Appeal partially allowed, directing deletion of disallowance under Section 43B Income Tax Act, 1961.

The appeal was partly allowed, directing the deletion of the disallowance under Section 43B of the Income Tax Act, 1961, and restricting the disallowance of travelling expenses to 5%. Other disallowances for the purchase of a mobile phone, business promotion expenses, and conveyance expenses were upheld due to lack of supporting evidence.

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Issues Involved:
1. Disallowance of unpaid service tax liability under Section 43B of the Income Tax Act, 1961.
2. Disallowance for the purchase of a mobile phone.
3. Disallowance of business promotion expenses.
4. Disallowance of conveyance expenses.
5. Disallowance of travelling expenses.

Summary:

1. Disallowance of Unpaid Service Tax Liability:
The assessee appealed against the disallowance of Rs. 10,92,548/- for unpaid service tax liability under Section 43B of the Income Tax Act, 1961. The AO noted the amount as payable but not deposited before filing the Income Tax Return and thus disallowed it. The Ld. CIT(A) upheld this disallowance by referring to a Cochin Bench decision, which was later set aside by the Hon'ble Kerala High Court. The assessee argued that the service tax collected in the current year was deposited and the unpaid amount pertained to earlier years, not claimed as a deduction. The Tribunal, citing the Delhi High Court's decision in CIT Vs. Noble And Hewitt (I) Pvt Ltd, concluded that since the assessee did not claim the unpaid amount as a deduction, Section 43B could not be applied. The Tribunal directed the AO to delete the disallowance.

2. Disallowance for Purchase of Mobile Phone:
The assessee did not press this ground of appeal regarding the disallowance of Rs. 6,490/- for the purchase of a mobile phone, and it was dismissed.

3. Disallowance of Business Promotion Expenses:
The AO disallowed Rs. 26,265/- out of Rs. 2,27,207/- claimed as business promotion expenses due to non-production of supporting evidence. The Ld. CIT(A) upheld the disallowance, noting that the expenses were not petty and lacked supporting documents. The Tribunal confirmed the Ld. CIT(A)'s decision as the assessee failed to produce evidence.

4. Disallowance of Conveyance Expenses:
The AO disallowed Rs. 42,223/- out of Rs. 3,55,885/- claimed as conveyance expenses due to non-production of supporting documents. The Ld. CIT(A) upheld the disallowance, noting that the expenses were not petty and lacked supporting evidence. The Tribunal confirmed the decision as the assessee failed to produce any material to support the expenses.

5. Disallowance of Travelling Expenses:
The AO disallowed Rs. 1,15,492/- out of Rs. 5,77,476/- claimed as travelling expenses due to non-production of some vouchers and noting personal expenses of Rs. 18,111/-. The Ld. CIT(A) directed the AO to limit the disallowance to unsupported and non-personal expenses. The Tribunal, noting the audited accounts and non-rejection of books by the AO, restricted the disallowance to 5% of the claimed amount, partly allowing the assessee's claim.

Conclusion:
The appeal was partly allowed with specific directions on each issue, particularly directing the deletion of the disallowance under Section 43B and restricting the disallowance of travelling expenses to 5%.

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