TMI Blog2012 (9) TMI 721X X X X Extracts X X X X X X X X Extracts X X X X ..... g the consistent view of the Tribunal, restrict the disallowance of expenses at 25% of the sundry expenses. - I.T.A. No. 5606/Mum/2011, I.T.A. No. 5316/Mum/2011 - - - Dated:- 11-7-2012 - Dinesh Kumar Agarwal And N. K. Billaiya , JJ. Assessee by : Y. P. Trivedi Revenue by : Sanjay Dutt ORDER Per Dinesh Kumar Agarwal : These cross appeals by the assessee and Revenue are directed against the order dtd. 13-05-2011 passed by the ld. CIT(A) 41, Mumbai for the A.Y. 2008-09. Both these appeals are disposed of by this common order for the sake of convenience. 2. Briefly stated facts of the case are that the assessee firm is engaged in the business of shipping agents and stevedores. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent years, restricted the disallowance out of gift expenses ₹ 5,00,000/-, Chandla expenses ₹ 3,41,127/-, Diwali expenses ₹ 3,00,000/- and business promotion expenses ₹ 6,00,000/- aggregating to ₹ 17,41,127/-. On appeal the ld. CIT(A) while relying on the appellate order for A.Y. 2006-07, allowed the relief of ₹ 3 lacs and confirmed the balance disallowance of expenses made by the A.O. 6. At the time of hearing the ld. Sr. Counsel for the assessee submits that in the assessment years 2005-06 and 2006-07, the Tribunal in assessee s own case has allowed a relief of 50% to the assessee out of disallowance of expenses sustained by the ld. CIT(A), therefore, he has no objection the same relief may be allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 10. After carefully hearing the rival parties and perusing the material available on record, we find that the AO has disallowed gift expenses, chandla expenses and Diwali expenses in toto on the ground that similar disallowance was made in earlier assessment years. On appeal, the Id. CIT(A) sustained the disallowance out of gift expenses of ₹ 3,00,000/- and Diwali expenses of ₹ 2,00,000/- and confirmed the disallowance of chandla expenses of ₹ 2,57;390/-. The Tribunal in the- earlier years (supra) has reduced the said disallowance by 50% vide finding recorded in para-3 of its order as under :- 3. Since it is a question of making estimate for disallowing the expenditure for non-business purposes or unsuppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de u/s 37(1) of the Act. 10. Brief facts of the above issue are that the A.O. noted that the assessee has collected certain fees or service charges from its clients. A portion of this amount was spent for making payments to port employees, docks staff and other such payments which otherwise not sanctioned as per law. These payments are neither credited nor debited to the P L account and do not appear in the P L account but routed through the balance sheet. He further observed that the assessee has submitted the details of these expenses. He further observed that in the earlier years, the amount was disallowed under Explanation to section 37 of the I.T. Act which was confirmed by the ld. CIT(A). Accordingly the assessee was asked to exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee as well as the ld DR and considered the relevant material. At the outset, we note that an identical issue has been considered and decided by the Tribunal in assessee s own case for the AY 1998-99 and 2002-02 and 2003-04 in ITA No. 750 to 752/Mum/2010 Vide order dated 7.3.2012 and both of us are parties to the said order. In para 4 of the said order, the Tribunal has decided this issue as under; 4. After considering the rival submissions carefully, we find that an identical issue came up for consideration before the Tribunal in the case of M/s. N. Jamnadas Co. vs. ACIT [supra] and the issue was decided vide paras 7 8 which are as under: 7. We have considered the rival submissions carefully. We agree with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be covered by the Explanation to section 37(1) otherwise the expenditure would be justified. In that case also in the absence of details it was assumed that speed money was paid to the extent of 25% to government employees because all the dock workers may not be government employees and some money is required to be paid to union leaders, etc. and other elements of the underworld. Therefore, it cannot be said that all the money has been paid to government employees. In the absence of details we follow the guidelines laid down in the case of A,P.I . (India) P. Ltd. (supra) and hold that 25% of the expenditure is hit by the Explanation to section 37(1) and the same is required to be disallowed. This proposal was given in the open C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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