Indian Research Manifestation Labs (P.) Ltd. v. Asstt. CIT

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The Tax Publishers2013 TaxPub(DT) 1802 (Ahd-Trib) : (2013) 145 ITD 0135 : (2013) 024 ITR (Trib) 0030 Income Tax Act, 1961 --Business expenditure--Petrol and diesel expenses Absence of relevant vouchers--Assessee-company was engaged in business of travels, money-charging, cargo facility management, tea estate, etc. It claimed deduction of expenditure incurred on petrol and diesel expenses. On failure of assessee to produce vouchers and substantiate claim, assessing officer disallowed 20 per cent of expenses. Commissioner (Appeals), however, disallowed 10 per cent of expenses claimed. *Held:* Not proper. One more opportunity be granted to the assessee to substantiate its claim by producing the vouchers and other details before assessing officer. Thus, issue is remitted to file of assessing officer and assessing officer is directed to verify the details and thereafter decide the issue on merits with respect to disallowance, after giving a reasonable opportunity of being heard to assessee. It is an undisputed fact that the assessing officer had asked the assessee to produce one months vouchers in the case of travel business but the assessee failed to produce the same before the assessing officer. The assessee did not produce the copies of the vouchers for his perusal. It is also a fact that the Commissioner (Appeals) did not call for a remand report from the assessing officer before granting partial relief. In view of these facts one more opportunity be granted to the assessee to substantiate its claim by producing the vouchers and other details before the assessing officer. Thus the issue is remitted to the file of the assessing officer and the assessing officer is directed to verify the details and thereafter decide the issue on merits with respect to disallowance, after giving a reasonable opportunity of hearing to the assessee. [Para 13] Income Tax Act, 1961, Section 37(1) Income Tax Act, 1961 --Business expenditure--Allowability Business promotion and advertisement expenses--During course of assessment proceedings, assessing officer noticed that assessee had claimed business promotion/advertising expenses on travel business. Assessee was asked to substantiate its claim. Assessee failed to do so. Considering nature of business expenses on business promotion to be excessive and in the absence of any evidence produced by assessee to justify its claim, he disallowed 25 per cent of business promotion expenses and thus made disallowance. Commissioner (Appeals), however, disallowed only 10 per cent expenditure. *Held:* Was rightly so. In view of facts and payment of fringe benefit tax by assessee, disallowance of ten per cent of business promotion/advertisement expenses was justified. It is a fact that the disallowance has been made by the assessing officer on estimated basis at 25 per cent, of the expenses and which has been restricted to 10 per cent, for the reason that the assessee has paid fringe benefit tax. It is also a fact that the assessee has neither produced any supporting material either before the lower authorities or before this Tribunal. In view of the totality of the facts, there is no reason to interfere with the order of the Commissioner (Appeals). Income Tax Act, 1961, Section 37(1) Income Tax Act, 1961 --Business deduction under section 36(1)(vii)--Bad debts Debts written off in books of account --As relevant amount of debt written off pertained to the debt of travel business and that same was taken into account in computing the income in earlier years and since amount was not recoverable the amount was written off in the books of account. Deduction under section 36(1)(vii) was to be allowed as bad debts. Where relevant amount was taken into account as assessee's income and written off in books of account as irrecoverable debts, bad debts would be allowed under section 36(1)(vii). SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1802 (Ahd-Trib) : (2013) 145 ITD 0135 : (2013) 024 ITR (Trib) 0030

Income Tax Act, 1961

--Business expenditure--Petrol and diesel expenses Absence of relevant vouchers--Assessee-company was engaged in business of travels, money-charging, cargo facility management, tea estate, etc. It claimed deduction of expenditure incurred on petrol and diesel expenses. On failure of assessee to produce vouchers and substantiate claim, assessing officer disallowed 20 per cent of expenses. Commissioner (Appeals), however, disallowed 10 per cent of expenses claimed. Held: Not proper. One more opportunity be granted to the assessee to substantiate its claim by producing the vouchers and other details before assessing officer. Thus, issue is remitted to file of assessing officer and assessing officer is directed to verify the details and thereafter decide the issue on merits with respect to disallowance, after giving a reasonable opportunity of being heard to assessee.

It is an undisputed fact that the assessing officer had asked the assessee to produce one months vouchers in the case of travel business but the assessee failed to produce the same before the assessing officer. The assessee did not produce the copies of the vouchers for his perusal. It is also a fact that the Commissioner (Appeals) did not call for a remand report from the assessing officer before granting partial relief. In view of these facts one more opportunity be granted to the assessee to substantiate its claim by producing the vouchers and other details before the assessing officer. Thus the issue is remitted to the file of the assessing officer and the assessing officer is directed to verify the details and thereafter decide the issue on merits with respect to disallowance, after giving a reasonable opportunity of hearing to the assessee. [Para 13]

Income Tax Act, 1961, Section 37(1)

Income Tax Act, 1961

--Business expenditure--Allowability Business promotion and advertisement expenses--During course of assessment proceedings, assessing officer noticed that assessee had claimed business promotion/advertising expenses on travel business. Assessee was asked to substantiate its claim. Assessee failed to do so. Considering nature of business expenses on business promotion to be excessive and in the absence of any evidence produced by assessee to justify its claim, he disallowed 25 per cent of business promotion expenses and thus made disallowance. Commissioner (Appeals), however, disallowed only 10 per cent expenditure. Held: Was rightly so. In view of facts and payment of fringe benefit tax by assessee, disallowance of ten per cent of business promotion/advertisement expenses was justified.

It is a fact that the disallowance has been made by the assessing officer on estimated basis at 25 per cent, of the expenses and which has been restricted to 10 per cent, for the reason that the assessee has paid fringe benefit tax. It is also a fact that the assessee has neither produced any supporting material either before the lower authorities or before this Tribunal. In view of the totality of the facts, there is no reason to interfere with the order of the Commissioner (Appeals).

Income Tax Act, 1961, Section 37(1)

Income Tax Act, 1961

--Business deduction under section 36(1)(vii)--Bad debts Debts written off in books of account --As relevant amount of debt written off pertained to the debt of travel business and that same was taken into account in computing the income in earlier years and since amount was not recoverable the amount was written off in the books of account. Deduction under section 36(1)(vii) was to be allowed as bad debts. Where relevant amount was taken into account as assessee's income and written off in books of account as irrecoverable debts, bad debts would be allowed under section 36(1)(vii).