TMI Blog2018 (12) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... Expenses incurred for business purposes - expenses quite nominal compared to the turnover of the assessee and hence the disallowance is excessive - Held that:- The assessee could file before the Ld. CIT(A) the ledger account of expenses to suggest that all the expenses are for regular business purposes. Before us, the Ld. counsel could not find fault with the findings of the CIT(A). However, we find that the disallowance made by the AO and confirmed by the Ld. CIT(A) at 15% of expenses of ₹ 18,31,221/- is on a higher side.Considering the facts and circumstances of the case, we direct the AO to restrict the disallowance to 10% of the aforesaid expenses of ₹ 18,31,221/- in place of 15% made by him. - ITA No. 6124/MUM/2016 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO was not convinced with the above explanation of the assessee and made a disallowance of ₹ 35,000/- being of personal nature and non-business expenses. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). During the course of appellate proceedings the assessee claimed that the gifts were made to three employees/supervisors on account of their marriage and the expense is not disbelieved by the AO. The assessee claimed that the employees are part of its business and it is necessary to establish a healthy and long relationship with the employees. However, the Ld. CIT(A) was not convinced with the above explanation of the assessee and noted that the payment of gift has not been made as part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure while computing the income for the purpose of taxation as held in CIT v. Jeevandas Laljee Sons (2000) 245 ITR 719 (Mad). Thus the 1st and 2nd ground of appeal are dismissed. 8. The 3rd, 4th and 5th ground of appeal 3. The learned CIT(A) failed to appreciate that addition on ad hoc basis is not within the scope of sec 147 as the same is on presumption without having any concrete or positive evidence. 4. The learned CIT(A) failed to appreciate that all expenses were incurred for the purpose of business and considering commercial expediency and nature of business the same must be allowed in toto as business expenses without going into super technicalities, 5. The learned CIT(A) failed to appreciate that the individual expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be verified, the AO made an ad hoc disallowance of 15% of the aforesaid expenses of ₹ 18,31,421/- which comes to ₹ 2,74,683/-. 10. In appeal before the Ld. CIT(A), the assessee filed the ledger accounts of the expenses to suggest that these are regular business expenses. However, the Ld. CIT(A) was not convinced with the above explanation of the assessee and held that: The facts of the case are considered. It is seen from the details filed that the travelling expenses has a journal entry of ₹ 25,935/- as amount transferred from 'travelling expenses (lodging boarding) . The details have not been filed. Further the expenses include payments made for persons like Mr. Ramesh Mestha but the nature of the payment, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee submits that these expenses have been incurred for business purposes and are quite nominal compared to the turnover of the assessee and hence the disallowance is excessive. On the other hand, the Ld. DR supports the order passed by the Ld. CIT(A) and submits that as most of the expenses are unverifiable, the above order be upheld. 12. We have heard the rival submissions and perused the relevant materials on record. As the return of income filed by the assessee on 27.09.2010 was reopened on 30.10.2014 by the AO by issuing notice u/s 148, the 3rd ground of appeal does not survive. We find that the submission of the assessee before us, was the same as was made before the Ld. CIT(A). We find that the assessee could file before ..... X X X X Extracts X X X X X X X X Extracts X X X X
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