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2023 (10) TMI 307 - ITAT KOLKATAAd-hoc disallowance @ 20% of total site expenses - AO by observing that assessee has not provided any documentary evidence in support of claim of site expenses, adopted an ad-hoc rate of 20% to disallow site expenses after reducing the component of sales tax from it - HED THAT:- We note that assessee is a company engaged in the business as railway contractor and supplier. Assessee has furnished the break-up of site expenses which it has claimed in its P&L Account. AO has adopted ad-hoc percentage of 20% to make a disallowance towards site expenses without giving any rational basis for the same. AO while making a disallowance has reduced the component of sales tax from the total amount of the site expenses. Assessee has furnished a comparative analysis of the claim of site expenses in the preceding as well as subsequent years as tabulated above. Section 37(1) of the Act provides for allowing expenditure incurred by the assessee for the purpose of its business if they are not in the nature of capital expenditure or personal expenses and not being expenditure of the nature prescribed in section 30 to 36. In the present case before us, none of the authorities below as well as Ld. Sr. DR could bring on record any material to dislodge the claim of the assessee and substantiate the ad-hoc disallowance by adopting a rate of 20% for the same. As well as the provision of section 37(1), we delete the ad-hoc disallowance made by the Ld. AO and confirmed by the CIT(A). Accordingly, grounds taken by the assessee in this respect are allowed.
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