2014 (1) TMI 699

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..... 2,25,015/- is unjustified. 2. Ad-hoc disallowance of conveyance and general office expenses which is reduced to 7.5% by Hon'ble CIT (A) is unjustified." 3. The two issues that are raised before us relate to (i) disallowance of business promotion expenses to the extent of Rs. 2,25,015/- and (ii) ad-hoc disallowance of conveyance and general office expenses adopting the ad-hoc rate of 7.5%. 3.1. Relevant facts relating to the first issue of disallowance of Rs. 2,25,015/- leading to the confirming of the addition were narrated in para 4 of the impugned order which are as under: "During the course of assessment proceedings, the AO observed that assessee had claimed an expenditure of Rs. 5,19,116/- under the head 'sales promotion e....

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....s with the assessee. He fairly admitted that names of such persons cannot be disclosed due to business secrecy. In absence of any evidence as to distribution of silver coins for the purpose of business, the same cannot be allowed. As per bill produced by the assessee, each silver coin valued at Rs. 19,500/- and in aggregate 229 silver coins of 99.90 purity were purchased by the assessee. The value of each silver coin is not insignificant but is near to Rs. 20,000/-, hence onus lies on assessee to provide name and address of persons to whom such a precious gift amounting to Rs. 19,500/- was given and evidence as to business dealings with such parties. After amendment of section 37 by way of explanation to sub-section (1) of section 37, there....

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....ibunal in the assessee's own case of M/s. Pradeep Kumar & Co (supra). Considering the facts and submissions of the Ld Representatives of both the parties, we are of the opinion that the CIT (A) has rightly adjudicated the issue of disallowance of business promotion expenses and there is no infirmity in the order of the CIT (A). So far as the applicability of the said decision of the Tribunal for the Ay 2003-04, we find the same is distinguishable on facts. It is a settled legal proposition that the assessee is under statutory obligation to prove that the expenditure by way of silver coins is expanded wholly and exclusively for business purposes and not for the personal reasons. The assessee failed to do so in this instant case even before u....

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....d. Personal element can be seen in general office expenses and some what extent in conveyance expenses. Having regard to overall facts of the case, it would be just and proper to restrict disallowance @ 7.5% out of conveyance expenses and general expenses which would meet the ends of justice. No disallowance is warranted out of packing and forwarding expenses. In terms of discussion as above the assessee is entitled for relief accordingly." 9.1. Aggrieved with the decision of the CIT (A), assessee filed the present appeal before the Tribunal by raising the ground no.2. During the proceedings before us, Ld Counsel prayed for deletion of the addition on ad-hoc basis and allowing the expenses incurred towards conveyance and general office e....