AXIS IMPEX,MUMBAI vs. ACIT 18(2), MUMBAI

आदेश / O R D E R Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 15/11/2016 of the Ld. First Appellate Authority, Mumbai, confirming the disallowance of 10% of the staff welfare expenses as reduced from the original 25% made on ad-hoc basis by the Ld. Assessing Officer

This appeal was filed by the assessee on 05/01/2017.

2.1. We have considered the submissions of Ld. DR and perused the material available on record. The facts, in brief, are that the assessee is partnership firm engaged in the business of manufacturing and selling of plastic products, stainless steel coils, chemicals, etc. The assessee is also purchasing corrugated boxes, printed boxes, packing tissues, polythene bags, moulds of various types, declared income of Rs.97,49,620/-. The factory premises of the assessee is located at Gokhivare village, Vasai Taluk, wherein, as per the assessee, hundred workers have been working and the assessee claim to have providing lunch, tea and snacks to its workers (as is borne out from the statement of facts available on record). As per the assessee, the workers who was staying at the factory premises are also provided dinner. As per the assessee, staff welfare expenses are incurred upon these workers and thus a sum of Rs.24,37,433/- was claimed towards staff welfare expenses as on 31/03/2012 out of which the Ld. Assessing Officer disallowed a sum of Rs.6,09,358/- (representing 25% of the claim expenses) to cover up the discrepancies. On appeal before the Ld. Commissioner of Income Tax (Appeal), such expenses were reduced at the rate of 10% against 25% done by the Ld. Assessing Officer. The assessee is in further appeal before this Tribunal. It has been observed in the assessment order that the assessee was asked to furnish the bills and vouchers in support of its claim. It has been further observed that the assessee furnish the copy of bills and sales made for grocery item and major portion of the expenditure is in cash, therefore, to cover up the discrepancy 25% of such expenditure was disallowed. Before the Ld. Commissioner of Income Tax (Appeal), the assessee place reliance upon the decision in CIT vs S.P. (P.) Ltd. (202 taxman 386)(P & H), ACIT vs Allied Constructions 26 SOT 50 (Del.) and JCIT vs Vijay Shanti Builders Ltd. 48 ITR 310 (Chennai). It has been categorically observed in the assessment order as well as in the impugned order that major portion of the expenses was incurred in cash or some of the vouchers are self made, whereas, the claim of the assessee is that the impugned expenses are genuine and due to the nature of the expenditure some cash expenses were also incurred. Thus, the personal use cannot be ruled out and at the same time the claim of the assessee is not fully supported by evidence.

Considering the totality of facts and in the absence of full details and admission by the assessee that some expenses were incurred in cash, we find no infirmity in disallowing some of the expenses/cash expenses @10% in place of 25% made by the Ld. Assessing Officer. Therefore, the appeal of the assessee is dismissed.

Finally, the appeal of the assessee is dismissed.

This order was pronounced in the open court in the presence of ld. DR at the conclusion of the hearing on 07/08/2018.