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2015 (5) TMI 399 - ITAT LUCKNOWDisallowance of prior period expenses - CIT(A) allowed part relief - Held that:- Material Bills were correctly disallowed as the details of the amounts were examined and it was noted that these expenses relate to purchase of material etc. As these expenses should have been accounted for on a mercantile basis in year in which these were incurred, the same cannot be allowed as a deduction in the current year. Service Bills received in the current year for services rendered in the previous years. Since the service bills have been received in this year, the expenditure is allowable in this year. Thus, addition of ₹ 15,693 is deleted. Expenses of Previous years settled during the current year directed to be allowed as deduction as he settlement of dispute has taken place in this year, the amount is allowable as a expenditure in this year itself. Expenses on duty drawbackexcess credit was made earlier the necessary entries were passed debiting the accounts of the excess amount of duty drawback. It was explained by the appellant that it was a regular system of accounting followed by him and did not result in any profit or loss over a period of time, thus this amount is allowable. Similar is the case of Insurance claim. Commission payment payment may get settled in the next year whereby on the date of payment there might be a change in the foreign currency rates. It was explained by the appellant that it was a regular system of accounting followed by him and did not in any profit or loss over a period of time. Expenses allowable u/s 43B are only allowed on payment basis. Even if the liability would have been made in the earlier years the same would have been disallowed. Thus payment of bonus, customs and tax are covered within the provisions of section 43B, accordingly the addition is deleted. - Decided against revenue. Disallowance of travelling expenses - CIT(A) has restricted the disallowance - Held that:- Since the disallowance was made on ad hoc basis without pointing out any defect either in the books of account or in the vouchers maintained by the assessee, no disallowance on ad hoc basis is permissible under the law. We, therefore, delete the addition even sustained by the ld. CIT(A). - Decided in favour of assessee. Disallowance of postage, telegram and telephone expenses - Held that:- Assessee is a company where expenditures cannot be considered to be of personal in nature. The Assessing Officer has made ad hoc disallowance having noted that these expenditures were incurred for non-business purposes, without pointing out any defect. Even before us, nothing has been stated by the Revenue that a particular expenditure has been incurred for non-business purposes. We are, therefore, of the view that no disallowance is sustainable in the eyes of law. Accordingly, the addition sustained by the ld. CIT(A) is also hereby deleted - Decided in favour of assessee. Disallowance of motor car expenses and depreciation - Held that:- D.R. could not establish that the motor car was utilized for the purpose other than business of the assesseecompany. Therefore, no disallowance on ad hoc basis is sustainable in the eyes of law. Accordingly, we delete the addition - Decided in favour of assessee. Disallowance of balance written off - CIT(A) deleted addition - Held that:- The appellant at the time of entering the rental agreement had paid ₹ 5,95,500 as an advance which, as per the agreement, was to be adjusted in the last year when the property is vacated. The agreement clearly that the advance rental shall be adjusted in the last 5 installments of the rent, this property had been vacated in this year, the impugned advance needed to be adjusted during the year under consideration. The accounting treatment whether the same should be allowed under "rent1 or "balances written off" does not affect the allowability of such expenses. As the property has been located during the year under consideration, the impugned expense has to be allowed to the appellant - Decided in favour of assessee. Disallowance of agricultural income expenses - Held that:- No defect in the order of the ld. CIT(A) as in the books, net loss from agriculture operations has been shown at ₹ 5,56,622, which wrongly included a sum of ₹ 4,21,344/- on account of tease rentals written off, which was not at all related to agricultural activities. If one excludes this amount, the total disallowance on account of agriculture expenses would have been ₹ 1.35,278/-. Out of this amount, the appellant has already added back an amount of ₹ 1,05,860/- in the computation of income filed for that year, Thus the balance amount of ₹ 29,418 only needs to be disallowed. - Decided against revenue. Deduction under section 80HHC - Held that:- CIT(A) has directed the Assessing Officer to re-compute the deduction under section 80HHC in the light of the judgment of the Hon'ble Apex Court in the case of CIT vs. Ravindra Nath Nair, [2007 (11) TMI 10 - Supreme Court of India] Disallowance of bad debts - Held that:- CIT(A) correctly reexamined the claim of the assessee and finding force in the contentions of the assessee that the claim of bad debts of ₹ 1,37,525/- has only been disallowed because of the fact that RBI has not approved this much amount in the settlement of the claims sent to them & it may not be out of context to mention that the bad debts are governed by section 36(1)(vii) of the Act which clearly stipulates that if the income has already been offered as income, then in that case the amounts can be written off as bad debts deleted the addition. - Decided against revenue.
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