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2017 (8) TMI 1615 - AT - Income TaxAddition of Donation and subscription account - HELD THAT:- Assessee had filed the evidence i.e. copy of ledger and evidence of donation and subscription before the AO. The ledger in respect to donation and subscription has been supported by evidence which is found placed. Thus, we find that the assessee had in fact filed the bills of each expenditure before the AO. We note that the subscription and donation was given by the assessee to various organizations to avoid confrontation and to smooth running of its business and, therefore, the expenses incurred by the assessee on subscription and donation is incidental to assessee’s business and are allowable as business expenditure. This view has been upheld in the case of CIT Vs. Bata India Ltd. [1993 (3) TMI 89 - CALCUTTA HIGH COURT] wherein it has been held that contribution to local puja and festival committees or organizations to avoid confrontation and for smooth running of its business are allowable as business expenditure. Therefore, we allow this ground of appeal of the assessee. Addition under the head repairs - ad hoc disallowance of 20% taking note of the fact that the expenses were made in cash and there were only internal voucher to support the same and since there is no way to verify the same and there being chances of inflation of the claim of expenses he made the disallowance of 20% of such expenses - HELD THAT:- When all the evidence were filed before the AO and from the bills the addresses of the service providers are available, so, if the AO wanted to verify the veracity of the bills he could have easily verified the veracity of the bills from the service providers. We note that the AO has made the disallowance only on the basis of surmises and conjectures. We note that the assessee maintained books u/s. 44AB of the Act which was duly audited u/s. 44AB of the Act as well as u/s. 227(4) of the Companies Act, 1956. The assessee had produced the copy of the ledger account and the supporting vouchers and bills before the AO, therefore, the finding of the AO that there was no evidence to support the claim is erroneous and we find that all the evidences were filed before the AO and the ad hoc disallowance was not warranted. In case, the AO had any doubt in respect of any bills, the AO should have verified it from the payees whose addresses are available in the bills/vouchers which were on record. In such a scenario, without rejecting the books of account, the ad hoc disallowance made is not sustainable in the eyes of law which view the Tribunal has been taking consistently in several decisions. If any specific expenditure is unverifiable or is un-vouched, then such specific expenditure is disallowable. In the present case no specific item has been identified by the AO to make the disallowance, therefore, we are of the view that estimated disallowance as confirmed by the ld. CIT(A) is arbitrary exercise of power and, therefore, unsustainable in the eyes of law and therefore, it stands deleted. - Decided in favour of assessee.
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