2023 (7) TMI 15 - AT - Income Tax

Tribunal reduces expenses disallowance to 5% in taxpayer's favor, highlights fair assessment process.

Shirish M Dalvi Versus DCIT Circle 23 (3), Mumbai

The Tribunal partially allowed Ground no.7 of the assessee's appeal, reducing the disallowance of expenses claimed from 50% to 5% of the aggregate amount, ... Disallowance of expenses - assessee has claimed an expenditure towards various expenses besides claiming expenses relating to land - AO disallowed 80% of the various administrative expenses - HELD THAT:- The detail of expenses claimed by the assessee is given at page 29 of the assessment order. On a perusal of the same, we noticed that a sum has been incurred towards salary and bonus. The remaining expenses claimed by the assessee which consisted of various administrative expenses like advertisement, car expenses, depreciation, rent, telephone, travelling etc., which are normally incurred by a business concern. Accordingly, we are of the view that disallowance of 50% confirmed by the learned CIT(A) is also on the higher side. We note from the orders passed by the tax authorities that they have not made any adverse observation in respect of various administrative expenses claimed by the assessee. Accordingly, we are of the view that this issue can be put to rest if the disallowance is restricted to 5% of the aggregate amount of expenses - Decided partly in favour of assessee. Issues involved:The judgment involves the challenge to an order of the CIT(A)-33, Mumbai, relating to assessment year 2010-11. The specific issue in question is the disallowance of expenses claimed by the assessee.Details of the Judgment:Issue 1: Disallowance of ExpensesThe Assessing Officer disallowed 80% of the various administrative expenses claimed by the assessee, amounting to Rs 23,73,288. In the appellate proceedings, the CIT(A) restricted the disallowance to 50% of the expenses. The Tribunal, upon review, found that the disallowance of 50% was on the higher side. It noted that there were no adverse observations regarding the administrative expenses claimed. Consequently, the Tribunal directed the Assessing Officer to restrict the disallowance to 5% of the aggregate amount of expenses, totaling to Rs 1,48,330. Thus, Ground no.7 urged by the assessee was partly allowed.This judgment highlights the assessment and appeal process concerning the disallowance of expenses claimed by the assessee. The Tribunal's decision to reduce the disallowance percentage showcases a balanced approach in addressing the issue at hand.