2010 (4) TMI 1063

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....sources. Your appellant submits that the disallowance of Rs. 7,66,246/- is wrongly made and ought to be deleted. 2. The learned CIT(A) erred in granting only partial relief to the extent of 50% of the total expenditure disallowed by the assessing officer and thereby confirming the disallowance of traveling expenses to Rs. 74,400/- ignoring the fact that the same have been incurred for the purpose of business and constitute genuine business expenditure. Your appellant submits that the traveling expenses disallowed should be allowed in full under the given facts and circumstances. 3. The learned CIT(A) in granting only partial relief to the extent of 50% of the total expenditure disallowed by the assessing officer and thereby confirmi....

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.... asked for explanation on which the assessee has submitted that TDS deductible from the payment towards office upkeeping could not be deducted since the same was adjusted directly by the Reliance Energy Ltd. against the amounts payable by them. The AO did not accept the explanation of the assessee and disallowed the amount of Rs. 7,66,246/-. On appeal, the CIT(A) has also confirmed the disallowance made by the AO. 3. Before us, the ld. A.R. of the assessee has submitted that the assessee is having two separate agreements towards office rent as well as other common services regarding office upkeepment. The assessee has not paid any amount to Reliance Energy Ltd. and the amount payable was adjusted by Reliance Energy Ltd. by way of account e....

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....element of income and the payment is only as a reimbursement of expenses incurred by the payee, then no disallowance can be made u/s.40(a)(ia). In the case in hand, the AO has not given a finding that the expenses were for office upkeeping as revenue receipt in the hands of Reliance Energy Ltd. and not a pure reimbursement of expenses. Respectfully following the decision of the Hon'ble jurisdictional High Court (supra), we decide this issue in favour of the assessee and against the Revenue. 6. The next issue is regarding disallowance of traveling expenses. The assessee has debited an amount of Rs. 14,88,000/- as traveling expenses. The AO made a disallowance @ 10% amounting to Rs. 1,48,000/- and added back to the total income of the as....

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....related to the nature of the business of the assessee. Since the traveling expenses are petty in nature and keeping in view the nature of the business of the assessee at the sites located in remote areas, it not always possible to obtain proper vouchers for the said expenditure. Even otherwise, when the expenditure has not been found as abnormal in comparison to the total turnover and income admitted by the assessee, then it is not justified on the part of the lower authorities to disallow certain percentage of the expenses which is ad hoc in nature. Having regard to the facts and circumstances and nature of the expenses as well as the business activities of the assessee, we do not find any reason to disbelieve the explanation of the assess....