TaxTMI 
TaxTMI 
2011 (12) TMI 771
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....f the case in upholding the addition made to the income in respect of the amounts lying to the credit of the following accounts as per the audited balance sheet as on 31-03-2007. a. Sundry creditors - Staff A/c Rs. 2,36,927 b. Sundry creditors - others a/c Rs. 9,77,652 Tota l: Rs. 12,12,579 3. The Ld. CIT(A) has erred in law and on facts of the case in upholding the action of the Ld. AO in disallowing Rs. 2,44,284 being 1/6th of the following expense: a. Telephone expenses Rs. 6,83,896 b. Senior Partner's Car Expenses Rs. 1,75,080 c. Other car expenses Rs. 3,10,445 d. Depreciation on cars Rs. 2,96,280 Total Rs. 14,65,701 4. The Ld. CIT(A) has erred in charging interest u/s 23....
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.... (i) The assessee has claimed only such expenses which have actually been paid by the assessee during the relevant previous year. The details of expenses claimed by the assessee along with their actual payments under the head traveling and conveyance account are attached herewith in the paper book 1 at pages 7 to 16. (ii) The expenses incurred by the staff and partners of the assessee in the nature of traveling, conveyance, hotels, taxi, meals etc. are generally met by the client directly and this is the reason because of which the claim of expenses by the assessee towards traveling and conveyance is merely Rs. 15,17,580.24 (11,53,279 + 3,64,301.24) as against the gross professional receipt of Rs. 4.5 crores. (iii) ....
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....he bill of the staff, the following entry is passed: Bank account Debit To recoverable traveling and conveyance expenses account Or The above entry may also be passed by the following two entries: Client Account Debit To recoverable traveling and conveyance expense a/c. AND Bank A/c &nbs....
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.... the said has been already disallowed by the assessee itself and offered it to taxation in the return of income (2) Assessee's business comprises of compliance with various offices and the staff uses these facilities for the purposes of business of the assessee. The partners of the assessee firm have their own cars, which are used by them for their personal use. These details were filed before AO. There is no justification in further disallowing of senior partners' car expenses and other car expenses which pertain exclusively to the staff mobility and are incurred for the purpose of business (3) Depreciation on car is consequently to be allowed. 3.3. Apropos telephone expenses, it is contended that the assessee is a ver....
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....esides, we are of the view that they are not cash receipts diverted to balance-sheet to reduce any tax liability. In view thereof, we delete these additions. Ground no. 1 of the assessee is allowed. 6. Apropos second ground, the assessee itself disallowed 25% expenditure on the car expenses of the senior partner. In a busy professional firm of chartered accountants, it cannot be assumed that the partners will have time to go for personal errands, leaving their professional work behind. Under these circumstances, we do not see any justification in any further disallowance of senior partners' car expenses. 6.1. Apropos other car expenses also, they are claimed to be incurred on staff travel. No instances have been brought on record to s....