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of <h1>Appeal successful: 20% disallowance of site expenses overturned under Income-tax Act</h1> <h3>Durga Signal Infra Pvt. Ltd., C/o Subash Agarwal & Associates, Advocates, Versus Assistant Commissioner of Income Tax (OSD), Ward- 1 (1), Kolkata.</h3> Durga Signal Infra Pvt. Ltd., C/o Subash Agarwal & Associates, Advocates, Versus Assistant Commissioner of Income Tax (OSD), Ward- 1 (1), Kolkata. - TMI Issues:The sole issue raised in this appeal is regarding the ad-hoc disallowance of 20% of total site expenses amounting to Rs. 3,67,37,203.Summary:Issue 1: Ad-hoc Disallowance of Site ExpensesThe assessee, engaged in the business as a Railway contractor and supplier, filed a return of income reporting a loss. The Assessing Officer (AO) noted significant expenses claimed in the Profit and Loss Account, resulting in a loss. The AO called for details on site expenses claimed, amounting to Rs. 3,67,37,203. Without specific defects pointed out, the AO made an ad-hoc disallowance of 20% towards site expenses. The CIT(A) upheld this decision. The assessee contended that detailed particulars were provided, and a comparative analysis showed consistent claims in previous and subsequent years. The AO's basis for the ad-hoc disallowance was not rational. The Tribunal noted that the authorities failed to substantiate the disallowance, and as per Section 37(1) of the Income-tax Act, allowed the expenditure incurred for business purposes. The ad-hoc disallowance was deleted, and the appeal was allowed.In conclusion, the appeal of the assessee was allowed, and the ad-hoc disallowance of site expenses was deleted.
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