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2022 (6) TMI 947 - AT - Income TaxDisallowances of expenses - ad-hoc disallowance - HELD THAT:- We note that the assessee is LLP and is engaged in the construction business. A perusal of profit & loss account shows that during the year construction expenses including other institutional expenses incurred for construction of flat has been carried forward as a closing work-in-progress. Administrative expenses and depreciation has only been claimed in the profit & loss account and the same has been claimed against the other income. Out of all the disallowances made by the ld. AO some of them confirmed by CIT(A) are those expenses which have not been claimed as an expenditure during the year. AO in the assessment order has observed that the assessee has furnished required details but without pointing any specific error or discrepancy in the expenses so claimed by the assessee, had made these disallowances which are prima facie ad-hoc in nature. Disallowance of motor car expenses - HELD THAT:- Assessee has only claimed motor car expenses at Rs.72,250/- during the year in the profit & loss account and depreciation of Rs. 2,00,093/- on the motor car. Revenue has failed to bring any evidence to show that this motor car was not used for business purposes. Giving a general remark that it was used by the partner will not be sufficient to hold the disallowance. However, considering the facts and circumstances of the case and being fair to both the parties, we confirm disallowance of motor car expenses only to the extent of Rs. 15,000/- and delete the remaining disallowance confirmed by the ld. CIT(A). Hence, this ground is partly allowed. Disallowance at the rate of 10% on the telephone expenses, conveyance charges and general expenses - HELD THAT:- Firstly, the actual expenditure incurred during the year on these three heads is at Rs. 3,94,966/- and out of this sum Rs. 2,84,147/- was not claimed in the profit & loss account. The balance amount claimed as an expenditure during the year is only Rs. 1,10,819/- and, therefore, 10% of it i.e. 11,082/- is confirmed and the remaining disallowance is deleted. Hence, ground no. 3 is partly allowed. Disallowance on account of interest on service tax, TDS, penalty for P. tax - HELD THAT:- On examining the facts of the case, we find that the actual amount in these heads is only 87,981/-. Out of Rs. 87,981/- amount of Rs. 67,021/- already stands disallowed in the computation of income suo-moto by the assessee and the remaining amount of Rs. 20,960/- has not been claimed as an expenditure during the year as it has been transferred to construction work-in-progress. Therefore, under the given facts and circumstances the disallowance of Rs. 99,593/- was uncalled for and the said disallowance is deleted. Hence, ground no. 4 is allowed. Disallowance being 10% of business promotion expenses confirmed by ld. CIT(A) - HELD THAT:- On going through the records, we find that firstly, the alleged business promotion expense has not been claimed by the assessee in the profit & loss account but has been shown in the construction work-in-progress account and secondly, the correct amount of the expenses is Rs. 1,63,272/-. Since, the business promotion expenditure has not been claimed in the profit & loss account, there remains no scope to make any disallowance of the expenditure. Accordingly, we reverse the finding of the ld. CIT(A) and delete the ad-hoc disallowance of Rs. 23,935/- made on account of business promotion expenses. Computation of income by considering the returned loss which was not done in the assessment order - HELD THAT:- Through this ground the assessee has stated that in the computation of income as well as ITR filed for the year under appeal, loss of Rs. 1,32,760/- has been shown. Return of income is filed before due date of filing return of income u/s 139(1) of the Act. However, ld. AO has shown NIL income in the assessment order while computing total income of the assessee. We find merit in the contention of the ld. Counsel for the assessee and on observing that loss has been declared in the return of income filed on 22.09.2014, the same ought to have been captured in the assessment order. We, thus, direct the Revenue authority to make necessary rectification and income from business as per return should be taken as loss. Thus, ground of the assessee is allowed.
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