- (1.) This appeal under Section 260A of the Income-Tax Act, 1961 (for short "the Act") has been filed by the Revenue against the order dated 20.8.2010, passed by the Income Tax Appellate Tribunal Delhi Bench C, New Delhi (in short "the Tribunal") in ITA No. 3050/Del/2008, relating to the assessment year 2002-03. The following substantial questions of law have been claimed for determination of this Court: 1. Whether on the facts and in the circumstances of the case, the Ld. ITAT was right in law in confirming the order of the Ld. CIT(A) in deleting the addition of Rs. 8,28,512/-made by the Assessing Officer on account of staff welfare expenses disregarding the fact that the expenditure was not incurred wholly and exclusively for the business purpose? 2. Whether, on the facts and in the circumstances of the case, the Ld. ITAT was right in law in confirming the order of the Ld. CIT(A) in deleting the addition of Rs. 3,31,539/-made by the Assessing Officer on account of sales & business promotion expenses even though there was no evidence to the effect that the amounts debited under this head are wholly and exclusively for business purposes and are not personal in nature as such it would meet the ends of justice to disallow 10% of the expenditure under this head? 3. Whether, on the facts and in the circumstances of the case, the Ld. ITAT was right in law in confirming the order of the Ld. CIT(A) in deleting the addition of Rs. 3,62,175/- made by the Assessing Officer on account of disallowance out of vehicle and telephone expenses even though the assessee had failed to establish that the same were incurred wholly & exclusively for the business purposes and the possibility of personal use cannot be ruled out and in contravention of the decision of Hon'ble Madras High Court in the case of CIT v. Chitram and Co. (P) Ltd., 191 ITR 92 and CIT v. Madura Coats Ltd. : 263 ITR 241
(2.) The facts, in brief, necessary for adjudication as narrated in the appeal, are that the respondent-assessee filed return for the assessment year 2002-03 on 31.12.2002, declaring income of Rs. 17,97,99,180/-. The assessment was, however, completed on 30.3.2005 vide order passed under Section 143(3) of the Act at an income of Rs. 19,59,12,430/- wherein certain additions and disallowances were made by the assessing officer.
(3.) The assessee preferred appeal before the Commissioner of Income-tax (Appeals) (in short "CIT(A)"). The assessee was granted relief by the CIT(A) vide order dated 31.7.2008 of an amount of Rs. 15,28,846/-. The disallowance made by the assessing officer of an amount of Rs. 9,28,512/- on account of staff welfare expenses was restricted to Rs. 1,00,000/- and accordingly, addition of an amount of Rs. 8,28,512/- was deleted. The CIT(A) restricted disallowance under the head Sales and Business Promotion to Rs. 1,00,000/- and deleted balance disallowance of Rs. 3,31,539/-. The CIT(A) also deleted the addition of Rs. 3,62,175/- that had been made by the assessing officer after disallowing the expenditure debited towards Vehicle and Conveyance expenditure and Residential and mobile phone expenses.;