TMI Blog1990 (9) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission paid by the assessee to various parties. 3. The assessee appealed to the CIT(A) who restricted the disallowance out of commission payment to only Rs. 7,864. Still feeling dissatisfied, the assessee has come up before the Tribunal in second appeal. 4. The break-up of the amount of Rs. 7,864 is given at page 4 of the paper book filed by the assessee. A sum of Rs. 4,910 was paid as commission to Shri Prem Kumar, Prop., Prince Advertisers by cheque. The remaining amount of Rs. 2,954 was paid in cash to M/s Kanwar Printers. The CIT(A) disallowed these two payments only on the ground that no confirmation letters have been filed from these two parties. 5. Shri C.S. Agarwal, advocate appearing for the assessee submitted before that confirmation letter from Shri Prem Kumar, Prop., Prince Advertisers was duly filed by the assessee before the Assessing Officer, a copy of which is at page 7 of the paper book and that, therefore, there was no justification in disallowing the amount paid as commission to this party. Shri Agarwal, however, candidly stated that in respect of the other party, namely, M/s Kanwar Printers no confirmation letter was filed by the assessee. 6. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly and exclusively for the purpose of the business. In our opinion, the disallowance of Rs. 1,000 is quite reasonable and is accordingly upheld. 10. The ITO disallowed 1/4th of car expenses, driver's salary and depreciation on car on account of personal use by the partners. The disallowance was confirmed in appeal by the CIT(A). 11. We have heard the learned authorised representatives of the parties. The assessee has not been able to show that it maintained a log book recording the movement of the car. The entire expenses cannot, therefore, be said to have been incurred for the purpose of business and some disallowance is therefore called for. The disallowance of 1/4th of the expenses is on higher side and calls for reduction. Having regard to the facts of this case, we are of the view that it would be fair and reasonable to restrict the disallowance out of the car expenses, driver s salary, depreciation on car to 1/5th of the claim, the assessment shall be modified accordingly. 12. The last ground disputes the disallowance of Rs. 3,860 out of the business promotion expenses. The ITO found that business promotion expenses are in the nature of entertainment. He accordingly dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell as details of the business procured by them and in respect of which commission was paid. It would be convenient to discuss separately the case of each party to whom commission had been paid separately. At page 8 of the paper book, name of the party mentioned against serial No. 1 is Sri Prem Kumar, Prop., Prince Advertisers, to whom commission of Rs. 3795.15 p. was said to have been paid through cheques. Confirmation letter from this party was filed before the Assessing Officer. A copy of this letter is at page 22 of the paper book. Details of business stated to have been procured by this party for the assessee-company are given at page 9. A perusal of the details shows that business was procured from M/s Motor and General Finance Ltd., M/s Goodwill India Ltd. and M/s Raasrang,New Delhi. Out of them, the first two parties wrote to the Assessing Officer that they had directly placed order for advertising work with the assessee-company and that there was no intermediary who had brought business from them to the assessee. It is thus clear that so far as these two parties are concerned, M/s Prince Advertisers were nowhere in picture and they did not procure any business from them fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission to M/s Mehra Enterprises. A copy of the confirmation letter from this party is at page 25 of the paper book and details of payments made to this party are given at pages 13,14, and 15 of the paper book. Commission was paid to M/s Mehra Enterprises for procuring business from as many as 13 parties none of whom informed the Assessing Officer that they had done business directly with the assessee and that there was no intermediary. The disallowance of commission paid to this party was upheld by the CIT(A) on the ground that the assessee could not specify the parties from whom advertisements were obtained. Such details are, however, given at pages 13,,14 and 15 of the paper book and as per certificate appended to the paper book filed by the assessee, all the documents listed in the index were on the record of the ITO/ CIT(A). Since necessary details were in fact furnished by the assessee, the ground on which disallowance in respect of the commission paid to this party has been sustained by the CIT(A) is untenable. In view of the evidence available on the record, we hold that there was no justification for disallowing the amount of Rs. 20,180.40 (sic) paid as commission to M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oing reasons out of the disallowance sustained by the CIT(A), deduction should be allowed in respect of the amounts of Rs. 129.73, Rs. 547.20 and Rs. 20,180.45. Thus, a total amount of Rs. 20,857.38 out of the disallowance sustained in appeal by the CIT(A) is admissible for deduction. The assessment shall be modified accordingly. 22. The next ground relates to the disallowance of Rs. 3,000 out of the miscellaneous expenses. The ITO disallowed Rs. 8,000 out of miscellaneous expenses claimed at Rs. 23,590 for unvouched and inadmissible items. The CIT(A) restricted the disallowance of Rs. 3,000. 23. We have heard the learned authorised representatives of the parties. The assessee has not filed details of the miscellaneous expenses before us. However, the CIT(A) has recorded his finding to the effect that miscellaneous expenses are by and large admissible. In view of this, there was no justification for making any disallowance out of these expenses. This disallowance restricted to Rs. 3,000 by the CIT(A) is, therefore, deleted. 24. The next ground disputes the disallowance of Rs. 1,000 out of conveyance account. Out of conveyance expenses, the Assessing Officer made a disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness funds. 28. Shri Agarwal submitted before us that s. 28(iv) was not all applicable. It could not be established by the authorities below that the interest-free loan of Rs. 40,000 was advanced out of the borrowed funds and that it was a case of division of borrowed funds for non-business proposes. In this connection our attention was invited to the balance sheet, a copy of which is at page 32 of the paper book. 29. We have also heard the learned Departmental Representative who has supported the order of the authorities below on the point. 30. The balance sheet for the year under consideration shows that opening balance in the capital account of Sardar Surinder Singh, one of the partners, was Rs. 84,877. The balance sheet shows that advance of Rs. 40,000 could have been made by the assessee-firm out of the funds on which it was not paying any interest. Moreover, the finding of the CIT(A) that advance of Rs. 40,000 was made out of borrowed funds has no basis and is not supported by any evidence. There is no material to show that there was any nexus between the advance made to Smt. Rajinder Kaur and the borrowed funds of the assessee on which interest was payable. In our o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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