TMI Blog2015 (1) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/-. The learned A.R. has not controverted the findings given by the learned CIT(A) as well as the Assessing Officer that the assessee was unable to produce the complete bills and vouchers related to repair and maintenance. Therefore, he was reasonable to restrict the disallowances at 5%. - Decided partly in favour of assessee. Disallowance of foreign traveling expenditure of directors, employees - the employees were directors’ wives, who travelled with the directors due to their personal relation - Held that:- Considering both the sides and case laws referred by the learned A.R., which are not squarely applicable on the case of assessee as the relative in all the case laws referred by the assessee were on foreign tour related to business purposes. However, in case of assessee, no evidence was produced before the lower authorities as well as before us that purpose of the directors as well as their wives and directors employees was for business. Therefore, we confirm the order of the learned CIT(A).- Decided against assessee. Ad hoc disallowance under the head Staff Welfare Expenses - Held that:- After considering the assessment order as well as finding given by the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid to the customers; (iv) the appellant craves liberty to raise additional ground and to modify/amend the ground of appeal at the time of hearing. Grounds in Cross Objection 1. The learned Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming disallowance of ₹ 61,783/- incurred on foreign travelling expenditure of director s employees by holding that the employee s are director s wives who travelled with the directors due to their personal relations. 2. The learned Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming ad hoc disallowance out of various expenditures as under:- Staff welfare Expenses ₹ 19,038/- Show Room Expenses ₹ 72,378/- Business Promotion Expenses ₹ 42,361/- Repair Maintenance Expenses Rs.1,25,000 /- 3. The learned Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming disallowance of ₹ 58,315/- out of depreciation on vehicles by holding that the vehicles are not allowed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad showroom expenses. The learned Assessing Officer gave reasonable opportunity of being heard to assessee to furnish the details. The assessee had filed required details and copy of ledger account. On verification of details, it was found that most of expenses were incurred in cash on the basis of self made vouchers, therefore, a lump sum addition of ₹ 1,44,755/- being 10% of total claim was disallowed by the Assessing Officer. Under the head repair and maintenance, the assessee had claimed expenses of ₹ 20,21,020/- in P L account. On verification of details filed, it was found by the Assessing Officer that a bill dated 06/8/2007 of ₹ 32,412/- issued by Frig Care Centre and payment of ₹ 54,140/- to JVVN Ltd. were included therein. Month wise salary payment had also been included. The assessee was also failed to produce all the bills and vouchers related to repair and maintenance expenses. Therefore, he presumed that the entire expenses were not related to the business activities of the assessee company. Thus, a lump sum disallowance of ₹ 2,02,102/- being 10% was disallowed and added to the total income of the assessee. Further the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted the remaining addition of ₹ 77,102/-. Under the head incentive and remuneration paid to the customers, it has been observed by the learned CIT(A) that this expenditure can be summarized as under:- i) Paid to customers ₹ 11,07,092/- ii) Service Tax ₹ 07,52,466/- iii) Paid to employees ₹ 05,26,403/- Total ₹ 23,85,961/- The assessee had received incentive from Sunderam Finance at ₹ 7,89,279/-. Remaining incentive was received from various banks i.e. ₹ 3,17,813/-, which has also been passed on to the customers. The assessee received incentive from Maruti Insurance amounting to ₹ 89,76,823/-. The assessee paid to the employee out of this incentive at ₹ 4,47,726/- and only ₹ 21,058/- was passed on to the customers. Accordingly he held that incentive paid to the employees was reasonable and no disallowance is called for. 4. Now the Revenue is in appeal as well the assessee is in C.O. before us. The learned D.R. vehemently supported the order of the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenditure incurred by assessee is necessarily and exclusively for the purpose of business. The learned CIT(A) has also accepted the explanation of the assessee but still without any basis confirmed the disallowance of ₹ 19,038/- ₹ 42,361/- out of staff welfare business promotion expenses respectively restricted the disallowance out of showroom expenses to ₹ 72,377/- repair maintenance expenses to ₹ 1,25,000/-. No disallowance can be made just for the sake of disallowance. Hence, the entire disallowance be deleted. Reliance is also placed on the following case laws:- (i) Widex India (P) Ltd. Vs. DCIT 66 DTR 57 (Del.)(Trib.) (ii) CIT Vs. Oracle India (P) Ltd. 199 Taxman 181 (Del) (HC) (Mag.) (iii) Arthur Anderson Co. Vs. ACIT (2010- TIOL-416-ITAT) (iv) Seasons Catering Services (P) Ltd. Vs. DCIT 43 DTR 397 (Del) (Trib) He further submitted that the assessee has received gross commission/incentive of ₹ 2,67,51,209/- from various banks/finance companies/insurance companies against which it has incurred expenses of ₹ 23,85,961/- towards service tax incentive paid to customers/employees. In course of assessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -. The learned A.R. has not controverted the findings given by the learned CIT(A) as well as the Assessing Officer that the assessee was unable to produce the complete bills and vouchers related to repair and maintenance. Therefore, he was reasonable to restrict the disallowances at 5%. Accordingly, the revenue s appeal as well as C.O. of the assessee are dismissed on this ground. The learned CIT(A) allowed the full expenses under the head incentive and remuneration paid to the customers after verifying each item, which has not been controverted by the learned DR, therefore, we dismiss the revenue s appeal on this ground. 7. Now, we are taking remaining grounds of C.O. of the assessee. In the first ground of the C.O. the appellant had challenged the disallowance of ₹ 61,783/- incurred on foreign traveling expenditure of directors, employees by holding that the employees were directors wives, who travelled with the directors due to their personal relation. The learned Assessing Officer observed that the assessee incurred expenditure on travelling at ₹ 8,83,522/-. It is found that ₹ 1,37,598/- and ₹ 1,66,598/- were incurred on account of foreign travelling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A). 8. The first point of second ground of assessee s C.O. is against confirming the ad hoc disallowance under the head Staff Welfare Expenses. The staff welfare expenses claimed by the assessee at ₹ 1,90,382/-, the learned Assessing Officer disallowed ₹ 19,038/- being 10% of total expenses claimed on the ground that the expenses were not wholly and exclusively incurred for business purposes and on self made vouchers , which has been confirmed by the learned CIT(A) by observing that the disallowances were having personal nature and claimed on self made vouchers. The learned AR reiterated the same arguments that no specific defects had been pointed out by the learned Assessing Officer and the learned CIT(A) except claimed on self made vouchers. He further submitted that ₹ 64,980/- was incurred towards marriage and birthday gifts to the family members of the staff is a normal business/courtesy. The expenditure incurred in course of running the business for maintenance of cordial relation with the staff. After considering the assessment order as well as finding given by the learned CIT(A) we hold that no specific defects had been pointed out by the lower authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the case of Goverdhan Prasad Singhal Vs. ITO Anr. 27 DTR 1 (Jpr.)(Trib.) for the car taken on the basis of delivery note on 31/3/2003 and Ajay Goyal Vs. ITO 99 TTJ 164 (Jod.)(Trib.) and prayed that the addition confirmed by the CIT(A) may be deleted. The learned D.R. supported the order of the learned CIT(A). After considering the facts of the case, we hold that both the vehicles were registered on 31/3/2008 and vehicles were used for Demo purposes which can safely be placed at the business premises for the purpose of Demo. Even on Demo vehicles, the insurance is required but the assessee had placed these vehicles in its showroom for Demo purposes, which proved that the assets were used on last date for the purpose of business, accordingly, depreciation claimed by the assessee is justified. Therefore, we allow this ground of assessee s C.O. 10. The 4th ground of the assessee s C.O. is against confirming the disallowance of ₹ 11,200/- out of payment of ₹ 55.105/- of road tax for trucks by treating the same as prepaid expenditure. The learned Assessing Officer found that the assessee had claimed ₹ 1,84,758/- under the head truck expenses. On verificat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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