TMI Blog2022 (4) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... out entire poultry complex. The assessee could not justify as to why an expenditure of around ₹ 80,000/- per month is incurred to maintain one bore well at the cost which is less than ₹ 50,000/- only. We are of the view that when the entire poultry complex has been leased out, there is no justification to pay salaries to six employees. We find no infirmity in the order passed by the Ld.CIT(A) and uphold the same. Accordingly, this ground raised by the assessee is dismissed. Disallowance of expenditure towards vehicle repairs and vehicle maintenance - HELD THAT:- The assessee company has leased out the entire poultry complex. The assessee agreed before the AO that the expenditure amounting to ₹ 34,871/- and ₹ 94,274/- incurred related to tractor but not lease income. CIT(A) has allowed only an amount of ₹ 10,033/- spent towards petrol for vehicles used by the staff as there is possibility of incurring this expenditure. We do not find any infirmity in the order passed by the Ld.CIT(A) and uphold the same. Accordingly, the ground raised by the assessee is dismissed. Disallowance of poultry equipment repairs - AO disallowed an amount incurred tow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue s appeal by holding that apart from depreciation and insurance expenses allowed by the AO, the other expenses viz., the poultry equipment repairs, salary and wages, staff welfare, repair and maintenance, printing and stationery, miscellaneous expenses, tax presentation fees, audit fees, filing fees and other bank charges are also to be allowed, since the assessee is a private limited company and the minimum expenditures are to be incurred to keep the assessee company alive and accordingly, the Ld. AO was directed to estimate the expenses reasonably and decide the issue. Thereafter, the Ld. AO giving effect to the Tribunal s order passed consequential order on 14.06.2011 and determined the assessee s total income at ₹ 5,74,444/- which includes income from business at ₹ 1,42,084/- and income from other sources at ₹ 4,32,360/-. Aggrieved by the order of the Ld. AO s consequential order, the assessee went on appeal before the Ld. CIT (A). On appeal, in the second round of proceedings, the Ld. CIT(A) has partly allowed the assessee s appeal. On being aggrieved with the decision of the Ld.CIT(A), the assessee preferred appeal before the Tribunal by raising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fy for any deduction as it is not essential expenditure to keep the company alive. The Ld.CIT(A), relying on the decision of Coordinate Bench of ITAT held that on perusal of the ITAT order, it shows that this head is not included in the directions of the ITAT to be considered by the AO. Salaries and wages come under different heads and are considered separately . Accordingly, the Ld.CIT(A) upheld the order passed by the AO. 7. Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal and submitted that the Ld.CIT(A) is not justified in upholding the addition of ₹ 72,000/- made by the AO towards disallowance of management salaries and pleaded for allowing the same as management salaries are very much necessary to keep the assessee company alive. 8. On the other hand, the Ld.DR heavily placed reliance on the order of the Ld.CIT(A) and pleaded for upholding the same. 9. We have heard both the parties, perused the material available on record and also the order passed by the Hon ble ITAT, Visakhapatnam. It is abundantly clear that the ITAT order shows that the head management salaries is not included to be considered by the AO, to k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try complex. The assessee could not justify as to why an expenditure of around ₹ 80,000/- per month is incurred to maintain one bore well at the cost which is less than ₹ 50,000/- only. We are of the view that when the entire poultry complex has been leased out, there is no justification to pay salaries to six employees. We find no infirmity in the order passed by the Ld.CIT(A) and uphold the same. Accordingly, this ground raised by the assessee is dismissed. 15. Ground No.4 is related to disallowance of expenditure towards vehicle repairs and vehicle maintenance. The assessee agreed before the AO that the expenditure incurred for vehicle repairs and vehicle maintenance amounting to ₹ 34,871/- and ₹ 94,274/- respectively was related to tractor but not lease income. However, claimed that an amount of ₹ 10,000/- was spent for petrol for vehicles used by staff in performance of the duties of the company. The AO observed that the petrol was purchased in quantities of 6 to 12 litres at a time. The AO disallowed the entire expenditure u/s 57(iii) of the Act, observing that if petrol was purchased for staff vehicles it would have been in small quantities f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intain one bore well. The AO further observed as per the information available on record that the assessee company has agricultural activity and it is also maintaining a guest house in the poultry complex premises and the water drawn by the bore wells is shared by the assessee. Accordingly the AO has not considered the expenditure under poultry maintenance for deduction u/s 57(iii) of the Act and disallowed the same. 22. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A). The Ld.CIT(A) upheld the order of the AO, observing that as per clause 6 of the lease agreement, the lessee should bear all the repairs, claims etc, arising out of their maintenance in the lease period. Only the major capital expenditure for buildings, equipment shall be borne by the lessor, i.e. the assessee. The Ld.CIT(A) verified different bills produced, which are of the value less than ₹ 12,560/- which show that the items of expenditure are in the nature of routine expenditure, which are to be borne by the lessee, but not by the assessee. No bills were produced for one item of the value of ₹ 1,20,000/- to prove that this amount is to enhance t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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