @ 20% as against 5% as seeked by assesse - Held that:- The assessee has failed to furnish any evidence or explanation why only 5 per cent. was to be disallowed, whereas the Commissioner of Income-tax (Appeals) has considered the relevant provisions of fringe benefit tax and found that 20 per cent. of the disallowance was reasonable. In the absence of contrary material on the finding of the Commissioner of Income-tax (Appeals), the order of the Commissioner of Income-tax (Appeals) is confirmed on the issue. - Decided against assesse.
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