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of <h1>Partial Allowance of Business Expenses Disallowance Under Section 37(1) Due to Insufficient Proof and Lack of Excessiveness</h1> <h3>Ram Manohar Versus Income Tax Officer, Ward-1 (2) (3), Meerut</h3> Ram Manohar Versus Income Tax Officer, Ward-1 (2) (3), Meerut - TMI The appeal concerns the disallowance of 50% of the assessee's regular business expenses, including salaries, rent, freight, and repairs, totaling Rs. 29,09,890, under section 143(3) of the Income-tax Act, 1961, for assessment year 2017-18. The lower authorities upheld this disallowance, citing insufficient proof that the expenses were 'wholly and exclusively' incurred for business purposes under section 37(1). However, the appellate tribunal noted that while the assessee failed to fully discharge the onus of proof, the department also did not provide comparable instances to establish the expenses as excessive or unreasonable. Balancing these factors, the tribunal deemed it just to reduce the disallowance from 50% to 10%, explicitly stating that this decision 'shall not be treated as a precedent.' The appeal was thus partly allowed, with directions for recomputation in accordance with law.
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