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2007 (12) TMI 256 - AT - Income TaxDisallowance on generator running expenses - Travelling expenses - Telephone expenses and Mobile Phone expenses - vehicle maintenance expenses. Disallowance on generator running expenses - expenses not fully vouched or partly vouched or supported by internal vouchers - HELD THAT:- Admittedly and obviously the assessee has processed 37.71 lakh kgs. of seeds in this year as compared to the 36.39 lakh kgs. seeds in the preceding year. Therefore, consumption of electricity is definitely required more than the last year. The assessee keeps the generator set on stand by and it is not possible to prove on record that electrical supply was erratic during relevant year. I do not agree with learned CIT(A) that there cannot be any co-relation of generator expenses with the quantity of seeds processed. Rather, these are directly related to each other. It is an admitted fact that the books of accounts of the assessee were not rejected and the production is more in this year. The small amounts of diesel expenses were not verifiable. The lump sum addition of Rs. 70,000 is not based on any logic. Therefore, legally it is not possible to sustain this addition as the two years are not comparable and the reasoning of the assessee are plausible. Therefore, this addition is hereby ordered to be deleted. As a result, this ground of appeal is allowed. Travelling expenses - disallowed 1/5th of such expenses on account of personal user of these expenses - By comparing the expenses of one year with the other year is not a valid basis at least for making disallowances of travelling expenses unless these expenses are found to be unexplained or unvouched. The assessee has claimed that these were spent wholly and exclusively towards his business of export. There is no iota of evidence on record which can point out that any part of these expenses was incurred except than for business purposes. Thus, it is not justifiable to make ad hoc disallowance on the pretext that personal user must have been involved therein. In this regard, Tribunal in the case of Ganesh Foundry vs. Asstt. CIT [2002 (8) TMI 278 - ITAT JODHPUR] held therein that when a disallowance is made without pointing out an item of disallowable nature it could not be sustained. The facts of this ground are exactly similar to the case of Ganesh Foundry. Therefore, by respectfully following the same, delete the entire addition and allow ground No. (3) of the appeal of the assessee. Telephone expenses and Mobile Phone expenses - The element of personal user in telephone expenses cannot be ruled out but keeping in view the entire facts of this case, I find that the impugned disallowance is on higher side. Instead of 20 per cent disallowance. I restricted the same to 10 per cent and reduce this addition to just half. Therefore, ground No. (4) is partly allowed. Disallowance out of vehicle maintenance expenses - 1/5th of total expenses - disallowance is on higher side and, therefore, I restrict the same to 1/10th and reduce the same to just half in the interest of justice and fair play. As a result, ground No. (5) is also partly allowed. In the result, the appeal of the assessee is partly allowed.
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