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2017 (8) TMI 273 - AT - Income TaxDisallowance of 25% of expenditure - documentary evidence - reimbursement of expenditure incurred through employees - Held that:- As in assessee’s own case for Assessment Year 2004-05, 2005-06, 2006- 07, 2007-08 2008-09 & 2009-10 reimbursement of expenses to the employees by employer on the basis of self-declaration for small amounts, for which it is difficult and sometimes cumbersome to obtain supporting by employees, is common prevalent practice and it is not an disallowable expenditure. Therefore, also we reject the contention of revenue that balance 25% expenditure is without any basis and evidence. He also held that the payment is business expenditure as it is paid by way of salary or remuneration to the employees. Similarly he set aside the disallowance for the purpose of verification of the assessing Officer in case if the total amount of expenditure on subsistence allowances not related to the previous year and then to make disallowance of the expenditure to that extent, if it is related to the earlier years. DR could not point out any quantification made by the Ld. AO about the amount expenditure related to previous year and earlier years. Therefore when the assessment order does not mention about the vouchers and declaration which are pertaining to earlier years, then in that case that verification needs to be done by the A.O. only, hence there is no infirmity in the order of Ld. CIT(A) in directing ld. AO to verify the claim of the assessee form that aspect and quantify the disallowance, if any. In view of this, we confirm the order of the first appellate authority deleting the disallowance of subsistence allowance expenses Claim of the assessee u/s 10A - unobserved depreciation whether can be reduced from the income from other sources - Held that:- Hon’ble Karnataka High Court judgment in case of Yokogawa India Ltd. [2011 (8) TMI 845 - Karnataka High Court] clearly makes point that how the set off of unabsorbed depreciation has to be taken into account. As the income of the Section 10A unit has to be excluded at source itself before arriving at the gross total income, the loss of the non-section 10A unit cannot be set off against the income of the Section 10A unit under Section 72. The loss incurred by the assessee under the head “Profits and gains of business or profession” has to be set off against the profits and gains, if any, of any business or profession carried on by such assessee. Therefore, as the profits and gains under Section 10A is not be included in the income of the assessee at all, the question of setting off the loss of the assessee of any profits and gains of business against such profits and gains of the undertaking would not arise. Similarly, as per section 72(2), unabsorbed business loss is to be first set off and thereafter unabsorbed depreciation treated as current year’s depreciation under Section 32(2) is to be set off. As deduction under Section 10A has to be excluded from the total income of the assessee the question of unabsorbed business loss being set off against such profit and gains of the undertaking would not arise. Appeal of the assessee is allowed.
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