TaxTMI 
TaxTMI 
2013 (1) TMI 184
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....ling expenses amounting to Rs. 5,20,077/-. 2. The CIT (A) erred in confirming disallowance of 50% of Employees Remuneration and Benefits amounting to Rs. 3,45,815/-. 3. The CIT (A) erred confirming disallowance of 50% of Telephone expenses amounting to Rs. 1,93,946/-. 4. The CIT (A) erred in confirming disallowance of 25% of Vehicle expenses amounting to Rs. 53,000/-." 3. Briefly stated the relevant facts of the case are that the assessee was earlier assessed in Baroda before the same was transferred to Mumbai. Assessee filed the return of income declaring loss at Rs. 10,07,604/-. During the scrutiny assessment, Assessing Officer made additions and the total income was det....
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....additions on accounts of, namely (i) Travelling Expenses (ii) Remuneration and Benefits (iii) Telephone Expenses and (iv) Motorcar Expenses. During the set aside assessment proceedings, the AO in para 2 mentioned that the Company has not started its manufacturing activity and earned only commission income of Rs. 22,72,869/- and AO also mentioned that the assessee claimed an expenditure to the tune of Rs. 32,86,399/-. AO identified above four accounts with the total debits of Rs 23,34,079/- for making disallowances. He also mentioned that the first invoice raised by the assessee was dated 20.5.1996 and therefore, expenditure prior to the said date relates to 'precommencement/ preoperative expenditure', which are capital in nature. The detail....
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....ntioned above and the same is confirmed." 6. The above disallowances are essentially affected for the absence of supporting bills and vouchers which were lost in transit when the assessee shifted his base from Baroda to Mumbai. The Revenue rejected the assessee's claim that all the expenditure was incurred fully for the purpose of the business of the assessee. The claim of the assessee must be allowed in full on lines with the assessment year 1998-1999. Revenue was of the opinion that substantial portion of expenditure definitely pertains to setting up of manufacturing unit and such portion cannot be allowed against commission income. BEFORE THE TRIBUNAL IN SECOND ROUND: 7. Aggrieved with the above finding of the CIT (A), assessee ....
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....aims of the assessee particularly for want of bills and vouchers and the details in support of the claims of the assessee in the books of account. Hon'ble Tribunal in the first round of the proceedings have already given its finding on the issue of allowability of expenditure relating to manufacturing activity and upheld the cutoff date 20.1.1996. 8. Further, Shri Deepak Tralshawala, Ld Counsel for the assessee argued stating that it is a fact the assessee lost relevant evidences in transit while shifting from Baroda to Mumbai; otherwise the books of account are duly audited by the auditors. AO has not rejected the said books. He fairly mentioned that so far as the manufacturing activity is concerned, the same has not yet been set up til....
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....uantified the same at Rs. 1,54,789/-. Therefore, in our opinion, despite the objection of the Ld DR for bringing finality to the longstanding litigation (nearly 14 years), the argument of the Ld Counsel should be accepted notwithstanding the assessee's failure to produce any bills and vouchers for the reasons of 'lost in transit'. To the extent of Rs 1,54,789/-, as consented by the Ld Counsel, revenue succeeds and thus, relevant ground of the assessee is dismissed. 10. Now we shall take up the other issue of genuineness of the general expenditure claim of Rs.21,79,289/-for the period subsequent to the cut off date 20.5.1996. In this regard, we have perused the individual accounts of travelling expenses, telephone expenses and car expense....
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....he facts that cars in question were outsourced by the Company and placed them at the disposal of the Directors' of that company. Whereas, in the present case, the car in question was owned by the assessee and use of the vehicles wholly and exclusively was not demonstrated with the help of log book to support the nature of use of the cars. It is admitted fact that the assessee does not have evidences in its possession as they are lost in transit and in effect, the assessee failed to discharge its legal responsibility before the AO. Thus, in principle, AO is justified in resorting to make disallowances out of the claims made by the assessee. But in our opinion, the percentages adopted by the AO are not reasonable. It is a settled position tha....