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2013 (5) TMI 387 - AT - Income TaxDisallowance towards labour charges - The AO contended that as the assessee fail to produce the parties AO made addition. Same was sustained by CIT(A). - Held that:- It is found that the addition has been made on account of the fact that the assessee could not substantiate its claim of having paid labour charges to the above three parties. Assessee vehemently argued that he was not provided adequate opportunity of being heard by the authorities. It was submitted that when the assessee tried to place on record evidence in support of payment to the above three parties before the learned CIT(A), he ignored the same. Without going into the merits or otherwise of the addition, in our considered opinion, the ends of justice would meet adequately and the matter is restored to the file of AO. Disallowance towards foreign traveling expenses As per AO assessee could not co-relate the above foreign traveling expenses with the business purpose Held that:- Disallowance has been made in respect of foreign visits conducted by Shri Anil Soni, who was neither a partner nor an employee of the assessee-firm. The assessee failed to place on record any evidence co-relating the above visits. In the absence of any nexus, we are of the considered opinion that the said disallowance of was rightly confirmed. - decided against the assessee. Adhoc disallowance of telephone expenses - AO made this ad hoc disallowance for the simple reason that the element of personal expenses included in the total telephone expenses could not be ruled out. No relief was allowed in the first appeal Held that :- In our considered opinion, there is no basis for making such disallowance more so when the telephones were installed at the business premises of the assessee. - in favor of assessee. Addition made out of conveyance and petrol expenses, repairs and maintenance, miscellaneous expenses and staff welfare AO submits that assessee could not produce necessary documents in support of such expenses. Held that:- Assessee showed us a copy of the letter furnished before the AO in support of submitting the details / vouchers etc. of these expenses. Thus, there is no logic in sustaining any ad hoc disallowance. - in favor of assessee. Disallowance at 1/5 of interest on motor car loan AO disallowed 1/5th of these expenses on the ground that the car might have been used for personal purpose Held that:- There can be no disallowance in respect of interest on loan obtained for purchase of car because of the reason that such interest is deductible u/s 36(1)(iii). When we turn to section 38(2) providing for disallowance on account of user of building for non-business purpose, what is found that section 36 is absent. The disallowance u/s 38(2) has been contemplated only in respect of sections 30, 31 and 32. In our considered opinion, there is no basis for sustaining the disallowance towards interest on motor car loan. - addition deleted - in favor of assessee.
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