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TMI Blog2015 (5) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... red in law and on facts in allowing the relief of Rs. 2,74,802/- on account of foreign travelling expenses admitting himself that the disallowance was justified in principle but restricted the disallowance without giving any reasons. 3. The Ld. CIT(A) has erred in law and on facts in allowing the relief of Rs. 54,080/- on account of telephone & telex expenses admitting himself that the disallowance was justified in principle but restricted the disallowance without giving any reasons. 4. The Ld. CIT(A) has erred in law and on facts in allowing the relief of Rs. 1,06,834/- on account of motor car expenses and depreciation admitting himself that the disallowance was justified in principle but restricted the disallowance without giving any reasons. 5. The Ld. CIT(A) has erred in law and on facts in allowing the relief of Rs. 5,95,500/- on account of bad debts without giving any specific findings and without calling for a remand report from the AO. 6. The Ld. CIT(A) has erred in law and on facts in allowing the relief of Rs. 4,21,344/- on account of agriculture expenses without giving any specific findings and without calling for a remand report from the AO. 7. The order of the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has stated that normally the duty drawback cheques were received within 3 to 4 months from the date of shipment. As the appellant is following the mercantile system of accounting at the time of finalization of accounts the credit for duty drawback receivable was taken in the account on the basis of own computation/estimate. However sometimes there was a difference in the computation and the computation made by the custom department which resulted in either excess credit or short credit, In this case since excess credit was made earlier the necessary entries were passed debiting the accounts of the excess amount of duty drawback. It was explained by the appellant that it was a regular system of accounting followed by him and did not result in any profit or loss over a period of time. In my view this amount is allowable. Similar is the case of Insurance claim. Now coming to the commission payment the same is payable is foreign currency and according to the mercantile method of accounting the same has to be provided on the estimate basis of value of currency as prevailing on the last day of the financial year. The payment may get settled in the next year whereby on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance was made on ad hoc basis without pointing out any defect either in the books of account or in the vouchers maintained by the assessee, no disallowance on ad hoc basis is permissible under the law. We, therefore, delete the addition even sustained by the ld. CIT(A). Accordingly ground No.5 of the assessee in I.T.A. No.468/LKW/2013, which is on the same issue, is also disposed of along with this ground. 11. Apropos ground No.3, it is noticed that the Assessing Officer has made disallowance of postage, telegram and telephone expenses amounting to Rs. 54,080/- on the ground that the expenditures might have been incurred not for the business purposes. 12. The ld. CIT(A) re-examined the issue in the light of assessee's contentions and finding force therein he restricted the addition to Rs. 24,000/-, against which the assessee as well as the Revenue are in appeal before the Tribunal. 13. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that the assessee is a company where expenditures cannot be considered to be of personal in nature. The Assessing Officer has made ad hoc disallowance having noted that these e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 5,95,500 as an advance which, as per the agreement, was to be adjusted in the last year when the property is vacated. The agreement clearly that the advance rental shall be adjusted in the last 5 installments of the rent, this property had been vacated in this year, the impugned advance needed to be adjusted during the year under consideration. The accounting treatment whether the same should be allowed under "rent1 or "balances written off" does not affect the allowability of such expenses. As the property has been located during the year under consideration, the impugned expense has to be allowed to the appellant. The addition made is hereby, deleted." 17. Though the Revenue has preferred an appeal before the Tribunal challenging the order of the ld. CIT(A), but could not point out any defect in the order of the ld. CIT(A). Since no infirmity is noticed in the order of the ld. CIT(A), we confirm the same. 18. Apropos ground No.6, it is noticed that the Assessing Officer has made disallowance of agricultural income expenses amounting to Rs. 5,56,623/-, against which an appeal was filed before the ld. CIT(A) with the submission that Rs. 4,21,344/- has been written off being le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed on the basis adopted by the appellant in its return filed for the year under consideration. 5. The CIT(Appeals) has erred in law and on facts in upholding disallowance of Rs. 33,148/-, out of travelling expenses incurred by the directors of the appellant company on foreign travel holding it to be of personal nature. 6. BECAUSE the entire travelling expenses claimed by the appellant had been immured wholly and exclusively for the purposes of the business of the appellant and no disallowance out of this expenditure should have been upheld by the CIT(Appeals). 7. BECAUSE the CIT(Appeals) has erred in law and on facts in upholding the disallowances of a) Rs. 24,000/- Out of telephone and telex expense; and b) Rs. 60,000 Out of motor car expenses and depreciation on vehicles on the ground of personal user. 8. BECAUSE looking to the fact that the appellant is a body corporate and a listed company, no disallowance on the ground of personal user could have been made. 9. BECAUSE in any case the disallowance as referred to above letter much too high and excessive. 10. BECAUSE order appealed against is contrary to facts law and principles of natural justice. 21. Ground Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restricted the disallowance without giving any reasons, 3. The Ld. CIT(A) has erred in law and on facts in allowing the relief of Rs. 2,47,894/- on account of telephone & telex expenses admitting himself that the disallowance was justified in principle but restricted the disallowance without giving any reasons, 4. The Ld. CIT(A) has erred in law and on facts in allowing the relief of Rs. 99,125/- on account of motor car expenses and depreciation admitting himself that the disallowance was justified in principle but restricted the disallowance without giving any reasons. 5. The Ld. CIT(A) has erred in law and on facts in allowing the relief of Rs. 1,37,525/- on account of bad debts without appreciating the fact that the approval from RBI was not taken during the year on the said amount. 6. The Ld. CIT(A) has erred in law and on facts in allowing the relief of Rs. 1,77,570/- on the additions made u/s 14A without appreciating the fact that provisions 2 & 3 and Rule 8D were merely introduced to clarify the mode of calculation of expenses incurred in relation to exempted income. 7. The order of the CIT(A), Kanpur being erroneous, unjust and bad in law be vacated and the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions of the appellant through Ld. A.R., relevant part of which has been reproduced above. My point wise view is given as under; 1. Service Bills of previous year received and accounted for during the current year amounting to Rs. 7,012: These service bills amounting to Rs. 7,012 were bills received in the current year for services rendered in the previous years. Since the service bills have been received in this year, the expenditure is allowable in this year. Thus addition of Rs. 44,235 is deleted. 2. Expenses of Previous years settled during the current year amounting to Rs. 2525: Since the settlement of has this year, the amount is allowable as a expenditure in this year itself. The AO is directed to allow this as a deduction. Thus, addition of Rs. 2,525 is deleted. Settlement of claims of the creditors crystallized during the year under consideration amounting to Rs. 86,500: Since the settlement of dispute has taken place in this year, he amount is as an expenditure in this year itself. The AO is directed to allow this as a deduction. Thus, addition of Rs. 86500 is deleted." 29. Though the Revenue has filed an appeal before the Tribunal, but during the course of hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer has made disallowance of motor car expenses amounting to Rs. 1,99,125/- and disallowance of depreciation amounting to Rs. 3,28,652/- on such motor cars for the reason that these vehicles were used for personal purposes. . An appeal was preferred before the ld. CIT(A) and the ld. CIT(A) has restricted the disallowance to Rs. 1 lakh. 37. Now the assessee as well as the Revenue are in appeal before the Tribunal and during the course of hearing, it was contended that there is no possibility of personal use of car in the case of companies. We find force in the contention and we are of the view that this addition is not sustainable and accordingly we delete the same. 38. Apropos ground No.5 in I.T.A. No. 533/LKW/2013, it is noticed that the Assessing Officer has made disallowance of bad debts amounting to Rs. 1,37,525/-, against which an appeal was filed before the ld. CIT(A) with the submission that the claim of bad debts of Rs. 1,37,525/- has only been disallowed because of the fact that RBI has not approved this much amount in the settlement of the claims sent to them. It was further contended before the ld. CIT(A) that it may not be out of context to mention ..... 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