TMI Blog2020 (8) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraphs on the principle of natural justice, the action of the assessing officer cannot be upheld. Accordingly, we direct the AO to allow deduction relating to pantry and stationery purchase. Addition of Building maintenance expenses - said expense was grouped under the head Administrative expenses - according to AO, the assessee did not produce proper break-up of the asset owned by it and expenses related to building hence the AO disallowed 40% of the above said claim - HELD THAT:- It is not clear whether the AO did call for any detail or not. We have noticed that the assessee is carrying on sub-letting activity on the buildings taken on rent. Hence the expenses incurred on building should be mainly on maintenance activities only. We notice that the AO has disallowed 40% of expenses on adhoc basis, i.e., he did not bring any material on record to support the estimate of 40%. Accordingly, in the absence of any supporting evidences, we are of the view that the disallowance of 40% of expenses on the higher side. Since the assessee has not furnished any break-up details, we are of the view that some disallowance out of the above said expenses is called for. In our vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under the head Income from other sources in both the years under consideration. While determining the net income, the AO restricted the amount of certain expenses without making any discussion on the body of the assessment order and also made certain additions after discussing about them. The Ld CIT(A) confirmed the assessment orders passed for both the years under consideration. Aggrieved, the assessee has filed these appeals before us. 5. We shall first take up the appeal filed for assessment year 2011-12. The assessing officer computed net income of this year as under:- Gross receipts as per P L a/c 7,75,58,849 Less:- Allowable Expenditure 1. Rent Paid 1,51,62,183 2. Admin Expenses allowed 4,77,83,850 3. Financial expenses 14,93,854 4. Total income from other sources * 6,96 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .00 crore. Accordingly, he prayed for deletion of this disallowance. 8. On the contrary, the Ld D.R submitted that the break-up details are available in the Annual report and hence the matter may be restored to the file of AO for examining it afresh. 9. We heard the parties and perused the record. We notice that the assessing officer did not discuss anything about the above said disallowance of ₹ 1.00 crore, i.e., by way of restricting the amount of administrative expenses to ₹ 4.77 crores as against the claim of ₹ 5.77 crores. The assessee has furnished Annual Report and Schedule H of the Annual report contains the break-up details of the administrative expenses. Hence it is not a case of non-furnishing of details of by the assessee as observed by Ld CIT(A), since the Annual report was very much available before the assessing officer. The Ld A.R also submitted that the assessing office did not given any opportunity to the assessee in this regard. 10. The proceedings before the assessing officer is quasi-judicial proceedings and hence, while acting in their quasi-judicial capacity, the income tax authorities have to adhere to the principles of natural jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,70,44,339 2. Admin Expenses allowed 6,98,20,334 3. Financial expenses 59,79,990 4. Depreciation as per IT Act 26,94,024 5. Employee Benefits 1,80,02,255 ---------------- 15,35,40,942 Net Income 1,21,21,791 14. The first issue relates to the action of the AO in not allowing claim of ₹ 31,76,042/- relating to pantry and stationery purchase. It can be noticed that the rent paid figure adopted by the AO is ₹ 5,70,44,339/-. However, the Profit and Loss account shows a figure of ₹ 6,02,20,381/-under the head cost of material consumed , which comprises of rent expenses of ₹ 5,70,44,339/- and Pantry Stationery purchase of ₹ 31,76,042/-. The AO, however, without discussing anything in the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e., he did not bring any material on record to support the estimate of 40%. Accordingly, in the absence of any supporting evidences, we are of the view that the disallowance of 40% of expenses on the higher side. Since the assessee has not furnished any break-up details, we are of the view that some disallowance out of the above said expenses is called for. In our view the disallowance may be restricted to 10% of the expense claimed under the head building maintenance services, i.e., 10% of ₹ 45,57,237/- and the same would take care of deficiencies, if any in the claim. We order accordingly. The order passed by Ld CIT(A) on this issue stands modified accordingly. 18. The next issue relates to the disallowance of ₹ 7.00 lakhs out of miscellaneous expenses. The claim of miscellaneous expenses was also grouped under the head Administrative expenses. We notice that the assessee has claimed a sum of ₹ 6.98 crores as Administrative expenses. The AO has disallowed a sum of ₹ 7.00 lakhs by observing that the assessee has not furnished the details of miscellaneous expenses. We notice that the AO has made this disallowance without properly analysing the fina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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