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2019 (12) TMI 664 - ITAT DELHIDisallowance in respect of business promotion expenses debited to Profit and Loss Account - AO has disallowed the said expenditure during year solely based on a letter from Taj Palace Hotel in which pre-wedding function is noted, whereas the fact on record suggest that there was no wedding ceremony took place in the family of the assessee during the year and it was happened only in the years 2004 and 2014 - HELD THAT:- Function was organized for lunch only and the expenditure incurred does not suggest any expenditure on account of DJ, Flower decoration, stage etc., suggesting that there was any marriage function organized in the family. Further, the invoice of Taj Palace Hotel issued and banquette challans does not mention any pre-wedding functions. Further, if there had been wedding in family, the other expenses on various transactions could have reflected in capital account of the assessee. Therefore, these circumstantial evidences lead to infer that the expenditure was in the nature of business promotion only, hence, such disallowance made by the AO is without corroborating evidences and without cross examining the parties, hence same are deleted. With regards to 1/5th of the disallowance of remaining expenses, we find that the AO has pointed out that some of the expenditure were incurred for personal travelling and are in the nature of personal, therefore, the nature of expenditure is such in which personal element cannot be ruled out. Therefore, we are of the considered opinion that AO was justified in making disallowance of the remaining expenses @1/5th, accordingly the disallowance of ₹ 2,02,993/- confirmed. This ground of appeal is partly allowed. Disallowance of Travelling Expenses being 1/4th of the total travelling expenses on account of personal element - HELD THAT:- We are of the view that the AO has cited some instances of Air Tickets which are definitely personal in nature. It is, further seen that the various family members have travelled in India which are not for the purpose of business, therefore considering the totality of the facts, we are of the considered opinion that disallowances restricted to 1/5th of the total expenses by the ld.CIT(A) are appears to be reasonable, hence this ground of appeal of the assessee is dismissed. Disallowance of vehicle expenses - HELD THAT:- AO disallowed 1/5th of the said amount and worked out the disallowance of ₹ 2,41,061/-. The ld.CIT(A) has also restricted the disallowances to 1/5th of the vehicle expenses. However, before us, that the ld.Counsel has argued that the disallowance on account of personal element in respect of car depreciation is not justified and against the Law. We find this argument of the ld.Counsel is valid, therefore 1/5the of the disallowances attributable to car depreciation of ₹ 8,33,187/- are deleted. The AO is directed to recalculate the disallowance, accordingly, out of vehicle expense. Remaining disallowances @1/5th restricted by ld.CIT(A) are upheld, accordingly, this ground of appeal is therefore partly allowed. Rate difference on cancellation of contract of purchase of goods - HELD THAT:- Transaction could be effected by orgal agreement, which not prohibited by law. Since, the Om Exim, is a unit of M/s.Ram Kishore Chemical Co., therefore, non-appearing the name of Om Exim is of no consequence. The evidences filed by the assessee in the form of debit notes, confirmation, bank accounts and payments has not been refuted by the AO. In view of these facts, we are of the considered opinion that the assessee has incurred a business loss, hence same is allowable as business expenditure, accordingly the disallowance / additions made by the AO are therefore deleted.
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