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2017 (5) TMI 1821 - AT - Income TaxDisallowance of speed money expenditure - allowable business expenditure or not? - The assessee firm claim, that this speed money was paid out of business expediency - assessee is a partnership firm engaged in the business of clearing and forwarding agent and transport contractor - CIT(A) restricted the disallowance to 1.6% of the total payment - HELD THAT:- It is not the case of the AO that the speed money is not allowable in principle. The AO had not even doubted the genuineness of the expenditure. Having regard to the nature of the evidence produced before him, the AO has come to the conclusion that a part of the expenditure was not allowable as he felt that there was no evidence available except the self made vouchers and the expenditure incurred in cash. It is trite to law that no expenditure can be disallowed without rejecting the books of accounts and reliance in this regard can be made on the decision of Hon'ble Karnataka High Court in case of Anil Kumar & Co. Vs CIT [2016 (3) TMI 184 - KARNATAKA HIGH COURT] The assessee firm is not on appeal against the order of the CIT(A); keeping in view the above principle, we sustain the order of the CIT(A) and appeals filed by the revenue are dismissed. Assessment u/s 153A - Addition of speed money as illegal payment - as found during the course of search and seizure operations certain incriminating material suggesting illegal payment to the officials of port was found therefore he inferred that out of the total speed money claimed the speed money paid in excess of Rs. 26/- per tone was treated as inflated expenditure - HELD THAT:- The law is settled to the extent that the additions in the assessments u/s. 153A can be made only based on the material facts as a result of the incriminated materials found. From the perusal of the assessment order it is clear that during the course of survey and seizure operations the department had seized a loose sheet indicating payment to the certain officials of the port trust. Based on this information the AO as well as the CIT(A) has disallowed the payment to the extent of 10% of the speed money as illegal payment. Mere perusal of the loose sheet it is clear that about 10% of the cash payments was made to the officials of the port trust. Therefore in our considered opinion the disallowance to the extent of 10% is just and proper and therefore we do not want to interfere.
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