TaxTMI 
TaxTMI 
2016 (5) TMI 811
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.... an income of Rs. 65,14,780/- after making certain additions / disallowances. The first issue in this appeal is regarding disallowance of Rs. 35,35,126/- on account of salary expenses. During the year under consideration the assessee had debited salary expenses of Rs. 70,70,252/-. The Assessing officer required the assessee to furnish employee wise details of salary paid and TDS deducted, with complete PAN numbers and addresses of the employees and supporting evidence. In response to the aforesaid query, the assessee submitted a list of employees to whom salary was claimed to be paid. From this detail, the Assessing officer noticed that the list did not contain the addresses, nor the PAN numbers of the employees and also the designations. The assessee did not deduct the tax at source on these payments and all the payments were made in cash. After affording reasonable opportunity of being heard to the assessee in this case, the Assessing officer came to the conclusion that part of these payments were undoubtedly bogus and, therefore, he disallowed 50% of the salary debited by the assessee i.e. Rs. 35,35,126/- and added back the same to the total income of the assessee. 3. On appeal....
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.... salary expenses for all months should not be accepted. On the submission of additional evidence, the appellant has submitted that details of salary expenses of few months were submitted by the counsel of the assessee as it was asked during the assessment proceedings. The assessee was in possession of all the details of the expenses as the accounts were duly audited by the auditor and details of few months were supplied to show the number of employees and the nature of expenditure. The assessee has also relied on few judicial pronouncements that inaction of the part of the counsel of the assessee should need not lead to draw adverse inference against the assessee. The evidence submitted by the assessee during appellate proceedings was vital and directly related to the ground which led to a disallowance. Further, the AO has not cited any reason for refusal to admit the additional evidence. Considering the facts and having relevance to the disallowance, the additional evidences submitted during appellate proceeding were admitted and considered for decision. Here, reliance is also placed on the decision in the case of Smt. Mahinder Kaur Vs. Central Govt (1976) 104 ITR 120 (AIL), CIT V....
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....ssessee is a charitable society covered under the definition of charitable purposes as per section 2(15) of the Act also. The entire income of the assessee is exempt u/s 11 of the Act. The accounts of the assessee are audited u/s 44AB of the Act. In this case, it is an admitted fact that the substantial amount of salary was paid in cash. In this regard, the assessee contended that cash payments were made because the bank of the assessee where the account was maintained was situated at the distance of about 32 KMs from the college premises i.e bank was at Panchkula and college was at Vilalge Mouli. However, the assessee has maintained the records of salary paid by it i.e. month wise / person wise, salary sheet and designation. Admittedly, the assessee is running an engineering college and, therefore, it has to keep qualified staff for teaching the students without which a college cannot run. The main contention of the assessee is that the whole amount incurred on account of salary is only for the purpose of running of College and no part of it had been spent for any other purposes. In this case, the CIT(A) has observed that the salary expenses has been claimed on monthl y basis for ....
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....he CIT(A) on this issue. Consequently we reject ground No.1 of the appeal. 5. Ground No.2 of the appeal reads as under;- 2. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in law in deleting the addition made on account of disallowance of expenses u/s 40(a)(ia) without any evidence ignoring the findings of the A.O. 6. The facts relating to this issue are that the assessee claimed an amount of Rs. 5,84,071/- on account of advertisement expanses. The Assessing officer required the assessee to explain as to why the amount in question should not be disallowed u/s 40(a)(ia) of the Act. After considering the assessee's reply, the Assessing officer observed that to enjoy privilege of registration u/s 12AA of the Act, the Trust is under obligation to complete various stipulations provided in the relevant provisions of the Act. According to Assessing officer, the assessee failed to comply with the provisions by not deducting TDS. Accordingly, the Assessing officer disallowed the claim made by the assessee on account of advertisement expenses at Rs. 5,84,071/- us/ 40(a)(ia) of the Act. 7. On appeal, the C IT(A) deleted the disallowance for the reasons sta....
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.... to in Section 28 shall be computed in accordance with the provisions contained in Section 30 to 43D". Thus, Section 30 to 43 provides various kinds of deductions which are to be made while computing the profit of the assessee from business or profession. Section 40 provides an exception to such deductions which have been provided in Section 30 to 38 and starts with a non obstante clause. Thus, Section 40 is applicable only when deductions under Sections 30 to 38 are being made in computing the income chargeable under the head "profits and gains of business or profession" under Section 28. The exception in Section 40 is carved out, only for the purpose of Section 28 and not for computing the exemption of income of a charitable trust under Section 11. The disallowance made under Section 40(a) will only go to enhance the business profit of an assessee whose income is assessable under section 28 and not otherwise. Hence, provisions of section 40(a) are not applicable in case of charitable trust or institution where income and expenditure is computed in terms of section 11. Accordingly, we do not find any merit in the orders passed by the Assessing Officer as well as by the CIT(A) an....
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....nbsp; Vehicle running and maintenance 3,42,157/- Total Rs. 9,01,124 12. The Assessing officer disallowed 1/5 t h of these expenses i.e. Rs. 1,80,224/- on account of unvouched expenses and expenses of personal nature. On appeal, the C IT(A) allowed the expenses claimed on account of business promotion, Misc. expenses, repair and maintenance, office expenses, D.G. set, Printing and Stationary expenses. The Ld. C IT(A) observed that these expenses were claimed to run the educational institution. According to him, these expenses are reasonable and at the same time, the Ld. C IT(A) has also observed that the Assessing officer has not found any evidence regarding bogus claim of any expanses, therefore, he held that these expenses cannot be disallowed. However, the Ld. CIT(A) held that 1/10 t h out of vehicle running and maintenance expenses should be treated as personal in nature. He therefore, restricted the disallowance out of these expenses to Rs. 34,215/-, and allowed a relief of Rs. 1,46,009/- to the assessee.....