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2010 (2) TMI 803 - AT - Income TaxDisallowance of expenses on account of most of the expenses had been evidenced by self prepared vouchers and were in the form of reimbursement to the directors and senior executives and the payments had been made in cash. - Held that:- mere claim by the company officials that they have spent more than Rs.10,000/- of entertainment expenditure cannot preclude the AO for examining the veracity of the expenditure as to whether the same was laid out wholly or exclusively for the purpose of business. However, at the same time we also find that AO instead of identifying such expenditure, has proceeded to make estimated disallowance in this regard. In this regard, we draw support from the Apex Court decision in the case of Kapurchand Shrimal vs. CIT, (1981 -TMI - 5860 - SUPREME Court) wherein it was held that the appellate authority has jurisdiction as well as the duty to correct the errors in the proceedings under appeal. - Matter remanded back to AO. Disallowance of Travel Expense. - held that:- the disallowance by the AO is only on adhoc basis without any mention of any specific discrepancy. decided in favour of Assessee. Disallowance of Interest on account of loan diverted to Directors as interest free advance loans - held that:- The Directors of the company also have relationship with the company as its employees. It is quite common consideration in both public and private sector that employees are granted interest free advances as per the rules made in this regard. These form part of the service conditions and are aimed to retain the employees to make the compensation package attractive. - As held by the Hon'ble Apex Court in the case of M/s SA Builders vs. CIT (2006 -TMI - 3364 - SUPREME COURT), wherein it was held that if there is commercial expediency in granting of interest free advances to sister concerns, there cannot be any disallowance on account of diversion of interest bearing funds. - decided in favour of Assessee. Regarding allowance of ded. u/s 80HHC in MAT. held that:- assessee is entitled for deduction under section 80HHC on adjusted book profit for the purpose of section 115JB.decided in favour of Assessee. regarding Provision for Bad debts in computation of MAT. - Held that:- the claim that the relevant deduction may be allowed while computing book profit in the year of actual write off, we find that the claim of the assessee is a cogent one. - decided against Assessee.
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