TaxTMI 
TaxTMI 
2006 (9) TMI 218
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....of any consultancy/business during such tour or any income being shown on that account in P&L a/c specially when he was accompanied by his family and the so-called recovery of Rs. 99,10,506 from M/s Sumitomo Corporation next year was not feasible when it did not exist in balance sheet of the firm and further the income shown as fees from project in the P&L a/c was only Rs. 1,10,898. 3. The learned CIT(A) erred in deleting addition of Rs. 7,37,000 claimed as consultancy expenses when the assessee could not prove the services rendered by M/s Hi Tech Engg. and fee from projects shown in P&L a/c was only Rs. 1,10,898." 3. Rival contentions have been heard and record perused. In the course of assessment under s. 143(3), the AO observed that the assessee has two proprietary concerns in the name and style of M/s Triume International and M/s Apten Corporation. Perusal of P&L a/c of M/s Triume International reveals that the following income are credited: (Rs.) (i) Dividend inco....
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....iume International has a meager office and furniture and fixtures. It was further stated that Inspector has visited this property and reported that property was being utilized as the residence of Shri Binoy Jacob and his family. Thus, the depreciation and other expenses of this building cannot be treated as business expenses. It was submitted by the assessee that in the earlier year also 2/3rd of the property related expenses were treated for business purposes and only 1/3rd was personal in nature. 5. On the basis of above finding, the AO stated that in view of the property having been not used for business purposes, 2/3rd of the property related expenses are to be disallowed. 6. By the impugned order, CIT(A) reversed the action of the AO and directed for allowing 2/3rd of property related expenses just by stating that no satisfactory reason has been given by the AO with regard to the allowance of only 1/3rd of such expenses. The CIT(A) stated that the Department has accepted 2/3rd use of the property for business purposes from asst. yr. 1996-97, the AO was not justified for differing from the decision arrived at in the earlier years. 7. It was contended by the learned Dep....
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....year as per the facts and circumstances of the case prevailing during that year. Principle of consistency in approach is to be followed where there is no change in the facts and circumstances of the case. If there is change in the facts and circumstances, a different view as per the changed facts and circumstances is required to be taken. In the instant case during the year under consideration, on the basis of Inspector's report, the AO has recorded a finding that assessee and his family members were using the property for his residence, the firm M/s Triume International was not having even a single employee, meager office equipment and furniture were there. This report of the Inspector, as noted by the AO in his assessment order was not controverted by the CIT(A) before directing the AO to allow 2/3rd of the expenses. We are, therefore, inclined to agree with the learned Departmental Representative, Shri Rattan Singh, to the effect that CIT(A) was not justified in disregarding the Inspector's report and the findings recorded by the AO in the asst. yr. 1998-99 under consideration, and directing, the AO to follow the percentage of disallowance of expenses of earlier years. However, ....
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....tary evidence, he deleted disallowance to the extent of Rs. 2,70,377. 13. On the other hand, the learned Authorised Representative relied on the findings of the CIT(A). 14. We have considered the rival contentions and found that in the income of return itself, out of total travelling expenses of Rs. 7.81 lacs, the assessee has added back Rs. 2.40 lacs being air charges of the family members. Out of the remaining expenses of Rs. 5.40 lacs disallowed by the AO, the CIT(A) after considering the fact that assessee has withdrawn 4000 US $ for personal and other expenses and the fact that this foreign trip has helped the assessee in realizing loan of Rs. 99.10 lacs, and the future prospects of the business due to the foreign trip, restricted the disallowance to the-extent of 50 per cent of the foreign expenses of Rs. 5.40 lacs. Even though we agree with the learned Departmental Representative that assessee could not fully substantiate the business purpose, however, the balance disallowance of Rs. 2.70 lacs retained by the CIT(A), will serve the purpose of Revenue to the effect that all the expenses have not been allowed. The findings recorded by the CIT(A) at para 6 has not been co....