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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B” (SMC
Before: SMT. P. MADHAVI DEVI
This is assessee’s appeal for the AY.2007-08, against the order of the Commissioner of Income Tax (Appeals)-6, Hyderabad, dated 30-11-2017.
Brief facts of the case are that the assessee-HUF filed its return of income for the AY.2007-08 on 31-10-2007, admitting total income of Rs.2,94,970/-. During the assessment proceedings u/s.143(3) of the Income Tax Act [Act], assessee was required to file bills/vouchers in support of its claim with regard to expenses debited to the P&L A/c. The assessee produced the same, but he did not file the bills/vouchers to full extent, which were debited in P&L A/c. When the assessee was confronted, the assessee agreed for the disallowance of the expenditure to the tune of 15% of Rs.70,29,200/- and
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accordingly, an amount of Rs.10,54,380/- was disallowed and brought to tax u/s.69C of the Act.
2.1. However, assessee preferred an appeal before the CIT(A), who confirmed the order of Assessing Officer on the ground that the assessee himself has agreed for the addition.
2.2. Against the said order of the CIT(A), assessee is in second appeal before us, by raising the following grounds of appeal:
“1. The order of the learned Commissioner of Income tax (appeals) is erroneous both on facts and in law.
The learned Commissioner of Income tax (appeals) erred in confirming the disallowance of Rs. 10,54,380 made by the Assessing Officer as representing 15% of the gross expenditure debited to the profit and loss account.
The learned Commissioner of Income tax (appeals) ought to have considered the fact that the appellant maintained proper books of account and maintained proper vouchers for all the expenditure incurred and that therefore, no disallowance can be made.
The learned Commissioner of Income tax (appeals) ought to have seen that the Assessing Officer made the addition under sec. 69C of the Act, which section is not applicable to the facts of the case. 5. The learned Commissioner of Income tax (appeals) ought to have further seen that the expenditure is for the purpose of business and no part of the expenditure can be said to be personal in nature”.
At the time of hearing, Ld. Counsel for the assessee admitted that the assessee had agreed for the addition during the course of assessment proceedings, but he prayed for a direction to Assessing Officer, not to make disallowance out of the payments such as property tax, rent for the premises, telephone bills, salary and depreciation etc., on the ground that
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these are payments which are to be made compulsorily and there cannot be any personal element or non-genuineness of the same.
Ld.DR, however, opposed this contention of the assessee.
Having regard to the rival contentions, I find that the statutory payments to the Government such as - property tax, rent for the premises taken, telephone bills and depreciation have to be allowed in full, because there cannot be any doubt with regard to the said payments. However, with regard to salaries and other expenses, there is a chance of inflating the expenditure. In the view of the same, I direct the Assessing Officer to disallow 15% of the expenditure, excluding the property tax, rent paid to the premises and depreciation.
In the result, the appeal of assessee is treated as partly allowed, as above. Order pronounced in the open court on 12th June, 2019 Sd/- (P. MADHAVI DEVI) JUDICIAL MEMBER Hyderabad, Dated 12th June, 2019 TNMM/pvv Copy to : 1. Maneklal Agarwal, H.No.1-8-167 to 179, S.D. Road, Secunderabad. 2. Income Tax Officer, Ward-10(1), Hyderabad. 3. CIT (Appeals)-6, Hyderabad. 4. Pr.CIT-6, Hyderabad. 5. D.R. ITAT, Hyderabad. 6. Guard File.