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2015 (8) TMI 132 - ITAT LUCKNOW

2015 (8) TMI 132 - ITAT LUCKNOW - TMI - Disallowance of telephone expenses - CIT(A) restricted it to 7.5% of the total expenses - Held that:- We find force in the submissions of Learned A.R. of the assessee that no disallowance is called for in the case of the assessee out of telephone expenses on the basis that it was partly used for personal purposes by the Directors/ employees of the assessee company, the same can be included in the perquisites value of the concerned Director/ employee but th .....

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red in cash and on self-made vouchers cannot be doubted in all cases and held that disallowance of 5% as against 30% made by the AO is reasonable - Held that:- The order of CIT(A) is not sustainable because this is not the basis of the Assessing Officer that the expenses were incurred in cash. The main basis is that the expenses are abnormally high. When such abnormal increase in the expenses is considered in the light of the facts that majority portion of increase in expenditure is incurred in .....

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artly used for personal purposes by the Directors/ employees of the assessee company, the same can be included in the perquisites value of the concerned Director/ employee but the disallowance cannot be made in the hands of the assessee company. Hence, by respectfully following case of Sayaji Iron and Engg. Co. vs. CIT [2001 (7) TMI 70 - GUJARAT High Court ] we hold that no disallowance is justified out of vehicle running and maintenance on the basis that it was used for personal purposes by the .....

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justice. While deciding the appeal of the assessee and Revenue for assessment year 2003-04, we have held that no disallowance is justified because increase in turnover in assessment year 2003-04 as compared to assessment year 2001-02 was more than increase in claim of expenses under this head in assessment year 2003-04 as compared to assessment year 2001-02 and therefore, it was held that no disallowance is justified. In the present year we have seen that although there is increase in turnover o .....

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he Assessing Officer asked the assessee to explain this expenditure, the assessee could not produce any documentary evidence and the assessee shown its inability to produce any documentary evidence. Under these facts, the Assessing Officer made disallowance of 25%. The CIT(A) also held that the assessee could not produce any documentary evidence. Before us also, no documentary evidence was produced therefore, we do not find any reason to interfere in the order of CIT(A). - Decided against assess .....

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ses are incurred in cash, no disallowance is justified. - Decided in favour of assessee.

Disallowance on account of repairs & maintenance (building) - CIT(A) upheld the disallowance of 5% as against 10% made by the Assessing Officer - Held that:- expenses incurred is not dependent on turnover and the same can be very high in one year and very low in some other year and therefore, only for this reason that the expenses incurred on account of repairs & maintenance of building is very hi .....

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essee company, the same can be included in the perquisites value of the concerned Director/ employee but the disallowance cannot be made in the hands of the assessee company. Therefore, we decline to interfere in the order of CIT(A) on this issue - Decided against revenue. - ITA No.445/LKW/2013, ITA No.517/LKW/2013, C.O. No.31/LKW/2013 - Dated:- 31-7-2015 - SHRI SUNIL KUMAR YADAV AND SHRI A.K. GARODIA, JJ. For The Assessee : Shri K. R. Rastogi, F.C.A. For The Revenue : Shri Y. P. Srivastava, D. .....

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is not pressed. Accordingly, this ground is rejected as not pressed. 4. Ground No. 2 of the assessee and ground No. 2 of the Revenue are inter connected, which read as under: Ground No. 2 of the assessee s appeal: That learned CIT(A) has erred in confirming the disallowance to the extent of ₹ 61,950.15 made on account of telephone expenses. Ground No. 2 of the Revenues appeal: The Ld. CIT(A) has erred in law and on facts in restricting the disallowance made by the AO of ₹ 1,65,220/- .....

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CIT [2002] 253 ITR 749 (Guj). 6. We have considered the rival submissions. We find force in the submissions of Learned A.R. of the assessee that no disallowance is called for in the case of the assessee out of telephone expenses on the basis that it was partly used for personal purposes by the Directors/ employees of the assessee company, the same can be included in the perquisites value of the concerned Director/ employee but the disallowance cannot be made in the hands of the assessee company. .....

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sessee s appeal: That learned CIT(A) has erred in confirming the disallowance to the extent of ₹ 2,94,108.15 made on account of freight & cartage (outward). Ground No. 2 of the Revenues appeal: The Ld. CIT(A) has erred in law and on facts in restricting the disallowance made by the AO of ₹ 17,64,649/- out of freight and cartage expenses to 5% of the total expenses without giving any reasons for restricting the disallowances and not appreciating the facts that most of the disallow .....

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amp; cartage (outward) as compared to ₹ 108.19 lac in the preceding year. In the present year, the turnover is ₹ 17,869.78 lac as against the turnover of ₹ 16,978.55 lac in assessment year 2003-04. Hence, the increase in turnover in the present year is around 5% but the increase in expenses under this head is about 74%, which is quite abnormal. It is also noted by the Assessing Officer that at least ₹ 58.82 lac has been incurred in cash. The Assessing Officer has made dis .....

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igh. When such abnormal increase in the expenses is considered in the light of the facts that majority portion of increase in expenditure is incurred in cash, the disallowance of 30% is not excessive and unreasonable. We, therefore, reverse the order of CIT(A) and restore that of the Assessing Officer. Accordingly, ground No. 3 of the assessee is rejected and ground No. 3 of the Revenue is allowed. 10. Ground No. 4 of the assessee s appeal is as under: That learned CIT(A) has erred in confirming .....

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ssessee company. 12. Learned D.R. of the Revenue supported the assessment order whereas it was submitted by Learned A.R. of the assessee that the present issue is covered in favour of the assessee by the judgment of Hon'ble Gujarat High Court rendered in the case of Sayaji Iron and Engg. Co. vs. CIT [2002] 253 ITR 749 (Guj). 13. We have considered the rival submissions. We find force in the submissions of Learned A.R. of the assessee that no disallowance is called for in the case of the asse .....

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was used for personal purposes by the Directors/employees of the assessee company. Accordingly, ground No. 4 of the assessee stands allowed and ground No. 4 of the Revenue stands dismissed. 14. Ground No. 5 of the assessee and connected ground No. 6 of the Revenue are as under: Ground No. 5 of the assessee s appeal: That learned CIT(A) has erred in confirming the disallowance to the extent of ₹ 1,10,34,2456.00 made on account of consumable stores. Ground No. 6 of the Revenue s appeal: The .....

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nd the same can be decided on similar line. 16. We have considered the rival submissions. We find that in the present year, the assessee has claimed an amount of ₹ 2206.85 lac under the head consumable store as compared to ₹ 2286.27 lac in assessment year 2003-04. The Assessing Officer made disallowance of 10% on the basis that the expenses were not open to complete verification. The CIT(A) has held that the disallowance of 5% will meet the ends of justice. While deciding the appeal .....

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have gone down to ₹ 2206.85 lac as compared to ₹ 2286 lac in assessment year 2001-02. Under these facts, in our considered opinion, no disallowance is justified. We hold accordingly. Ground No. 5 of the assessee is allowed and ground No. 6 of the Revenue is rejected. 17. Ground No. 6 of the assessee s appeal is as under: That learned CIT(A) has erred in confirming the disallowance of ₹ 65,651/- made on account of travelling & conveyance (Director). 18. Learned A.R. of the a .....

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idence and the assessee shown its inability to produce any documentary evidence. Under these facts, the Assessing Officer made disallowance of 25%. The CIT(A) also held that the assessee could not produce any documentary evidence. Before us also, no documentary evidence was produced therefore, we do not find any reason to interfere in the order of CIT(A). This ground of assessee is rejected. 20. Ground No. 7 of the assessee and connected ground No. 7 of the Revenue are as under: Ground No. 7 of .....

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roceedings. 21. Learned A.R. of the assessee reiterated the same contentions which were raised before CIT(A). Learned D. R. of the Revenue supported the orders of the authorities below. 22. We have considered the rival submissions. We find that it is noted by the Assessing Officer in para 8 of the assessment order that the assessee has claimed an amount of ₹ 3,88,869/- under the head selling distribution and administrative expenses. He has further noted that during the examination of bills .....

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order, we are of the considered opinion that ground No. 7 raised by the assessee is not arising out of the order of CIT(A) because it is held by CIT(A) in no disallowance is called for under the head general expenses . Moreover, we feel that the expenses debuted under the head general expenses are small day to day expenses incurred for newspaper, journals, magazines, refreshment for customers, typewriter repairing expenses as noted by the Assessing Officer in para 8 of the assessment order and .....

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& maintenance (building). Ground No. 1 of Revenue: The Ld. CIT(A) has erred in law and on facts in restricting the disallowance made by the AO of ₹ 1,70,333/- out of repair and maintenance expenses to 5% of the total expenses without appreciating the facts that most of the disallowances were made on account of cash payment for which no records were maintained by the assessee company. 24. Learned D.R. of the Revenue supported the assessment order whereas Learned A.R. of the assessee su .....

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The Assessing Officer held that the expenses are not fully verifiable and made disallowance of 10%. When the assessee carried the matter in appeal before CIT(A). It was held by him that the expenses incurred in the present year is quite high at ₹ 17.03 lac as against ₹ 5.10 lac in the preceding year and he upheld the disallowance of 5% as against 10% made by the Assessing Officer. In our considered opinion, expenses incurred is not dependent on turnover and the same can be very high .....

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restricting the disallowance made by the AO of ₹ 52,036/- out of generator expenses to 5% of the total expenses without giving any reasons for restricting the disallowances and not appreciating the facts brought on record by the A.O. during the course of assessment proceedings. 27. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). 28. We have considered the rival submissions. We find that it is noted by .....

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