TMI Blog2017 (6) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... ad it claimed any expenditure with regard to the tax-free income during the year under consideration. Therefore, there was no justification of any kind to make any disallowance invoking the provisions of Section 14A of the Act, we find that the ground of appeal raised by assessee in the present appeal is squarely covered in favour of assessee as the facts of this year are also not at variance, hence this ground of appeal is allow in favour of the assessee. Addition on account of payment to Traffic Police for Police arrangements (Bandobast) - Held that:- The contention of assessee are vague even during the submission of the Ld. AR of the assessee could not substantiate under which provision the said expenses were paid to the traffic police. It is not the contention of Ld. AR of the assessee that the said expenses were deposited with the account of traffic police for making the necessary arrangements at the Water Park or the payment was made as statutory expanses. The assessee has failed to substantiate its contention that the expenses were paid wholly and exclusively for the purpose of business. The Hon’ble Karnataka High Court in CIT Vs Neelavathi & others (2010 (2) TMI 176 - KA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 26-5-2017 - Shri G.S. Pannu, Accountant Member, And Shri Pawan Singh, Judicial Member For The Appellant : Mr. D.C. Jain (AR) For The Respondent : Mr. Suman Kumar (DR) ORDER Per Pawan Singh, J.M: This appeal under section 253 of Income Tax Act is directed by assessee against the order of CIT(A)-17 Mumbai, dated 19/02/2014 for assessment year 2010-11. The assessee has raised the following grounds of the appeal. Grounds of Appeal: 1) Under the facts and circumstances the learned CIT(A) erred in confirming the addition of ₹ 5,77,953/- being deemed rent income, made by the Assessing Officer. 2) Under the facts and circumstances the learned CIT(A) erred in confirming the addition of ₹ 12,500/- u/s. 14A r.w. Rule 8D, made by the Assessing Officer. 3) Under the facts and circumstances the learned CIT(A) erred in confirming the addition of ₹ 17,500/- on account of payments to traffic police for Police Bandobust stating nonbusiness expenditure made by the Assessing Officer. 4) Under the facts and circumstances the learned CIT(A) erred in confirming the addition of ₹ 45,411/- on account of Non deduction of TDS on int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rged the onus in that regard. Therefore, reversing the order of the FAA, we decide the first ground of appeal in favour of the Assessee. 5. Considering the decision of Tribunal in assessee s own case for AY 2009-10, when the facts for the year under consideration are also similar. Therefore, keeping in view the principal of consistency this ground of appeal is allow in favour of assessee. 6. Ground No. 2 relates to addition of ₹ 12,500/- under Section 14A read with Rule 8D. We have seen that similar addition was made against the Assessee for Assessment year 2009-10 and the assessee file appeal before the Tribunal and the following order was passed ITA No. 7605/M/2012 vide order dated 06/01/2017. We have heard the rival submissions. We find the assessee had not incurred any expenditure nor had it claimed any expenditure with regard to the tax-free income during the year under consideration. Therefore, there was no justification of any kind to make any disallowance invoking the provisions of Section 14A of the Act. The basic precondition for making disallowance under the said section is earning of tax-free income and incurring of expenditure by the assessee. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessee are vague even during the submission of the Ld. AR of the assessee could not substantiate under which provision the said expenses were paid to the traffic police. It is not the contention of Ld. AR of the assessee that the said expenses were deposited with the account of traffic police for making the necessary arrangements at the Water Park or the payment was made as statutory expanses. The assessee has failed to substantiate its contention that the expenses were paid wholly and exclusively for the purpose of business. The Hon ble Karnataka High Court in CIT Vs Neelavathi others (2010) 322 ITR 643(Kar) held that payments made to police or rowdies to keep away from the business premises is not allowable as business expenses. Thus, we did not find any illegality or infirmity in the order of Ld. CIT(A) hence, this ground of appeal is dismissed. 10. Ground no. 4 relates to confirming the addition of ₹ 45,411/- due to non-deduction of TDS on interest paid on car loan. We have seen that similar disallowance was made against the assessee for assessment year 2009-10 and on appeal before Tribunal the identical ground was restored to the file of Assessing Officer for ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee made the fuel expenses in cash exceeding ₹ 20,000/- to M/s. Kailash Service Station on a single day. From the details furnished to Assessing Officer, the Assessing Officer noticed that assessee purchased fuel of ₹ 28,808/- on dated 02/05/2009, ₹ 28,808/- on dated 03/05/2009,Rs. 28,808/- on dated 05/05/2009 and ₹ 30,736/- on dated 26/02/2010. Thus, the assess made the purchase of ₹ 1,17,160/- which is not in conformity with the provision of section 40A(3) of the Act. The assessing officer before making disallowance, recorded in its order that the assessee has agreed for the disallowance of the aggregate amount of ₹ 1,17,160/- under section 40A (3). On appeal before CIT(A), the disallowance was confirmed holding that such payment were made in cash to M/s Kailash Service Station and no expenses are allowable as expenditure incurred in cash on a single day. The ld CIT(A) further concluded that the Assessee has not furnished any details to show that this expenditure is covered under exceptions laid down as per Rule 6DD. We have seen the copy of receipt placed on record at page number 66- 69 that consist of receipts are as below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that he had made an ad hoc disallowance at the rate of 20%, that the FAA had confirmed his order. In our opinion in case of corporate assessee disallowance on account of personal element can be made only if the expenditure incurred was for the personal use of any of the directors / employee and that expenditure did not have any relation with the carrying out of the business. We don t find that AO / FAA had carried out any such exercise. If the AO had any doubt, it was his duty to make further investigation and pinpoint the actual expenditure not incurred for the business of the assessee. In the circumstances, we are of the opinion that making and upholding the disallowance was not justifiable. Reversing the order of the FAA, we decide the last ground in favour of the assessee. 16. Considering the decision of earlier year in the assessee own case and we find that the similar ad hoc disallowance was deleted by Tribunal for AY 2009-10. Thus, respectfully following the decision of coordinate bench in earlier year this ground of appeal is allowed in favour of assessee. 17. In the result appeal of the assessee is partly allowed. Order was pronounced in the open court on 26t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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