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2019 (10) TMI 924 - AT - Income TaxTrading addition on account of low yield ratio in comparison to the preceding year - CIT-A sustained part addition - HELD THAT:- Low production of oil from the oil seeds in comparison to the earlier years. We find variation in the yield ratio is very meager and in some of the cases it is less than 1%. Once the difference is very negligible which can be due to various factors and reasons including the quality of seed, oil contents in the seeds due to climate condition for a particular season which affects the quality of crop itself. Ignoring all these factors as explained by the assessee in the reply to the show cause notice of the A.O., the addition made by the A.O. and sustained by the ld. CIT(A) is not justified. CIT(A) has also not given any basis for sustaining the addition of ₹ 3.00 lacs and therefore, such an ad hoc addition without specifying the basis is not permissible, accordingly, the addition sustained by the ld. CIT(A) is deleted. Disallowance of expenditure incurred on transportation - HELD THAT:- The assessee has separately claimed fuel expenses, delivery expenses of ₹ 2,85,206 in its P&L account, therefore, even if the said claim of loss on sale of vehicle is wrongly or mistakenly shown instead of delivery expenses, it cannot be accepted when the assessee has already claimed the delivery and fuel expenses separately. Hence, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. Disallowance of 10% of certain expenses - A.O. has disallowed 10% of the telephone expenses on the ground that the assessee did not maintain any call register and in absence thereof, personal element cannot be ruled out - HELD THAT:- Once the telephone expenses are verifiable from the telephone bills itself then this cannot be a case of unverifiable expenses. Further the personal element is only suspected by the A.O. and not found. Even otherwise, when the telephones are used in the business premises of the assessee and the expenses are verifiable from the telephone bills itself then the same cannot be disallowed on mere suspicion. Travelling expenses were also disallowed as 10% on the ground of personal element. The A.O. has not doubted the expenditure incurred by the assessee and if the expenses are not found to be excessive having regard to the nature of business and volume of business of the assessee then such an ad hoc disallowance on personal element is not justified. Building repair and maintenance expenses, the A.O. has made 10% disallowance on account of non-verifiability of the expenses as the same were paid in cash and supported with self-made vouchers - Since this expenditure was incurred in cash and the assessee has produced only self-made vouchers then in absence of supporting documentary evidence, 10% disallowance of expenditure is justified. Other office expenses - assessee has shown office expenses and most of these were paid in cash and supported by the self-made vouchers. However, it is to be noted that if the expenditure is not found to be excessive and it is inevitable for the business of the assessee then the petty expenses incurred by the assessee on day to day basis is bound to be incurred in cash and without any vouchers from the other side due to such a small and petty expenses. Once the said expenditure is not found to be excessive having regard to the nature of business and volume of the business of the assessee then an ad hoc disallowance is not justified. Accordingly except 10% of building repair and maintenance expenses, all other disallowances made by the A.O. and sustained by the ld. CIT(A) are deleted.
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