Tribunal decision on business promotion & motor car expenses disallowance rates aligns with past assessments

The Tribunal partly allowed the Revenue's appeal on business promotion expenses, setting a 20% disallowance rate, citing consistency with previous assessments. Regarding motor car expenses, the Tribunal dismissed the Revenue's appeal, upholding the 20% disallowance set by the CIT(A) as reasonable, given a lower disallowance in the subsequent assessment year.

---

---

Issues involved: Assessment of business promotion expenses and motor car expenses.

Business promotion expenses: The appeal was against the order of the Commissioner of Income Tax(A) - XI, Mumbai regarding the addition of business promotion expenses. The assessee, a professional actor, had claimed business promotion expenses of &8377; 30,11,098, which the Assessing Officer disallowed 25% as being of personal nature. The CIT(A) reduced the disallowance to 10%. The Revenue contended that the disallowance should not have been reduced, as most expenses lacked vouchers. The assessee argued that in previous assessments, similar disallowances were accepted at 20% and 25%, making the 10% disallowance justified. The Tribunal held that a 20% disallowance was reasonable, based on the pattern from previous assessments, and partly allowed the appeal of the Revenue.

Motor car expenses: The Assessing Officer disallowed &8377; 11,60,370 on account of motor car expenses, interest on car loan, and depreciation on car. The CIT(A) restricted the disallowance to &8377; 4,64,148. The Tribunal found the 20% disallowance sustained by the CIT(A) to be reasonable, especially considering that in the following assessment year, only a 10% disallowance was made. Therefore, the Tribunal dismissed the appeal of the Revenue.

In conclusion, the Tribunal partly allowed the appeal of the Revenue regarding business promotion expenses by setting a 20% disallowance rate and dismissed the appeal concerning motor car expenses, upholding the 20% disallowance set by the CIT(A).

---