1983 (6) TMI 46 - AT - Income Tax

Summary

Issues:
1. Disallowance of travelling expenses
2. Disallowance of advertisement expenses
3. Disallowance of car expenses
4. Treatment of subsidy on generator
5. Disallowance of charity expenses
6. Claim for due relief under section 80

Analysis:
1. The first issue pertains to the disallowance of travelling expenses claimed by the assessee. The Income Tax Officer (ITO) disallowed a portion of the claimed amount, citing that most expenses were incurred for travel to Delhi, including amounts spent by partners. The Commissioner of Income Tax (Appeals) upheld the disallowance. The Appellate Tribunal found no justification for interference, considering the disallowance made in the previous year and upheld the decision.

2. The second issue concerns the disallowance of advertisement expenses claimed by the assessee. The ITO disallowed a portion of the claimed amount, considering certain expenses as donations rather than legitimate advertisement costs. The Appellate Tribunal reviewed the details and reduced the disallowance amount, noting that souvenirs and tournaments are recognized means of publicity and advertisement.

3. The third issue involves the disallowance of car expenses claimed by the assessee. The ITO disallowed a portion of the claimed amount, following a similar disallowance made in the previous year. The Appellate Tribunal upheld the restriction of disallowance to one-third of the expenses, considering the number of partners in the firm.

4. The fourth issue pertains to the treatment of subsidy received on a generator. The ITO added the subsidy amount to the assessee's income, but the Commissioner of Income Tax (Appeals) directed the ITO to allow depreciation on the generator after deducting the subsidy amount. The Appellate Tribunal modified the direction, instructing the ITO to examine if the subsidy directly or indirectly reduced the actual cost of the asset before allowing depreciation.

5. The fifth issue concerns the disallowance of charity expenses claimed by the assessee. The ITO disallowed the claimed amount, considering them as petty donations. The Appellate Tribunal upheld the disallowance, finding no justification for interference after reviewing the details of charity and donation.

6. The final issue relates to the claim for due relief under section 80, which was not addressed by the Commissioner of Income Tax (Appeals) or argued before the Appellate Tribunal. The Tribunal noted observations made by the Commissioner of Income Tax (Appeals) regarding depreciation claimed on a generating set, and agreed to delete certain remarks based on factual information presented by the assessee. Ultimately, the appeal was partly allowed by the Tribunal.