Decided on June 30,2008



D. Karunakara Rao, Accountant Member - (1.) THIS is an appeal filed by assessee against the order dated 20.05.2005 of CIT (A)-XII, Mumbai. The ground in the appeal read as under: 1. The learned commissioner of income tax (Appeals) erred by upholding the disallowance of Rs. 50,000/- on account of personal element being involved in the expenses. 2. The learned commissioner of income tax (Appeals) has erred by reducing sum of Rs. 1,57,28,127/- from the block of assets, received from Insurance company as sales proceeds on account of extinguishment of asset. 3. The learned Commissioner of Income-tax (Appeals) has erred by adding Rs. 1,3 1,437/- Under Section 14A as proportionate expenses incurred to earn the exempt dividend income.
(2.) Ground No. 1 relates to upholding of disallowance of Rs. 50,000/- on account of personal expenses out of certain accounts mentioned in Schedule N of the profit and loss account of the annual accounts. These accounts are business promotion expenses, traveling expenses, vehicle maintenance expenses, miscellaneous expenses etc. During the assessment proceedings and in response to the AO's proposal to make disallowances of expenses of personal nature, the assessee submitted that the disallowance of the same was unwarranted and unjustified as there was no element of personal expenses in them. However, AO held that the claim of expenditure in the said accounts was unverifiable and the personal element was not ruled out and therefore, disallowed Rs 50,000/- on estimate basis out of these expenses. Aggrieved with the above, the assessee appealed to the CIT(A). During the first appellate proceeding before him, the CIT(A) observed that these expenses were incurred in cash and the verification of the genuineness of the assessee's claim involved many practical difficulties. Accordingly, the CIT (A) held that the expenses like car, traveling, vehicle, maintenance, advertisement expenses, miscellaneous and business promotion expenses contain the expenses of personal in nature and confirmed the addition.
(3.) THE assessee filed the appeal before us against the above decision of the CIT(A). After explaining the facts and circumstances of the ground, the Ld. AR for the assessee left the issue to the discretion of the Bench. We have examined the issue and perused the orders of the lower authorities. We find that the disallowance of Rs. 50,000/- out of the total claim of Rs. 83,82,618/- in the Schedule N, is very meager. Owing to the unverifiable nature of expenses and on finding difficulty in ruling out the personal nature in such expenses, we find that the disallowance is justified and order of the CIT (A) does not call for any interference. Accordingly, ground 1 is dismissed;

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.