2020 (12) TMI 115

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..../-), is being challenged on facts & law alongwith the challenge to percentage of disallowance. 2. Because the action for disallowance of installation charges Rs. 2,75,375/- (25% of Rs. 11,01,500/-) is being challenged on facts & law alongwith the challenge to percentage of disallowance. 3. Because the action for declining the benefit of deduction is being challenged on facts & law for non deduction of TDS on the amount of Rs. 1,12,768/- u/s 40(a)(ia) r.w 194C. 4. Because the action for declining the claim of interest expenses of ? 1,00,000/- is being challenged on facts & law. 5. Because the action for upholding the disallowance of payment of interest of Rs. 2,85,600/- (12% of 23,80,000/-) u/s 36(l)(iii) is being challenged on facts & law pursuant to the principle of commercial expediency and business exigency. 6. Because the action for total disallowances of Rs. 14,54,692/- on under mentioned expenses are being challenged on facts & law alongwith percentage of disallowances:- - Expenses of Diwali Rs. 64,141 /- (10% of 6,41,415/-) - Business promotion Rs. 76,058/- (10% of 7,60,576/-) - Conference charges Rs. 1,83,654/- (10% of 18,36,544/-) - Conveyance Rs....

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....rned assessing officer examines this claim. The assessee submitted the detailed of the commission paid with the name of the party, permanent account number, address and the date of the credit of the commission expenditure as well as the amount of commission paid. The learned assessing officer noted that assessee has not furnished details as to services rendered by each such party however assessee submitted the confirmation of all those parties. The learned assessing officer noted that the gross profit rate for the year under consideration has declined from 35.74% in the immediately preceding previous year to 33.25% for the year under consideration and not satisfied by the submission of the assessee he held that commission expenditure of Rs. 8,239,253 is held to be bogus and therefore he disallowed the same. He further examined the details of the interest expenditure of Rs. 3,409,650 unsecured loan rates from the family members. He noted that assessee has paid interest at the rate of 18% to these parties which are covered u/s 40A (2) (b) of the income tax act when the funds from the banks are available at much lower rate. He noted that assessee is also paying interest at the rate of....

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....above-mentioned advances and made an addition of Rs. 285,600 disallowing the interest expenditure claimed in the profit and loss account. He found that assessee has further debited business promotion expenditure, Conveyance expenses, entertainment expenses, conference expenses and conveyance expenses totaling in to Rs. 4,596,860 and disallowed 1/10 of the above expenses of Rs. 459,686 for personal expenses. The AO further disallowed a sum of Rs. 995,007 out of travelling expenditure of Rs. 9,950,068/- being 10% of such expenses since the assessee is an individual and possibility of personal/non business element cannot be ruled out. He further noted that assessee has debited Rs. 25,59,539 on account of car and Scooter maintenance expenditure, car depreciation, car insurance and telephone expenditure. He disallowed 1/6 of the total expenditure of eight Rs. 426,590 out of that on account of personal expenditure. Assessee has already disallowed of Rs. 205,679 in the computation of the total income and therefore he made an act disallowance of Rs. 220,912 out of the same. Accordingly the total disallowance of expenditure of Rs. 1, 24,80,637 was made and the returned income of Rs. 5,296,9....

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....some of the bills and vouchers could not be produced before him. The assessee submitted that these are the disallowances made by the learned assessing officer and confirmed by the learned CIT - A for the first time in the case of the assessee for the reason of lower net profit. He submitted a detailed chart from assessment year 2007 - 08 to assessment year 2013 - 14 wherein the assessee has been assessed in most of the cases u/s 143 (3) of the income tax act. He further submitted that in none of these cases such disallowance has been made. He further stated that the disallowance made in the assessment for this year are merely for the reason of the fact that the assessee's net profit and the gross profit rate has gone down in the current year. He submitted a detailed chart wherein the details of the gross profit and the net profit has been provided since AY 2007 - 08 till A Y 2013 - 14. Such chart was produced by the assessee. On careful analysis of the facts it is noted that for assessment year 2012 - 13 the assessee has clocked the turnover of Rs. 156,343,839 and gross profit of Rs. 51,998,524 resulting into the gross profit rate of 33.26%. This gross profit compared to the previo....