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2014 (1) TMI 1705 - AT - Income TaxAddition in respect of loss on account of damages to factory building/shed due to hailstorm - Held that:- We are of the considered opinion that when the entire amount of claim made by the assessee was shown by the assessee as income in the year of claim, loss arising due to short realization in the present year after finalization of the claim has to be allowed as business loss and the same is not dependent on this as to whether the claim is in respect of building or in respect of stock. The claim in the present year is on this basis that the income accounted for in earlier year i.e. A. Y.2003-04 is not realized and, therefore, written off in the present year and hence, the same is allowable in the present year. Therefore, the issue raised by the Revenue in its appeal is rejected - Decided in favour of assessee Ad hoc disallowance out of repairs of plant & machinery, motor running expenses and misc. expenses - Held that:- Admittedly, if the entire amount is disallowed, it may cause injustice to the assessee because some cash expenditure is inevitable. In the facts of the present case, it cannot be said that ad hoc disallowance was made by the Assessing Officer without any basis. Admittedly, the disallowance is made by the Assessing Officer on the basis that huge expenses have been paid by the assessee in cash which is not verifiable and therefore, we confirm the disallowance of ₹ 7 lac. Regarding disallowance of ₹ 2 lacs out of motor running expenses claimed by the assessee at ₹ 29,19,901/- we find that out of total payment of ₹ 29.12 lac, only a payment of ₹ 4.31 lac was made by DD/cheque and the remaining amount was paid in cash. When such a huge amount is incurred in cash, which is not verifiable, the disallowance of a sum of ₹ 2 lacs is not excessive and this is not an ad hoc disallowance without any basis but estimated disallowance out of huge cash expenditure on the basis that such cash expenditure is not verifiable. Therefore, this disallowance of ₹ 2 lac is also confirmed. Regarding disallowance of ₹ 6 lacs out of misc. expenses claimed by the assessee at ₹ 99,38,909/-. Originally the disallowance was made by the Assessing Officer to the extent of 10%, which was restricted by learned CIT(A) to ₹ 6 lacs. The details of these expenses are available on page 25 of the paper book, which includes guarantee commission, bank charges, general charges, travelling expenses, law charges, safety, security charges and other various expenses under various heads. In our considered opinion, no disallowance is called for out of such expenses, which are usually office expenses and administrative expenses and are neither excessive nor unreasonable. We, therefore, delete this disallowance.
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