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TMI Blog2018 (6) TMI 1385X X X X Extracts X X X X X X X X Extracts X X X X ..... (i.e. 10% of 751121/- and 10% of 104856/-) and there by confirming addition of Rs. 85598/- to the total income of the assessee. 2. On the facts and in the circumstances of the case and law, the Commissioner of Income Tax(Appeals)-3, erred in confirming 10% disallowance from Machinery Repair expenses (i.e. 10% of Rs. 12,92,284/- and thereby confirming addition of Rs. 1,29,228/- to the total income of the assessee. 3. That on the facts and in the circumstances of the case and law the Commissioner of Income Tax(Appeals)-3, erred in assessing the total income at Rs. 75,67,036/- as against returned total income of Rs. 73,52,210/- declared by the assessee." 2. Regarding Ground No. 1, briefly stated, the facts of case are that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /R of the appellant do not made any submission that the travelling expenses and conveyance expenses are supported self made voucher. Therefore it is established that these expenses are not fully vouched. The Assessing Officer disallowed 20% of travelling expenses and conveyance expenses which is excessive and unreasonable. Therefore, considering the facts of the case, nature of these expenses I restrict the disallowance @10%. Thus the disallowance comes of Rs. 85,598/-. Accordingly, I confirm the addition of Rs. 85,598/- and balance amount of Rs. 85,598/- is deleted. This ground is partly allowed." 4. During the course of hearing, the ld. AR submitted that due to the sales person travelling from one village to another village and to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feed industry, the assessee has formulated payment plan, which is competitive with best industry practices, whereby the employee are paid fixed amount towards their boarding and lodging expenses and travelling expenses. The assessee is maintaining full details of the employee's visits and payment made to them towards these expenses, as the amount of such expenses has been fixed by the firm, most of vouchers in this category are authenticated by the proprietor to justify the payment made on this account. Hence, any disallowance out of travelling expenses and conveyance expenses, will be injustice. Further, conveyance expenses are paid to employees along with salary. 6. It was submitted that from the above, it is clear that full picture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance to 10% of total travel and conveyance expenses and no further relief may be provided to the assessee. 9. We have heard the rival contentions and perused the material available on record. It is a case where the AO has disallowed 20% of travelling and conveyance expenses incurred by the assessee and which has been sustained to the extent of 10% by the ld CIT(A). There is no finding recorded regarding any specific defect in claim of the expenses or the expenses have not been incurred for the purposes of the business. It is a clear case of adhoc disallowance of expenses which cannot be sustained in the eyes of law. In the result, addition so sustained by the ld CIT(A) is hereby deleted. 10. Regarding Ground No. 2, briefly stated, the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the course of hearing, the ld. AR submitted that the assessee herewith providing the summary of machinery repair expenses which contains full details of bill no., amount of bill and name of the party. All these detail were available in the books of accounts made available to the AO and in ledger account, where name is appearing means that these vendors are regular vendors of the company and payment to them are made mostly by cheques as they are regular supplier to the assessee. Total of Machinery Expenses Rs. 12,92,228/- Payment by way of cheque/Journal entries to regular vendors Rs. 10,97,774/- (% of total machinery expenses = 10,97,774/12,92,228= 84.94%) Payment by way of cash for machinery Expenses Rs. 1,94,510/- (% of total m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturing of cattle feed, so it is not possible that there were no machinery expenses in earlier years. In earlier years, machinery repair expenses were transferred to repairs and maintenance expenses, but after it was brought to the notice of assessee by the auditors of the concern, from the year under consideration, it was shown under the head of machinery repair expenses to present true and correct view. 14. It was further submitted that it is settled law that it is not open to the Assessing Officer to make addition on estimation basis without verifying that said expenses are genuine or not, as the Income Tax Law does not permit such adhoc additions. Mere fact that payments were made in cash on self made vouchers, not a conclusive evide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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