TMI Blog2018 (2) TMI 2105X X X X Extracts X X X X X X X X Extracts X X X X ..... th the parties, we hereby remand the matter to file of the Assessing Officer to verify the bills and allow the expenses debited. AR is also directed to produce all the bills and vouchers before the Assessing Officer to credit the claim of expenditure. Rebates and Discount Expenses - AO disallowed 10% of the expenses claimedas the Rebates and Discounts claimed do not commensurate with the increase of the turnover of the assessee and the assessee could not satisfactorily explain the drastic increase in the expenditure - AR argued that in applying the test of commercial expediency for determining whether the expenditure was wholly and exclusively laid out for the purpose of business, reasonableness of the expenditure has to be judged fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ad-hoc 10% out of building repair expenses of Rs. 43.92 Lacs as against 20% made by the AO c) Rs. 9,81,000 Ad-hoc 10% out of general expenses of Rs. 98.11 Lacs as against 20% made by the AO. Rs. 22,52,000 Total 2.That the Ld. CIT(A) has erred on facts and under the law in confirming ad-hoc 10% disallowance of Rs. 37,06,000/- as made by the AO out of total expenditure of Rs. 370.68 lacs under the head Discount and Rebates . 3. During the assessment proceedings the Assessing Officer has disallowed 20% of the expenses amounting to 45.04 lacs out of the total amount of Rs. 225.21 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of the business and commercially expedient and the same was admissible as deduction, he made a token disallowance of 20 per cent of such expenses on the ground that element of excessiveness in such reimbursement cannot be ruled out Not justified Assessing Officer has accepted that the accounts were duly admitted Disallowance was inherently based on surmises and conjectures and devoid of a legally sustainable foundation CIT(A) justified in deleting the disallowance. 7. The Ld. DR argued that the disallowance was due to the absence of supporting documents, cash memos or bills hence the Ld. AR s argument that Assessing Officer has not pointed out even a single instance where the expenses were not supported cannot be accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT Vs. EKL Appliances Ltd. (Delhi High Court), copy attached as Annexure-I which relied on the following judgments (kindly refer to pages 20-25 of such judgment): 20 ITR 1, Eastern Investment Ltd. Vs. CIT (Supreme Court) 65 ITR 381, CIT Vs. Walchand Co. etc. (Supreme Court) 115 ITR 519, CIT Vs. Rajendra Prasad Moody (Supreme Court) 12. The Ld. DR argued that while the turnover is increased by 67% the rebates and discounts have increased by 330% hence the disallowance which is in excess to the turnover needs to be disallowed. 13. We have gone through the record placed before us and submissions of both the representatives. 14. There were no findings by the Assessing Officer as to the discrepancy in books of accounts o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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