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2016 (9) TMI 712 - AT - Income TaxDisallowance of Telephone expenses - Held that:- It is an undisputed fact that the personal use of these Telephones cannot be denied as the expenses related to Mobile Phones and Telephone installed at the residence of partners. In earlier years, similar disallowance was made for A.Y.2005-06 which was accepted by the assessee firm as noted by Assessing Officer in his order.The arguments of learned AR that a nominal disallowance was made in various decisions of various Benches of ITAT do have some force. Thus we hold that a disallowance equal to 1/10th of expenses is a reasonable disallowance. The observation of Assessing Officer in the case of assessee that in Asst. Year 2005-06, the assessee had accepted 1/5th as disallowance do not hold much force as every year is a different year & moreover the Assessing Officer has not discussed the disallowance if any made in Asst. Years: 2006-07 & 2007- 08, therefore, we restrict the disallowance to the extent of 10%. Disallowance for Car expenses - Held that:- We find that personal use by partners and their family members of assessee cannot be ruled out and Assessing Officer has made disallowance car allowance of car expenses @ 1/5th car expenses after recording a finding that similar disallowance made in Asst. Year: 2005-06 was not contested by assessee. However, we hold that the disallowance equal to 1/10th of total expenses in the case of assessee is a reasonable disallowance as has been held in the case of disallowance of Telephone expenses. - Decided partly in favour of assessee. TDS u/s 194C OR 194J - Disallowance u/s 40(i)(ia) - payment of liaison/professional charges - Held that:- In the present case admittedly payee has not carried out any physical work resulting into tangible work and has only provided services to the assessee which cannot be categorized under the provisions of Sec. 194C for the purpose of deduction of tax at source. Therefore, the provisions of Sec.194C are not applicable to the assessee. Not all kinds of advisory could qualify as technical services. For any consultancy to be treated as technical services, it would be necessary that a technical element is involved in such advisory. Thus, the consultancy should be rendered by someone who has special skills and expertise in rendering such advisory. Now in the present case we find that the liaisoning services are provided by deductee were neither managerial nor consultancy nor technical in nature and therefore, in view of the above, the assessee was not required to deduct TDS on such payment u/s 194J also. In view of the above, we are in agreement with the learned AR that the provisions of Sec. 194C and Sec. 194J were not applicable to the assessee as regards payment of liaisoning charges. The Hon’ble Punjab & Haryana High Court in the case of CIT vs. Deputy Chief Accounts Officer, Markfed (2008 (2) TMI 260 - PUNJAB AND HARYANA HIGH COURT ) has held that where the material has not been supplied by assessee the TDS was not applicable. In view of the above, we hold that assessee was not required to TDS on this. - Decided in favour of assessee
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