9911796707
TMI Blog2020 (7) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs. 1,99,787 being 30% of the expenses accounted under the head subscription and membership fee on the ground that these are payments to various clubs and banks and were incurred only to maintain good relationship with clients and appears to be on a higher side. 3. Whether on facts and circumstances of the case, the Commissioner of Income Tax (Appeals) erred in confirming the estimated disallowance made by Assessing Officer being 10% of the expenditure accounted under carriage outward, commission and discount, transportation expenses, travelling expenses, business promotion expenses and repairs and maintenance, by making an estimation of such expenses supported by self-made vouchers." 3. The assessee is an individual engaged in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be ruled out; (ii) The expenses are on higher side; (iii) The assessee could not produce even 50% of evidences in support of claim of these expenses during assessment. 5.2 Aggrieved by the order of the CIT(A), the assessee has raised this issue before the Tribunal. The learned Counsel for the assessee has submitted a paper book enclosing therein the details of expenses claimed and disallowance, copies of the case laws relied on etc. The learned Counsel submitted that the Assessing Officer has made an arbitrary disallowance of 30% on certain presumptions without giving any basis / reason for the findings. It was submitted that the Assessing Officer has not pointed out any defect or deficiency in the details submitted during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustomers, a series of presentations, negotiations and discussions at various levels of the client would occur before the finalization of a particular order. Most of such presentations, meetings and discussions are held at various hotels, clubs. Such expenses incurred at hotels, clubs, for meeting, discussions, travelling etc. are accounted under the said head of subscriptions and membership fees, and also, travelling and other expenditures incurred for attending conferences / meetings with the dealer - Kirloskar is also accounted under the said head of expenses. The expenditure incurred is fully supported and are incurred through by banking channels. It is to be further noted that there are no qualifications, observations made by the Audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectly ascertained. These facts have been reported in the notes on account furnished by assessee's auditor in their audit report also. Therefore, 10% of the above expenses of Rs. 5,24,697 is disallowed and added back to the total income." 6.1 Aggrieved, the assessee is in appeal before the CIT(A). The CIT(A) observed that the disallowance being only 10% of such high amount of expenses, which is without proper bills is correct, fair and reasonable, and confirmed the view taken by the Assessing Officer. 6.2 Aggrieved by the order of the CIT(A), the assessee is in appeal before the Tribunal. The learned Counsel for the assessee submitted that the CIT(A) has grossly erred in confirming the adhoc disallowance at 10% of the expenditure accounte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves. Due to the very nature, such expenditure will be largely supported by self made vouchers only. Business promotion expenses 6,98,395 Expenditure on advertisements, approvals of various agencies and seminars, meetings etc. Repairs and maintenance 3,81,286 Repairs and maintenance of factory building, vehicles, equipment Total 52,46,974 6.5 The details of the ledger account are also placed on record. The expenditures are very much in the nature of unavoidable expenditure in a small scale manufacturing unit. The quantum of such expenditure is also very small when compared to the volume of operations of the assessee. The assessee is running a small scale manufacturing unit and this expenditure incurred are in the ordinary c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
