PERMESHWAR FASHION IMPEX PVT LTD,MUMBAI,MAHARASHTRA vs. DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-5(2)(1),MUMBAI, MUMBAI,MAHARASHTRA
What did the Tribunal hold?
The Tribunal confirmed the 50% disallowance for electricity, society charges, and depreciation on TV due to lack of substantiation for exclusive business use. The disallowance for car expenses was also upheld. The issues regarding credit card expenses and brokerage were restored to the AO for verification.
What were the facts?
The assessee company claimed various expenses including electricity, society charges, depreciation, vehicle expenses, credit card expenses, and brokerage. The Assessing Officer (AO) made disallowances, which were partly confirmed by the CIT(A). The assessee appealed against these confirmations.
What were the issues?
Whether certain expenses claimed by the assessee, including electricity, society charges, depreciation, vehicle expenses, credit card expenses, and brokerage, were for business purposes and eligible for deduction.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA, JM & SHRI ARUN KHODPIA, AM
आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM & SHRI ARUN KHODPIA, AM I.T.A. No.5346/Mum/2025 (Assessment Year: 2016-17) Permeshwar Fashions Impex Dy. Commissioner of Income-Tax Private Limited Circle – 5(2)(1), Mumbai Plot No.52, MIDC Road No.7, Vs. Room No.515, Aayakar Bhavan, Marol, Behind JVJ Orkey Mill, Maharishi Karve Road, Mumbai- Mumbai-400093 400020 PAN: AADCP2827J Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :
Assessee by : Shri Satish Modi, CA : Shri Virabhadra S. Mahajan (Sr. Revenue by Dr.) : 12.03.2026 Date of Hearing Date of Pronouncement : 02.06.2026
O R D E R Per Arun Khodpia, AM: This appeal is filed by the assessee to challenge the findings of Commissioner of Income Tax Appeals, National Faceless Appeal Centre (NFAC), Delhi [in short, “the Ld. CIT(A)”], dated 16.06.2025 for the assessment year 2016-17,arises from the assessment order under section 143(3) of the Income Tax Act, 1961 [in short, “the Act”] dated 24.12.2018, passed by Asst. Commissioner of Income-tax Circle-5(2)(2), Mumbai [in short, “the Ld.AO”]. The grounds of appeal raised by the assessee, are as under:
ITA No. 5346/Mum/2025 Permeshwar Fashion Impex Pvt Ltd “1. The Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi has erred in confirming disallowance at the rate of 50% for expenses incurred on electricity and society charges amounting to Rs.4,16,901/-(Rs.8,33,802/- @50%) for expenses incurred by Appellant Company for Registered office of the company. 2. The Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi has erred in confirming disallowance at the rate of 50% for Depreciation on TV of Rs. 16,933/-(Rs.33,866/-@50%), without appreciating the fact that the said assets are used at the Registered Office of the Appellant Company. 3. The Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi has erred in confirming the disallowance of Rs 10,00,000/- out of total expenses of Rs 24,46,162/-incurred on Appellants company's motor car on the ground for personal use, without appreciating the pacts that the said cars are exclusively by Appellant Company for its Business use. 4. The Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi has erred in confirming the disallowance of Rs 13,97,000/- out of total expenses incurred by the directors/company executives by credit card for personal expenses in spite of the submission of facts that personal expenses incurred by such directors/executives are debited to personal ledger accounts in the books of the company. 5. The Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi has erred in confirming the disallowance of brokerage of Rs 22,45,356/-, without appreciating the facts that the expenditure is incurred for the purpose of the business of the company or renting of premises, which is taxed under the heads of Profits and Gains from Business/Profession.”
The facts of the case are, that the assessee had filed its return of income on 16.10.2016 declaring total income of Rs.4,80,57,180/-. The case of assessee was selected for complete scrutiny, accordingly statutory notices u/s 143(2) and 142(1) were issued. In response to aforesaid notices, assessee submitted necessary details before the Ld. AO. On analysis of the information furnished by the assessee, Ld. AO had found that the assessee company had claimed certain expenses which are not for the business of the assessee but are personal in nature and being incurred for the benefit of promoters and their family members. Ld.
ITA No. 5346/Mum/2025 Permeshwar Fashion Impex Pvt Ltd AO, then made certain disallowances /additions and recomputed the income of the assessee, as under: Total income as per original return of income 48057183 ADD: Electricity expenses and society expenses 833802 ADD: High end vehicles and their expenses 1000000 ADD:Depreciation disallowed on TV purchased from 33866 Croma ADD: Brokerage paid to Bombay homes 578000 ADD: Credit card expense 1397600 ADD: Other brokerage 2245356 ADD: Interest u/s. 244A 388780 Add. Disallowance u/s. 14A 2576 Add: Disallowance u/s 35AC 27000 54564163
The assessment was completed with the aforesaid disallowances / additions, which thereafter were deliberated upon by the Ld. CIT(A) in the appeal before him. The issues in terms of findings of Ld. AO as well as the submission made by the assessee were discussed. Accordingly, Ld. CIT(A) had modified the additions / disallowances made by the Ld. AO, with the following observations: i. The disallowance of electricity expenses and depreciation of TV has been sustained by 50%. ii. The disallowance regarding high-end vehicle and their expenses amounting to Rs.10,00,000/- has been upheld. iii. The disallowance on account of expenses through credit cards by the Directors / executives of the company amounting to Rs.13,97,000/- was confirmed. iv. The disallowance of brokerage expenses to Bombay house paid by the assessee amounting to Rs.5,78,000/- was found to be incidental to the business of the assessee and therefore, has been deleted by the Ld. CIT(A). 3
ITA No. 5346/Mum/2025 Permeshwar Fashion Impex Pvt Ltd v. The other brokerage expenses amounting to Rs.22,45,356/-, since could not be substantiate by the assessee in absence of specific details of expenditure incurred, dehors the particulars of payees and the reasons for which such amounts were paid, the Ld. CIT(A) confirmed the same. vi. Regarding interest u/s 244A, the issue is restored back to the file of Ld. AO for verification and re-computation. vii. Regarding disallowance u/s 14A, Ld. CIT(A) directed the Ld. AO to delete the same. viii. Regarding deduction u/s 80G, Ld. CIT(A) allowed the assessee to avail the benefit of such deduction subject to fulfillment of entitlement conditions. The matter is restored back to the file of Ld. AO.
Being dissatisfied with the decisions of Ld. CIT(A) to the extent the disallowance/additions made by Ld. AO are confirmed by him, the assessee is in appeal before us. 5. The grievances before us remains are: (i) confirmation of disallowance for 50% of electricity and society charges, (ii) confirmation of depreciation claimed to the extent of 50% on TV purchased by the assessee-company, (iii) confirmation of disallowance for Rs.10,00,000/- incurred by the assessee- company on motor cars on the ground that such cars are used for personal requirements, (iv) confirmation of disallowance of Rs.13,97,000/- on account of credit card expenses incurred by the Directors / Executives of the company, (v) the confirmation of disallowance of brokerage amounting to Rs.22,45,356/- 6. At the outset, Ld. AR representing the assessee submitted that all such expenses, which are disallowed by the Ld. AO and to the extent confirmed by the Ld. CIT(A) are incurred for the business purposes of the assessee and all such 4
ITA No. 5346/Mum/2025 Permeshwar Fashion Impex Pvt Ltd expenses deserve to be allowed. Ld. AR furnished the copy of ledger account for disputed commission of brokerage expenses for the period from 1st April 2015 to 31st March 2016, stating that the brokerages were paid during the course of and for the purpose of business of the assessee, and therefore, such expenses are eligible for deduction from the income of the assessee under the provisions of the Act. It is further submitted that car maintenance expenses are incurred by the assessee for which a ledger account is maintained, which is enclosed in the assessee’s paper book at page no.40 to 65. These expenses are exclusively incurred for the business purposes of the assessee, therefore, such expenses would entirely eligible for deduction, as claimed by the assessee. Regarding society maintenance charges, Ld. AR furnished ledger copy of the society maintenance charges. Based on such submissions, it was the prayer that expenses incurred by the assessee are incurred only and exclusively for the business purpose of the assessee company therefore are incidental to the business activities and deserve to be allowed in totality. 7. Per contra, Ld. Senior DR vehemently supported the orders of Revenue Authorities. 8. We have considered the rival submissions and perused the material available on record. Admittedly, in the present case, all the expenditures incurred by assessee are examined and scrutinized at two stages, first by the Ld. AO and thereafter by the Ld. CIT(A). The factual aspect of the expenditure has been deliberated upon with findings upon analysis of the facts. 5
ITA No. 5346/Mum/2025 Permeshwar Fashion Impex Pvt Ltd
Coming to the individual expenditure, which are under controversy in the present matter, we find that the Ld. CIT(A) has fairly and judiciously decided the issue regarding expenses incurred for electricity, society charges and depreciation as the assessee was failed in furnishing any corroborative evidence to prove that the premises and assets including the TV, which is used for assessee’s business was entirely engaged in business endeavors, with no element of personal or residential dwelling in the said premises. We therefore, find substance and confirm the finding of Ld. CIT(A) in sustaining the disallowance to 50% of such expenses. Consequently, ground 1 & 2 of the assessee’s appeal stands dismissed. 9.1 Regarding car expenses, the assessee has furnished the ledger copy of such expenses, however, the nature and need or relation for incurrence of such expenses towards the purpose of assessee’s business could not be substantiated by way of furnishing the logbook for uses of such vehicles, as to whether the use was for personal or for the business purpose. Therefore, a reasonable disallowance was made by the Ld. AO, and sustained by the Ld. CIT(A).Even before us no new fact or evidence to contradict the findings if revenue authorities or explanations to prove them wrong could be brought on record by the assessee, hence, we do not have any reason to attain a different opinion, in absence of any other substantial submission by the Ld. AR on behalf of the assessee, so as to impress upon to take a different stand than what the Revenue 6
ITA No. 5346/Mum/2025 Permeshwar Fashion Impex Pvt Ltd Authorities have taken. Consequently, ground 3 of the assessee’s appeal stands dismissed. 9.2 Regarding credit card used by the Directors, promoters and their family members, it is submitted by the Ld. AR that such expenses which are personal in nature are already debited to the account of concerned person (promotirs/director/ executives) and therefore impliedly the assessee company had not claimed such expenditure in its profit and loss account. Therefore, the disallowance of such expenditure is uncalled, being never claimed in the profit and loss account. 9.2.1 We find substance in the plea of Ld. AR that once the expenditure incurred through credit card, which were paid by the assessee-company are debited to the personal ledger account of the individual directors and executives in the books of assessee-company, the same cannot be added back as disallowance, once such expenses are not debited in profit and loss account. However, such assertion of the assessee is subject to factual verification. We, therefore, restoring this issue back to the file of Ld. AO for verification and fresh adjudication. In result, ground no.4 of the assessee is allowed for statistical purposes. 9.3 Regarding disallowance of brokerage expenses, the Ld. AR submitted that the Revenue Authorities have not appreciated the facts in proper perspective, that the expenditure incurred was for the business purpose of the company, for renting of premises, the income of which has been taxed under the head profit and gain from business promotion. The details of such brokerage are furnished before us in a ledger account starting from page no.34 to 39 of assessee’s paper 7
ITA No. 5346/Mum/2025 Permeshwar Fashion Impex Pvt Ltd book. On perusal of the lengthy details of brokerage and commission, which thou do not have any supporting corroborative documents, we deem it appropriate to restore thus issue also back to the file of Ld. AO for verification and fresh adjudication. The assessee would be at liberty to explain with requisite evidence that such expenses are incurred exclusively for the business transactions and, therefore, entitled to be claimed as expenditure since the income earned by incurring such expenses was already offered for tax in the profit and loss account. In result, ground no.5 of the assessee is allowed for statistical purposes.
In result, the grounds of appeal of the assessee are disposed of and the appeal is partly allowed for statistical purposes, in above terms.
Order pronounced in the open court on 02-06-2026.
Sd/- Sd/- (AMIT SHUKLA) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, Dated : 02-06-2026. Ankit K., Sr. PS
Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT
ITA No. 5346/Mum/2025 Permeshwar Fashion Impex Pvt Ltd
BY ORDER,
(Dy./Asstt. Registrar) ITAT, Mumbai
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