TaxTMI 
TaxTMI 
2020 (7) TMI 434
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....allowance made by the Assessing Officer amounting to Rs. 1,99,787 being 30% of the expenses accounted under the head subscription and membership fee on the ground that these are payments to various clubs and banks and were incurred only to maintain good relationship with clients and appears to be on a higher side. 3. Whether on facts and circumstances of the case, the Commissioner of Income Tax (Appeals) erred in confirming the estimated disallowance made by Assessing Officer being 10% of the expenditure accounted under carriage outward, commission and discount, transportation expenses, travelling expenses, business promotion expenses and repairs and maintenance, by making an estimation of such expenses supported by self-made vouch....
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....easons:- (i) Higher personal element in such type of recreational expenses cannot be ruled out; (ii) The expenses are on higher side; (iii) The assessee could not produce even 50% of evidences in support of claim of these expenses during assessment. 5.2 Aggrieved by the order of the CIT(A), the assessee has raised this issue before the Tribunal. The learned Counsel for the assessee has submitted a paper book enclosing therein the details of expenses claimed and disallowance, copies of the case laws relied on etc. The learned Counsel submitted that the Assessing Officer has made an arbitrary disallowance of 30% on certain presumptions without giving any basis / reason for the findings. It was submitted that the ....
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....c., across the State of Kerala. Since the value of the product range is comparatively high, to convince the customers, a series of presentations, negotiations and discussions at various levels of the client would occur before the finalization of a particular order. Most of such presentations, meetings and discussions are held at various hotels, clubs. Such expenses incurred at hotels, clubs, for meeting, discussions, travelling etc. are accounted under the said head of subscriptions and membership fees, and also, travelling and other expenditures incurred for attending conferences / meetings with the dealer - Kirloskar is also accounted under the said head of expenses. The expenditure incurred is fully supported and are incurred through ....
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.... 6. As said earlier since the assessee kept self made vouchers mainly in respect of the above shown expenses, the genuineness of the claim could not be correctly ascertained. These facts have been reported in the notes on account furnished by assessee's auditor in their audit report also. Therefore, 10% of the above expenses of Rs. 5,24,697 is disallowed and added back to the total income." 6.1 Aggrieved, the assessee is in appeal before the CIT(A). The CIT(A) observed that the disallowance being only 10% of such high amount of expenses, which is without proper bills is correct, fair and reasonable, and confirmed the view taken by the Assessing Officer. 6.2 Aggrieved by the order of the CIT(A), the assessee is in appeal before....
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....enditure which is originating from the appellant, normally such expenditure will be supported by self made vouchers only. Travelling charges 3,96,922 Travelling expenses of sales executives. Due to the very nature, such expenditure will be largely supported by self made vouchers only. Business promotion expenses 6,98,395 Expenditure on advertisements, approvals of various agencies and seminars, meetings etc. Repairs and maintenance 3,81,286 Repairs and maintenance of factory building, vehicles, equipment Total 52,46,974 6.5 The details of the ledger account are also placed on record. The expenditures are very much in the nature of unavoidable expenditure in a small scale manufacturing unit. T....