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2018 (8) TMI 2089 - AT - Income TaxDisallowance of transport expenditure - AO disallowed assessee’s expenditure claim and Applied section 40(a)(ia) - HELD THAT:- We find no merit in either of these submissions. The fact remains that the Assessing Officer had himself accepted and assessed assessee’s total turnover to have been derived from transport business. He thereafter disallowed its corresponding transport expenditure to be not proved as genuine. DR fails to dispute the clinching fact that this assessee is in transport commission agent business rather than owning vehicles of its own. That being the case, it was very much necessary for the tax payer to engage other lorries for transportation of goods. This is therefore a case of accepting correctness of the entire receipts as income and disallowing the entire expenditure claim which is not permissible in our considered opinion. CIT(A) has estimated assessee’s profit @12% these peculiar circumstances only by exercising his co-terminus powers as well as to that of the AO the first appellate jurisdiction as well. Needless to say, the assessee’s books admittedly stood rejected. The CIT(A) has correctly appreciated the entire facts thereafter in holding that section 40(a)(ia) pre-supposes genuine business expenditure which cannot go side by side to an instance involving rejection of books. We thus affirm CIT(A)’s well reasoned findings. The Revenue fails in all of its three folded grounds.
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