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2011 (3) TMI 1053 - AT - Income TaxSearch and seizure u/s 132 - During the course of assessment proceeding, AO observed that in the search, blank/written or unused vouchers for Diwali bonus, conveyance and unused bills of various restaurants were found and seized - Assessee said that vouchers found were blank or unused which clearly shows that these vouchers were not used for booking of any expenses in the books of account. All these expenses were debited in the books of account and claimed in the P&L A/c are the genuine business expenses - Held that:- AO disallowed 20 per cent of the expenses which have been debited under the head conveyance and staff welfare to P&L account by way of inflation by making use of the blank signed bills kept in the premises - in the absence of any material to show that the vouchers which were found at the time of search were not used by the assessee for booking of expenses under the head conveyance and staff welfare - disallowance reduced to 10 per cent as against 20 per cent made by the Assessing Officer, ground taken by the assessee is therefore partly allowed. Addition incurred on renovation of office premises - Held that:- There is no dispute that the assessee has taken the premises on lease owned by the Directors of the company Shri Gnan Chand Mehta and Shri Ashish Mehta and Shraddha Mehta who held more than 50 per cent shares of the company. The period of lease was commenced from 16-10-2001 in respect of three properties and in respect of fourth property the lease period was commenced from 1-4-2002, relevant to the assessment year 2003-04 with the premises taken on lease for three years subject to the condition that the rent shall be increased by 15 per cent of the rent at the end of 11 months. As the assessee has incurred renovation expenses on the renovation of office by providing wooden partitions, cabins, cubicles, desks etc. started from 1-4-2001 i.e., prior to the property taken on lease thus where the assessee carries out repairs on certain premises taken on lease or other right of occupancy and any capital expenditure is incurred by way of renovation or extension and improvement to the building, then section 32 shall apply as if the said structure or the building is owned by the assessee. The effect of this insertion is that any capital expenditure incurred by the assessee on any premises acquired otherwise than on ownership basis, has to be treated as a building owned by such person and depreciation is allowable on it under section 32 as if it is building owned by him. Commission payment to Shri Vinod Jaiswal - CIT(A) deleted the addition - Held that:- In the absence of any contrary material placed on record by the Revenue to show that the chart prepared by the assessee appearing in the order of the CIT(A) is not correct or the entries recorded therein are not matching with the relevant seized material or the part of the amount was not paid by cheque or the same was not allowed as deduction or the payment has not been made to Shri Vinod Jaiswal to introduce the new members to carry on the business. This being so and in the absence of any finding recorded in respect of the application of the provisions of section 69 and TDS, the payment made by the assessee are allowable under Act as business expenditure and accordingly decline to interfere with the order of the CIT(A) on this account. The ground taken by the revenue is, therefore, rejected.
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