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M/s Gagrat And Co. Versus Deputy Commissioner of Income Tax

2016 (3) TMI 814 - ITAT DELHI

Addition towards conveyance expenses to partners, office maintenance and entertainment to clients - genuineness - bill not produced - Held that:- Assessing Officer disallowed the claim of the assessee of ₹ 6,00,000/- on the ground that the bills of the expenses debited by Sh. U.A. Rana were not produced before him and in the absence of the bills, the said expenses could not be established incurred wholly and exclusively for the purpose of business or profession of the assessee firm. On per .....

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firm, however, such bills were not produced before the ld. Assessing Officer for verification whether incurred wholly and exclusively for the purpose of the business or profession of the assessee firm. Therefore, in the interest of justice, we restore the matter to the file of the Assessing Officer to decide the issue afresh, in accordance with law, and also direct the assessee to produce all the said bills for verification and if the same are incurred wholly and exclusive for the purposes of th .....

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r 2010-11. The assessee raised the following grounds of appeal: 1. That the order of learned Commissioner of Income Tax (Appeal)-XVIII, New Delhi is bad in fact and in law. 2. That the learned Commissioner of Income Tax(A) has not been pleased to appreciate the evidence and other material on record propertly. 3. That the learned Commissioner of Income Tax(Appeals) has erred in confirming the addition of ₹ 6 lacs made by the Assessing Officer disallowing the expenses paid to Mr. U.A. Rana ( .....

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in law, may kindly be deleted. 4. That the Appellant craves leave to add/amend/withdraw or modify the grounds of appeal at the time of hearing. 2. The facts in brief are that the assessee, a partnership firm of advocates, filed its return of income for the year under consideration declaring income of ₹ 2,87,75,710/- on 13.10.2010. The case was selected for scrutiny and notice under Section 143(2) of the Income-tax Act, 1961 (for short "the Act"). In the course of scrutiny proceed .....

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for establishment, maintenance and upkeep of consultation room and library at the residence of the resident partners. It was further submitted by the assessee that the assessee firm did not own any car and the expenses of conveyance was restricted to ₹ 4,00,000/- as per clause 10.1 of the partnership deed. In respect of ₹ 80,000/- per annum towards entertainment to partners, the assessee submitted that the expenses were towards entertaining the clients at the consultation room maint .....

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re made to the resident partner, Mr. U.A. Rana, however, there was no actual expenditure made by the assessee firm. He further observed that the payments were made only to one resident partner and only on salary and interest paid to the partner was eligible for deduction subject to the restrictions contained in Section 40B of the Act. In view of the observations, the ld. Assessing Officer disallowed the expenses of ₹ 6,00,000/- and added to the income of the assessee. The other additions w .....

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icate upon. 4. In ground nos. 2 and 3, the assessee has challenged the addition of ₹ 6,00,000/- towards conveyance expenses to partners, office maintenance and entertainment to clients. 4. The learned Authorized Representative of the assessee addressing the background of the case, submitted that the said amount of ₹ 6,00,000/- was paid to the resident partner, Mr. U.A. Rana in accordance with the partnership deed. The learned Authorized Representative referred to page nos. 19, 35 and .....

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tency principle, the expenses should have been allowed. 5. On the other hand, learned Sr. Departmental Representative relied on the orders of the lower authorities. 6. We have heard the rival submissions and perused the material on record, including the orders of the lower authorities and the paper book filed by the assessee. The assessee has claimed expenses of ₹ 4,00,000/- for the amount reimbursed to the resident partner Sh. U.A. Rana for the use and maintenance of the motor car. It is .....

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t of which, ₹ 4 lacs was transferred towards the assessee firm and ₹ 1,917/- was claimed by him in his return of income. Similarly, according to copy of ledger account placed at page no. 35 of the paper book in respect of office maintenance expenses, Sh. U.A. Rana has debited expenses of ₹ 1,21,720/- , out of which ₹ 1,20,000 were transferred to the assessee firm. Further, according to page no. 40 of the assessee s paper book, Sh. U.A. Rana debited entertainment expenses .....

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