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2015 (1) TMI 1378 - AT - Income TaxDisallowance in respect of reimbursement of telephone and mobile expenses - Held that:- As per rule 3(8) of the Income-tax Rules, 1962, reimbursement of telephone expenses is not to be treated as perquisite in the hands of the employees with effect from the assessment year 2002-03. The hon'ble Gujarat High Court in the case of Sayaji Iron and Engg. Co. v. CIT [2001 (7) TMI 70 - GUJARAT High Court] held that in a case of corporate entity, no disallowance can be made on account of personal use by the director/employees. Respectfully following the proposition we do not find any merit in the disallowance made in respect of reimbursement of telephone and mobile expenses. Disallowance being one-third of the entertainment expenses - Held that:- We found that in normal business parlance on Diwali and other festive occasions, gifts are distributed to various customers and clients, however, no receipt for such gifts are taken. The Assessing Officer declined the claim of deduction merely on the plea that no third party evidence had been obtained, is not a valid reason for disallowance. Keeping in view the fact that the assessee had furnished full details of expenses along with supporting bills, vouchers, there is no reason for making such ad hoc disallowance. The Assessing Officer is directed to allow the expenses Ad hoc disallowance being one-fifth of the foreign travel expenses - Held that:- The assessee during the course of assessment proceedings had furnished all the details as requested by the Assessing Officer including the name of the employee, place visited, purpose of the visit, etc., in respect of the foreign travel. The purpose of visit of the employees was to attend business meetings, fairs and exhibitions, training, etc. It was further clarified that the expenses incurred were only on its employees and did not include any expenses incurred on the relatives of the employees. As the travel expenses are genuine expenses incurred wholly and exclusively for the purpose of business and are revenue in nature and hence should be allowed as deductible expenses under section 37(1) of the Act. Disallowance of foreign exchange loss on forward exchange contracts entered by the assessee - Held that:- The transaction entered by the assessee is on revenue account, i.e., to safeguard itself from potential risks arising from foreign currency fluctuations in respect of payments for the imported raw materials. Since the payment was on revenue account, AO is directed to allow the loss incurred on revenue account under section 37(1) of the Act. - Decided in favour of assessee Disallowance of commission expenses - Held that:- confirmation for rendering services and receipt of payment by the persons, who rendered services was not filed before the lower authorities nor even before us. Had the assessee filed such confirmation before the Tribunal, we would have restored the matter back to the file of the Assessing Officer for taking cognizance of such confirmation. In the absence of such confirmation for rendering services and receipt of commission income, expenses claimed on account of commission cannot be allowed. - Decided against assessee.
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