TMI Blog2003 (7) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... nce made under the heads telephone expenses Rs. 56,372 and travelling expenses Rs. 29,123 only. The assessee-firm has its head office at Jodhpur and branch offices at Jalore and Madras. The nature of business is that of export. The appellant had claimed total expenditure on postage, telegraph, fax and telephone at Rs. 2,81,860. The AO found that these expenses are partially vouched. Therefore, keeping in view the facts and personal use by the partners, the AO disallowed 1/5th of the claim. The learned Dy. CIT(A) confirmed this disallowance. 4. The learned authorised representative submitted that the AO disallowed 1/5th of the claim for personal use amounting to Rs. 56,372. This is highly excessive because, looking to the nature of trade, the expenses incurred are mostly for business purposes and there cannot be personal element to this extent as foreign calls are made frequently. All the calls and messages are sent by fax which are costly affairs. 5. The learned Departmental Representative relied upon the order of the learned Dy. CIT(A). 6. We have heard the rival submissions. We have also perused the record. We find that the AO had disallowed expenses on account of unvouched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised representative explained that the account of Shri Kamlesh Kalwani as appearing in the books of accounts ate as under: -4-92 Opening credit balance 3,00,000 17-6-92 Cheques issued 1,00,000 (Repayment) 1,00,000 Balance 2,00,000 31-7-92 Cheques received 1,00,000 Balance 3,00,000 The learned authorised representative submitted that the AO examined the account of creditor in detail and satisfied about the genuineness of credit entry after verification of the same from the bank statement of Shri Kamlesh Kalwani. The learned Dy. CIT(A) treated the entire amount including opening balance as sale proceeds of exported block because of suppression of sale. Even though no fresh amount was received in the year under consideration and the amount received pertains to preceding year which was added by the learned Dy. CIT(A) in this year. 12. The learned Departmental Representative relied upon the order of the learned Dy. CIT(A). 13. We find that the learned Dy. CIT(A) has not examined the facts of the case in detail. First of all we find that out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the loan is in his name in the books of the firm. The same cannot be treated as income of the firm on account of suppression of export sales. The AO accepted the loan after detailed investigation. Not only this, the burden is on the learned Dy. CIT(A) to prove with positive evidence that (i) There was a suppression in export sale. If so to what extent and how it worked out to Rs. 37,00,000. (ii) Had the money been received in the form of loan in the sale proceeds of export goods, the same would be exempt under s. 80HHC and thus no person will conceal an income which is not taxable and create a liability rather making his capital from tax free income. (iii) The firm is constituted by two persons and no partners will allow the other partner to take entire benefit of it had it been the income at all. He placed reliance on the following judgments: (1.) CIT vs. A. Raman Co. (1968) 67 ITR 11 (SC); (2.) CIT vs. Calcutta Discount Co. Ltd. 1973 CTR (SC) 425 : (1973) 91 ITR 8 (SC); (3.) Upper India Publishing House vs. CIT (1979) 10 CTR (SC) 101 : (1979) 117 ITR 569 (SC); (4.) Das Co. vs. CIT (1962) 45 ITR 369 (Pat); (5.) CIT vs. Keshavlal Chandulal (1966) 59 ITR 120 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) further disallowed a sum of Rs. 14,900. There was no justification for further disallowance of Rs. 14,900 by the learned Dy. CIT(A) and the same is hereby deleted. 22. Disallowance by the learned Dy. CIT(A) out of salary Rs. 1,32,240. The learned Dy. CIT(A) has disallowed this sum for being expenses incurred for non-business consideration. In the show-cause notice the learned Dy. CIT(A) said ".......the same is paid to relatives and partners and no person in whose case proof of rendering services is not there". 23. The learned authorised representative submitted that the AO examined the case in detail. Neither the learned Dy. CIT(A) went through the books nor details of expenditure claimed. The firm never claimed any salary to partners. Thus, the allegation of salary paid to partner is not correct. The details of salary paid are at pp. 60 to 62 of the paper book which shows that the salary was paid as under: Rs. (i) Jodhpur(HO) 1,00,000 (ii) Jalore branch 92,400 (iii) Madras branch 3,36,350 5,28,950 Out of the above salary paid to the relatives of partners was as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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