TaxTMI 
TaxTMI 
2008 (1) TMI 889
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....ing. Ground No. 3 is directed against deletion of disallowances from travelling expenses and business promotion expenses to the extent of ₹ 50,000 and ₹ 25,000 respectively. It is mentioned that the learned CIT(A) failed to appreciate that the personal use could not have been ruled out. 2. In regard to ground Nos. 1 and 2, it is mentioned in the assessment order that the assessee is a partnership firm of advocates. The return of income was filed on 2nd Dec., 2003 declaring total income of ₹ 44,96,140. The return was accompanied by audit report under s. 44AB of the Act, which inter alia showed that the assessee was following cash system of accounting. The balance sheet of the assessee showed the liability of ₹ 1,42,6....
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....income, the balance amount of ₹ 1,20,39,960 was also brought to tax as income. 2.1 Aggrieved by this order, the assessee moved an appeal before the CIT(A). Apart from the arguments taken before the AO, it was pointed out that the advances received by the assessee from the clients were held in trust for the benefit of the clients and it is only when any part of the advance was adjusted by raising a bill for the services rendered that that portion of the advance became income of the assessee. Attention was also drawn towards r. 30 of order IV of Supreme Court Rules, which virtually made an advocate, a trustee for his clients in respect of all monies which came into his hand except the portion which was earmarked as professional fees. T....
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.... assessee was deductible over a period of five years and not in the very first year. Further, she relied on the decision of Hon'ble Supreme Court in the case of CIT vs. T.V. Sundaram Iyengar & Sons Ltd. (1996) 136 CTR (SC) 444 : (1996) 222 ITR 344 (SC). In that case, the credit balances of the customers were written off to the P&L a/c, but it was claimed that such credit was not income as the liability of the assessee to refund the amount had not ceased. Hon'ble Court pointed out that a commonsense view has to be taken in the matter. The monies had been received in the ordinary course of business, which remained with the assessee for a long period as unclaimed by the trading parties. Their claim became time-barred with the efflux of time. T....
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....ted out that the balance amount was adjusted as income in subsequent year to which there is no rebuttal from the Revenue. In view of this fact, we tend to agree with the argument of the assessee taken before the lower authorities that bringing to tax the impugned amount in this year would amount to double taxation of the same income in different years. We also find that various cases cited by the learned Departmental Representative are distinguishable on facts. In the case of Taparia Tools Ltd. (supra), the question was about the deduction of deferred revenue expenditure, debited in the books in one year. The Court held that since the benefit of the debentures was available for a period of five years, the upfront interest was to be allowed ....
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....ve in the course of hearing before us, deals directly with the issue at hand. In that case, it was held that the advances received were held in trust in a fiduciary capacity and it will become income only when bill is raised for the services rendered. It may also be mentioned that the AO has not shown even in a prima facie manner that the advances were in the nature of income. Therefore, respectfully following this decision and keeping in mind the fact that the impugned amount was adjusted as income in subsequent year as income, the appeal of the Revenue is dismissed on these grounds. 4. In regard to disallowances from travelling expenses and business promotion expenses, it was mentioned in the assessment order that a sum of ₹ 21,88,....