2018 (2) TMI 2105

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....ing & Administrative' expenses:  a) Rs. 8,32,000 Ad-hoc 10% out of repair and maintenance expenses of Rs. 83.18 Lacs as against 20% made by the AO. b) Rs. 4,39,000 Ad-hoc 10% out of building repair expenses of Rs. 43.92 Lacs as against 20% made by the AO c) Rs. 9,81,000 Ad-hoc 10% out of general expenses of Rs. 98.11 Lacs as against 20% made by the AO.   Rs. 22,52,000 Total 2.That the Ld. CIT(A) has erred on facts and under the law in confirming ad-hoc 10% disallowance of Rs. 37,06,000/- as made by the AO out of total expenditure of Rs. 370.68 lacs under the head 'Discount and Rebates'. 3. During the assessment proceedings the Assessing Officer has disallowed 20% of the expense....

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.... "Even though the Assessing Officer has given categorical finding that the expenditure was for the purpose of the business and commercially expedient and the same was admissible as deduction, he made a token disallowance of 20 per cent of such expenses on the ground that element of excessiveness in such reimbursement cannot be ruled out - Not justified - Assessing Officer has accepted that the accounts were duly admitted Disallowance was inherently based on surmises and conjectures and devoid of a legally sustainable foundation - CIT(A) justified in deleting the disallowance." 7.  The Ld. DR argued that the disallowance was due to the absence of supporting documents, cash memos or bills hence the Ld. AR's argument that As....

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....it is not for them to tell the Assessee as to what expenditure the assessee can incur. He relied on the following judgments: • 345 ITR 241, CIT Vs. EKL Appliances Ltd. (Delhi High Court), copy attached as Annexure-I which relied on the following judgments (kindly refer to pages 20-25 of such judgment): • 20 ITR 1, Eastern Investment Ltd. Vs. CIT (Supreme Court)  • 65 ITR 381, CIT Vs. Walchand & Co. etc. (Supreme Court) • 115 ITR 519, CIT Vs. Rajendra Prasad Moody (Supreme Court) 12. The Ld. DR argued that while the turnover is increased by 67% the rebates and discounts have increased by 330% hence the disallowance which is in excess to the turnover needs to be disall....