BHARUCHA & PARTNERS,MUMBAI vs. ACIT - 16(2), MUMBAI

The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in restricting disallowance made on account of miscellaneous expenses and telephone / fax charges @5% as against 10% made by the ld. AO on adhoc basis in the facts and circumstances of the case.

We have heard rival submissions and perused the materials available on record. We find that assessee is a partnership firm engaged in the practice of legal profession. It had filed its return of income for A.Y.2014-15 on 29/09/2014 declaring total income of Rs. 5,35,03,831/-. The ld. AO during the course of assessment proceedings sought for details of miscellaneous expenses and telephone / fax charges, among others. We find that assessee had duly furnished the entire details comprising of original vouchers together with necessary supporting evidences. We find that the ld. AO without any basis simply concluded that the personal element of the aforesaid expenses cannot be ruled out and hence, 10% of the respective expenditure thereon was sought to be disallowed. Accordingly, a sum of Rs.2,96,969/- and Rs.3,48,349/- was disallowed by the ld. AO on account of miscellaneous expenses and telephone and fax charges. This disallowance was restricted to 5% by the ld. CIT(A) in first appeal. Aggrieved, the assessee is in appeal before us.

We find that the entire original vouchers together with the supporting documents were indeed furnished by the assessee for miscellaneous expenses and telephone and fax charges before the ld. AO during the course of assessment proceedings. The ld. AO did not observe any defect either in the vouchers or in the supporting documents or in the books of accounts furnished by the assessee. Hence, he ought not to have resorted to make any disallowance on adhoc basis. Before us the ld. AR also pointed out that two senior partners of the assessee firm did not claim even their mobile expenses from the partnership firm. We find that this Tribunal had deleted the similar disallowance made in assessee’s own case in for A.Y.2013-14 vide order dated 28/06/2019. Respectfully following the said decision, we direct the ld. AO to delete the disallowance made on account of miscellaneous expenses and telephone and fax charges. Accordingly, the ground Nos. 1 & 2 raised by the assessee are allowed.

The ground Nos. 3 & 4 raised by the assessee are with regard to chargeability of interest u/s.234B & 234C of the Act which are consequential in nature.

The ground No.5 raised by the assessee is general in nature and does not require any specific adjudication.

In the result, appeal of the assessee is allowed.