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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI
Before: SHRI G.D. AGRAWAL, HON’BLE & SHRI K. NARSIMHA CHARY
PER SHRI K.N. CHARY, J.M. Aggrieved by the order relevant to the assessment year 2011- 12 passed by the Ld. Commissioner of Income Tax (Appeals)-11, New Delhi (hereinafter for short referred to as the “Ld. CIT(A)”).
Assessee filed this appeal on the following grounds:
“That the order of the Ld. ACIT is bad in law based on the facts and in the circumstances of the case.
That the Ld. ACIT has gone wrong in disallowing expenses of Rs. 25,000/- from total expenditure incurred on Telephone arbitrarily on the ground that the same has been incurred for personal purposes.
That the Ld. ACIT has gone wrong in disallowing the expense of Rs. 50,000/- from the total expenditure incurred on Vehicle Running & Maintenance arbitrarily on the ground that the same has been incurred for non-business activities.
4. That the appellant craves leave to add , to alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of Appeal
on or before the final hearing, if necessity so arises.”
2. Briefly stated facts are that the assessee is an individual deriving income from the business of Government Exporter, House Property and income from other sources. For the AY 2011-12 assessee filed his return of income on 29.09.2011 declaring a total income of Rs. 2,60,07,860/- and during scrutiny AO found that the assessee incurred the expenses of Rs. 39,78,969/- under the following heads:
S.No. Head of Expenses Amount 1. Staff welfare 6,62,614/- 2. Telephone 15,41,180/- 3. Conveyance 17,75,175/- Total 39,78,969/- AO recorded that the assessee failed to justify that such an amount was exclusively spent for the purpose of business activities, as such, AO disallowed 10% of such expenses towards non-business expenses and such disallowance was Rs. 3,97,896/- . AO disallowed a further sum of Rs. 1,45,170/- on the ground that the assessee was not maintaining log book in respect of the vehicle running and maintenance and personal usage of the vehicle cannot be ruled out, as such, 10% out of 14,51,706/- was to be disallowed. In appeal Ld. CIT (A) found that there is no specific adverse finding by the AO in respect of the expenses of Rs.6,62,614/- on staff welfare and Rs. 17,75,175/- incurred towards conveyance expenses, as such, such an addition is not justified. However, in respect of the telephone expenses of Rs. 15,41,180/- Ld. CIT (A) observed that the possible personal usage cannot be ruled out and on that ground he confirmed the addition to a tune of Rs. 25,000/-. In respect of the vehicle running and maintenance charges Ld. CIT (A) found that a sum of Rs. 50,000/- would be a reasonable disallowance, as such, he gave relief to a tune of Rs. 95,170/- while confirming the disallowance of Rs.50,000/-. Challenging the confirmation of Rs. 25,000/- and Rs.50,000/- the assessee is in appeal before us.
3. We have carefully gone through the record and heard the Counsel on either side. Order of the Ld. CIT (A) on these two grounds is very reasonable and the Ld. CIT (A) has taken care to see that the disallowance is confined only to the expenses where there is possibility of personal use and he excluded the expenses like the expenses on account of the staff welfare and conveyance expenses of office staff members. Even in respect of the telephone expense Ld.CIT (A) confined the disallowance to Rs. 25,000/- and thereby out of Rs. 3,72,896/- he confirmed only Rs. 25,000/-. So also in respect of the vehicle running and maintenance charges, in the absence of any log book being maintained by the assessee, by no stretch of imagination can we say that there is no possibility of personal usage of the car. Rs. 50,000/- on that score confirmed by the Ld. CIT (A) is quite reasonable. We, therefore, uphold the findings of the Ld. CIT (A) and find the grounds of appeal are devoid of merits. Consequently the appeal is liable to be dismissed.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 16.11.2017