TMI Blog2016 (4) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... eding years or subsequent years relevant to the year under consideration has been furnished. Considering the fact regarding the importance of distribution of sample books and totality of the claim of assessee we further restrict the distribution of such expenses to the extent of 5%. Accordingly, we direct the AO to re-compute the disallowance of sample books distribution expenditure @ 5% of the total expense incurred by assessee. - Decided partly in favour of assessee Disallowance of carriage inward expense and carriage outward expenses - Held that:- It is only possible to make such payments in cash and not through any banking channel. Also on the reverse side of vouchers the names of coolies/transports to whom payment were made put their signatures/thumb impressions. Evidencing the genuineness of the expense, sample copies of debit vouchers relating to 'carriage inward' and 'carriage outward' enclosed at page No. 46 to 89 of the paper book is enclosed. As find from the chart given by Ld. AR in relation to above stated expenses that assessee has been incurring such expenses for the above stated activities and no disallowance has been made in the past. Besides, this, we find the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal by assessee is against the order of Commissioner of Income Tax (Appeals)-XXIV, Kolkatain appeal No.1051CIT(A)-XXIV/C-37/11-12 dated 19.12.2012. Assessment was framed by ACIT, Circle-37, Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') vide his order dated 28.12.2011 for assessment year 2009-10. 2. The assessee has raised the following grounds of appeal:- 1. The orders passed by the lower authorities are arbitrary, erroneous, without proper reasoning, invalid and bad in law, to the extent to which they are prejudicial to the inte5est of the appellant. 2. On the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the disallowance out of 'Book Distribution' expenses to the extent of ₹ 9,69,062/- being 15% of the total expenses claimed in this regard at ₹ 64,60,413/- instead of allowing the full claim. 3. On the facts and in the circumstances of the case, the learned CIT(A) erred in sustaining the disallowance out of 'Carriage Inward' expenses at ₹ 6,999/- and out of 'Carriage Outward' expenses at ₹ 7,307/- instead of allowing the full cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but most of the numbers were found out of services, while other persons refused to acknowledgeof having received any sample book. The assessee further submitted that no schools, colleges and teachers will admit the fact that they have received the sample books because this system of book distribution is outside the norm of educational system. As such the AO could not verify the expense regarding distribution of sample books, therefore disallowed 35% of expense as claimed by assessee under the head book distribution . Accordingly, AO added a sum of ₹ 22,61,145/- to the income of assessee. 5. Aggrieved, assessee preferred appeal before Ld. CIT(A) who upheld the action of AO after giving partly relief by observing in para-3.3 of his order, which reproduced below:- 3.3 I have carefully considered the observation of the Assessing Officer in the assessment order and also the submissions of the Ld. A/R. During the year, the appellant has incurred an expenditure of ₹ 64,60,413/- on account of book distribution . The appellant could not produce the supporting bills and vouchers before the A.O at the time of scrutiny assessment. During the curse of appeal, the Ld. A/R h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s distribution expenses. On the other hand, Ld.DR vehemently relied on the order of authorities below. 9. From the aforesaid discussion, we find that AO disallowed the expense in relation to sample books distribution on the basis of non-availability of supporting documents at the time of assessment proceedings. The assessee was able to produce only the receiving registers duly signed by the recipients to whom the specimen copies were given. In the absence of documentary evidence the AO disallowed such expense on the basis of reasonable estimate. We further find that such expense claimed by assessee for distributing of sample books are not supported from the bills vouchers. However, Ld. AR was able to give the registers, wherein the details of recipients of sample books were contained. We also find that disallowance was made by AO @ 35% of total book distribution expense which has been reduced by Ld. CIT(A) to 15%. From the order of lower authorities we find that that the nature of the expenses has not been doubted but the supporting expenses vouchers have not been produced, so the disallowance was made on estimated basis. No comparison of such expenses claimed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side of vouchers the names of coolies/transports to whom payment were made put their signatures/thumb impressions. Evidencing the genuineness of the expense, sample copies of debit vouchers relating to 'carriage inward' and 'carriage outward' enclosed at page No. 46 to 89 of the paper book is enclosed. The assessee has also submitted a chart in support of its claim.On the other hand Ld. DR relied on the orders of authorities below. 15. At the time of hearing, we find from the chart given by Ld. AR in relation to above stated expenses that assessee has been incurring such expenses for the above stated activities and no disallowance has been made in the past. Besides, this, we find the amount incurred by assessee is meager. Considering the submission of Ld. AR and totality of the facts, we reverse the orders of authorities below and delete the additions made by AO. This ground No. 3 of assessee's appeal is allowed. 16. Ground No.3 raised by the assessee in this appeal is that Ld. CIT(A) erred in sustaining the disallowance of ₹ 1,303/- and ₹ 7,750/- out of Shree Ganesh Puja and Bengali New Year Celebration expenses. 17. During the year ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has claimed sales promotion expense for an amount of ₹ 7,09,039/- which is comprising the following:- a. Expenses reimbursed for sales campaign locally - ₹ 58,406/- b. Expenses reimbursed for sales campaign in the district - ₹ 3,24,467/- c. Car hired expenses for the above - ₹ 3,26,166/- 23.1 During the course of assessment proceedings, AO found that all the expenses claimed by assessee in the case of (a) and (b) have been incurred in cash. The assessee has produced only debit vouchers in support of its claim. Therefore, AO has disallowed the above expenses @ 15% and added back to the total income of assessee. However, in case of (c) assessee has produced vouchers in support its claim but AO found on estimate basis that 20% of such expenses are in personal nature. Therefore, 20% of such expenses are disallowed and added to the total income of assessee. 24. Aggrieve, assessee preferred appeal before Ld. CIT(A) who has reduced such expense to the extent of 10% by observing as under:- 6.3 I have carefully considered the observation of the Assessing Officer in the assessment order and also the submission of the Ld. A/R. During the year, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the relevant assessment year.We find that the AO has disallowed the expenses on adhoc basis due to non production of the supporting bills and vouchers. However the ld. AR before us has submitted a chart showing the comparison between the turnover and such expenses for the earlier years and subsequent year. The purpose of this comparison of expenses of various years isto justify that the assessee has been incurring such expenses consistently and no issue for the disallowance arose.In view of above and in the interest of justice we reverse the orders of authorities below and delete the addition. This ground of assessee's appeal is allowed. 27. Ground No. 5raised by the assessee in this appeal is that Ld. CIT(A) erred in sustaining the disallowance of canvassing charges at ₹ 99,623/- being 10% of ₹ 9,96,235/- 28. During the year assessee has claimed a sum of ₹ 9,96,235/- towards the canvassing charges. It was claimed that assessee is having certain agents who used to go to the shop owners in sunburn areas for the promotion of its publishing books. The agents used to charge some commission for the sale of books and for collecting the sale consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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