2006 (1) TMI 471

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....re Rs. 1,00,000.00 2. Out of Employees cost Rs. 4,00,000.00 3. Out of transportation, fuel, repairs and maintenance Rs. 4,50,000.00 4. Out of postage & telegram Rs. 1,52,000.00 5. Out of traveling Rs. 0,83,500.00 3. These expenses were disallowed by the Assessing Officer. On first appeal, the learned CIT(A) sustained the disallowance at 50% out of the aforesaid total amount. Aggrieved with the same, both the assessee as well as the revenue are in appeal before the Tribunal. The learned DR submitted that the order of the learned CIT(A) is not sustainable in law. The assessee was called upon to correlate the actual quantity of work for which the bills were debited and the quantum of contract work carr....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rs who are employed for carrying out the contract work towards the end of the year as is usual and therefore the expenditure in 2 months also appears to be high because it also relates to the earlier months also in the same financial year. As the complete details of payments are available as estimated, the disallowance is far from the real. The learned CIT(A) should have allowed the entire amount. 5. We have heard the rival submissions and perused the records. The Assessing Officer sought a correlation of the expenditure in each month with the receipts of the month failing to appreciate that the receipts in a particular month may not reflect the entire expenditure incurred in the month for the payment is by another agency whereas expendi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....appropriate manner which has not been done. Merely because of the expenditure is high there is no warrant for disallowing any part of it and at worst it could give rise to suspicion which has to be confirmed by inquiry and facts. Further, the learned counsel for the assessee also filed a chart showing the expenses claimed for each and every year from 1995-96 for the three previous years, the claim made by the assessee has been accepted. It was pointed out that even during the earlier assessment year, the maintenance of accounts, receipts and payments are in the same line, as in the present assessment year under consideration. Therefore, from the aforesaid comparison that the earlier three years, the expenditure incurred by and large is reas....