TaxTMI 
TaxTMI 
2026 (3) TMI 1666
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.... 2. The brief facts of the case are that, the assessee is a partnership firm engaged in retail trade of liquor business, filed its return of income for AY 2022-23 on 23.09.2022 by declaring total income of Rs. 1,07,50,770/-. The case was selected for scrutiny and the assessment has been completed under Section 143(3) r.w.s. 144B of the Income Tax Act, 1961 dated 15.03.2024 and determined total income of Rs. 1,72,89,747/- by inter alia making addition towards income from business and profession of Rs. 11,99,000/-, ad hoc disallowance of 50% of various expenditure and addition of Rs. 25,89,977/- and addition of Rs. 27,50,000/- towards license fee charges paid to State Prohibition and Excise Department on 18.03.2021 and claimed for assessment....
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....penditure. 6. The learned counsel for the assessee, Shri C. Maheswhwar Reddy, C.A., referring to various expenditures, submitted that going by the business turnover of the assessee and expenditure incurred under Depot Transport, Hamali charges, Change Commission, Salary expenses, Repairs and Maintenance, which works out to 0.06% to 0.37% and is minimal in nature, but the A.O. without assigning any reasons and without rejecting the books of accounts, made ad hoc disallowance of 50% of said expenditure. Therefore, he submitted that the disallowance made by the A.O. should be deleted. 7. The learned Senior A.R. for the Revenue, Dr. Sachin Kumar, on the other hand, supporting the order of the Ld. CIT(A), submitted that the assessee could ....
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....nd vouchers. Further, going by the nature of expenditure, all the expenditure incurred by the assessee are in the nature of day-to-day expenses and incurred in small amounts except salary expenses. In respect of salary expenses going by the quantum of business, it is very minimum and therefore, in our considered view, the A.O. ought not to have disallowed the expenditure. The Ld. CIT(A) without appreciating the relevant facts simply upheld the ad hoc disallowance made by the A.O. Therefore, we direct the A.O. to delete the additions made towards 50% ad hoc disallowance of various expenditure of Rs. 25,89,977/-. 9. The next issue that came up for our consideration from Ground No. 5 to 7 of assessee's appeal is disallowance of Rs. 27,5....
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....cial Year 2021-22 relevant to the assessment year 2022-23, in our considered view, the assessee has rightly claimed deduction for the year under consideration which is further supported by the necessary licence issued by the authority and challans. The A.O. and the Ld. CIT(A) without appreciating the relevant facts simply disallowed the licence fee only on the basis of payment. 11. Insofar as the alternative argument of the learned counsel for the assessee in light of certain judicial precedents, including the decision of ITAT Hyderabad in the case of ITO Vs. M/s. Kanaka Durga Wines in ITA No. 591/Hyd/2011 dated 28.07.2011 that the A.O., in the alternative, rejected books of accounts and estimated 3% net profit on the cost of goods, beca....
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....ed and the same has not been accounted in the books of accounts of the assessee. It was the argument of the assessee before the A.O. that the incentives received by the assessee has been accounted in the books of accounts under the head "Sales and Incentives" and the same has been offered to tax and further, the assessee has already claimed deduction for TDS deducted by the payer. 15. We have heard both parties, perused the material available on record, and had gone through the orders of the authorities below. The assessee furnished the relevant evidence including sales registers for the period from 01.04.2021 to 31.03.2022 which includes sales and incentives received by the assessee from various parties for display of brands in front of....