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TMI Blog2012 (11) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... subject, the ld.CIT(A) has erred in confirming the action of the AO in making disallowance of Rs.58,929/- being 10% on account of personal element involved in travelling, telephone & mobile expenses." 3. The learned counsel for the assessee submitted that no defect in the account books have been pointed out by the Revenue, and therefore no disallowance could be made out of travelling, telephone and mobile expenses. The learned DR submitted that the assessee could not produce vouchers in support of the expenses claimed by the assessee and the AO has recorded a specific finding on the issue. 4. We have considered rival submissions and have perused the orders of the AO and the CIT(A). We find that the assessee could not produce supporting v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowance, and accordingly, the ground no.2 of the assessee's appeal is dismissed. 8. The ground no.3 of the assessee's appeal is as under: "3. On the facts and in circumstances of the case as well law on the subject, the ld.CIT(A) has erred in partly confirming the action of AO in making disallowance of Rs.50,27,336/- out of Rs.78,37,140/- u/s.40(a)(ia) of the Act." 9. The learned counsel for the assessee submitted that the issue is covered in favour of the assessee with the decision of the Special Bench of ITAT, Visakhapatnam in the case of Merilyn Shipping & Transports Vs. ACIT, (2012) 136 ITD 23 (Vishakha) (SB). He submitted that only an amount of Rs.4,85,252/- remained payable as on the last date of the accounting period, and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: "1. On the fact and circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition made by the AO of Rs.24,01,268/- on account of estimation of closing stock" 12. The learned DR referred to para-6 to 6.2 of the CIT(A)'s order in support of the case of the Revenue. The learned counsel for the assessee has relied on the order of the CIT(A). 13. We have considered rival submissions and have perused the orders of the AO and the CIT(A). We find that the CIT(A) has passed a detailed and speaking order on the issue. The relevant portion whereof is reproduced hereunder: "6. From the reasoning given by the AO In para-4.2 of the assessment order, it appears that he did not completely understand the modus operandi o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igher than the purchases in preceding months which means that the payments disbursed in month of March are also higher. Such happenings are also usual for the IT Department in respect of various expenses that have to be incurred out of the sanctioned budget for the year. Therefore, the AO was not really justified in making an issue of the fact that almost a quarter of the total purchases had been made in the month of March, 2005. Further, since the job had to be completed by the 31st, most of the purchased materials would also be consumed by then which would mean that the closing stock would be very less and so would be the Work In Progress (WIP). The low value of the closing stock as on 31-03-2005 was supported and corroborated by the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o consideration RA bill for the month of March, as also payment received during the month. In the facts and circumstances of the case, we are of the considered view that there being no valid reason for making the addition on account of estimation of closing stock, the CIT(A) was justified in deleting the same and the order of the CIT(A) on this issue is confirmed and the ground no.1 of the Revenue's appeal is dismissed. 14. The ground no.2 of the Revenue's appeal reads as under: '2. On the fact and circumstances of the case and in law, the learned CIT(A) has erred in deleting the disallowance made by the AO of Rs.32,448/- on account of "site expenses"." 15. We have heard both the parties. The case of the Revenue is that the assessee coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses. We find that there is no finding of any non-genuineness of the expense claimed under the head "salary & wages". These expenses incurred under the head "salary & wages" by nature did not allow any personal use of the assessee, and therefore the CIT(A) was justified in restricting the disallowance to the extent of 10% of the travelling expenses and of telephone and mobile expenses claimed by the assessee. There being no mistake in the order of the CIT(A) on this issue, the same is confirmed and the ground no.3 of the revenue's appeal is dismissed.
19. In the result, both the appeals of the assessee and the Revenue are partly allowed.
Order pronounced in Open Court on the date mentioned hereinabove. X X X X Extracts X X X X X X X X Extracts X X X X
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