TMI Blog2015 (9) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer has not pointed out any specific defect in the books of the assessee. It is not the case of the Assessing Officer that the expenses are not supported by bill and vouchers. Considering these facts, we are of the considered opinion that no interference is called for in the order of learned CIT(A) on this issue - Decided against revenue. Addition made on account of disallowance of Commission - CIT(A) allowed part relief - Held that:- A clear finding has been given by CIT(A) that the genuineness of the transaction is justified by the statement of the authorized persons who appeared on behalf of the commission agent. He has also noted that a statement on oath u/s 131 of the Act has been recorded by the Assessing Officer of the Accountant of the commission agent and he has confirmed the services rendered. The present director of the commission agent also appeared before the Assessing Officer but he could not throw any light on this aspect because he was not the director of the commission agent during the period when the transaction took place and the persons who were directors during the relevant period were not available, when te A.O. asked to appear. It is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was 21% for 4 months and 15% for 8 months and it is noted by the Assessing Officer also that even the rate of interest allowable on partner’s capital u/s 40b was 18% up to 01/06/2002, which clearly gives an indication that the rates paid by the assessee did not give any excessive benefit to the person covered u/s 40a(2)(b) of the Act. On this issue also, we do not find any infirmity in the order of CIT(A).- Decided against revenue. - ITA No.558/LKW/2014, C.O.No.02/Lkw/2015 - - - Dated:- 28-8-2015 - SHRI SUNIL KUMAR YADAV AND SHRI A.K. GARODIA, JJ. For The Revenue by Shri R. K. Ram, D. R. For the Assessee by None ORDER PER A. K. GARODIA, A.M. The appeal is filed by the Revenue and the Cross Objection is filed by the assessee, which are directed against the order of CIT(A)-II, Kanpur dated 31/03/2014 for assessment year 2003-04. 2. In its appeal, the Revenue has raised the following grounds: 1. That the Commissioner of Income Tax (Appeals) has erred in law and on facts in allowing the relief of ₹ 11,35,126/- deleting the addition on account of job charges income without appreciating the merits of the case as well as facts and material b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that being consolidated business, the appellant has not segregated the parts, travelling and other expenses incurred during providing maintenance services of diesel engines. All the expenses are booked in totality and expenses incurred in job work income have not been booked under the head net job income charges. Further the appellant has not maintained books of accounts of job work expenses separately and the selling of parts and service contracts separately. The Assessing officer has also not appreciated the fact that the appellant is in nature of such business where the appellant cannot ensure the continuity of the running of the engines. The breakdowns in diesel engines may be due to various reasons which are beyond the control of the appellant and the persons owning the diesel engines. It may also be important to mention that all the list of vouchers which has been quoted in the order is either fully supported or wherever the supporting cannot be taken due to business practices self made vouchers are present. The Assessing officer has erred by on one hand is accepting the net profit of the appellant and on the other hand rejecting the job income books which are not kept sepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, which are reproduced below for the sake of ready reference:- I have considered the contentions of the Assessing Officer and the submissions made by the appellant. Allowability of commission under the Income Tax Act, 1961 is very clear as held by many judicial authorities. There are 5 major components the services rendered have to be established, the genuineness of the transaction has to be established, the expenditure should be for business purposes, the expenditure should not be a capital expenditure and the expenditure should not be a personal expenditure. Now as far as the 3 components goes that expenditure should be for business purposes, should not be personal or not capital, no observations have been given by the assessing officer thus the assessing officer is not doubting that the expenditure is allowable under section 37 of the Income tax Act, 1961. The assessing officer in its entire gamut has challenged the rendering of services and the genuineness of the transaction. Now from whatever appears on the record is that rendering of services and the genuineness of the transaction are clearly justified by the fact that the payment has been made under an agreement, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed Cross Objection having grievance of the part disallowance upheld by CIT(A), we find that out of disallowance of ₹ 2,200/- under the head legal expenses, entire amount of disallowance was sustained by CIT(A). Similarly for disallowance of ₹ 7,430/- on account of advertisement also, entire disallowance was sustained by CIT(A). Out of disallowance of ₹ 24,123/- under the head misc. expenses, CIT(A) has confirmed the disallowance of ₹ 7,920/-. Out of disallowance of ₹ 68,851/- under the head telephone expenses, CIT(A) has confirmed the disallowance of ₹ 7,500/-. Similarly out of disallowance of ₹ 6,657/- under the head vehicle running and depreciation, disallowance is confirmed of ₹ 2,500/-. Regarding the last two disallowances out of telephone and vehicle running and depreciation, we are of the considered opinion that as per the judgment of Hon'ble Gujarat High Court rendered in the case of Sayaji Iron and Engg. Co. Ltd. vs CIT [2002] 253 ITR 749 (Guj), even if there is personal use of telephone and vehicles etc. by the Directors employees of the company, the same can be included in the perquisites value of the concerned Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these issues by going through the order of CIT(A). On page No. 8 of his order, CIT(A) has decided the issue of disallowance of ₹ 23,988/- under the heading travelling expenses . This disallowance was deleted by CIT(A) on the basis that nowhere in the order of the Assessing Officer, he has said that the expenses have either not been incurred for business purposes or are personal in nature or capital in nature and therefore, the same are allowable u/s 37 of the Act. We do not find any infirmity in the order of CIT(A) on this issue because there is no specific objection of the A.O. as has been noted by CIT (A) and this finding of CIT (A) could not be controverted by learned DR of the revenue. Hence, we decline to interfere in the order of CIT (A) on this issue. 10.1 The disallowance of ₹ 2,355/- out of conveyance expenses was also deleted by CIT(A) by making the same observation. Similarly the disallowance of ₹ 12,080/- under the head repairs and maintenance was also deleted by CIT(A) by making the same observation. For the same reasons, we do not find any infirmity in the order of CIT(A) on these issues also. Hence, we decline to interfere in the order of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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