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Deputy Commissioner of Income Tax, Circle-37 (1) , New Delhi Versus Mr. Percival Sam Billimoria

2016 (4) TMI 633 - ITAT DELHI

Disallowance on account of entertainment expenses and traveling expenses - CTI(A) restricted the disallowance - Held that:- In the present case, it is noticed that the assessee had been associated with two firms i.e. M/s AZB & Partners and M/s Ajay Bahl & Co. to render consultancy services and advice on the matters relating to his field of expertise. The AO asked the aforesaid firms u/s 133(6) of the Act about the involvement of the assessee and in response the above said two firms did not deny .....

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es and incurred about 17% of the professional fee on account of travelling expenses which cannot be considered to be unreasonable. At the same time, the assessee had not produced the vouchers for all the expenses incurred, moreover, in such type of cases, involvement of personal element cannot be ruled out. In our opinion, the ld. CIT(A) was justified in restricting the disallowance to the extent of 20% instead of whole amount disallowed by the AO. We do not see any infirmity in the impugned ord .....

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ed in this appeal: 1. In the facts and circumstances of the case the Ld. CIT(A) grossly erred in restriction the addition made by the AO on account of entertainment expenses from ₹ 8,01,890/- to ₹ 1,60,378/- though the assessee failed to prove the genuineness and failed to furnish necessary documentary evidence for incurring the above expenses. 2. In the facts and circumstances of the case the Ld. CIT(A) grossly erred in restriction the addition made by the AO on account of travellin .....

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n incurred by the assessee for the clients of the principals. 4. In the facts and circumstances of the case the Ld. CIT(A) grossly erred in restriction the addi6tion made by the AO on account of travelling expenses since, the assessee was getting a fixed monthly retainer-ship form the Principals and the assessee could not prove the need and genuineness of incurring the expenses for/on behalf of employer without reimbursement. 5. In the facts and circumstances of the case the Ld. CIT(A) grossly e .....

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by the assessee and categorical denial of having any link/connection w.r.t the travelling expenses incurred by the assessee by one of the two principals, namely M/s Ajay Bhal & Co. from whom 70% (approx) of the retainer-ship fee was received by the assessee, goes to show that such expenses incurred by assessee doesn t relate to earning professional receipts from the said firms. 7. That the grounds of appeal are without prejudice to each other. 8. The appellant craves leave to add, amend or .....

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on 28.02.2011. Later on, the case was selected for scrutiny. The AO accepted the trading result as the net profit shown by the assessee at 32% in the year under consideration was better than the net profit @ 26.40% shown in the preceding year. The AO also noticed that the assessee incurred entertainment expenses of ₹ 8,01,890/- in the year under consideration. He asked the assessee to prove that such expenses were incurred wholly and exclusively for earning of professional receipt. The AO .....

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see himself borne the expenses for the purpose of his profession, which were not reimbursable from the clients and being independent professional, the assessee attended seminars and conferences held abroad to spread/enhance professional skills, knowledge and to gain experience & recognition in the field of his profession, which ultimately helped him in delivering best services, those expenses were incurred for earning and that the revenue and the AO made the disallowance without affording an .....

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urse of assessment proceedings. The ld. CIT(A) was of the view that reasonableness of the expenditure has to be judged with reference to the nature of business. He further observed that the expenses were incurred having regard to the commercial expediency and those need not necessarily have their origin in contractual obligations and if the assessee carrying on a business finds that it is a commercial expediency to incur directly or indirectly, it would be open to such an assessee to do so notwi .....

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view the personal element involved in the said expenditure, the ld. CIT(A) restricted the disallowance to 20% of the expenses incurred and sustained the disallowance of ₹ 1,60,378/-. 7. The other issue raised by the department vide Ground Nos. 2 to 6 relates to the relief allowed out of the disallowance made by the AO on account of travelling expenses amounting to ₹ 42,22,168/-. 8. The facts related to this issue are similar to the facts involved for disallowance out of entertainmen .....

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