M/S BERNINA INTERNATIONAL PVT. LTD.,NEW DELHI vs. ITO, NEW DELHI

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ITA 2067/DEL/2017Status: DisposedITAT Delhi16 October 2017AY 2012-133 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the expenses were essential for running the business and the Assessing Officer had not demonstrated how they were excessive compared to preceding years. Therefore, the additions made were directed to be deleted.

What were the facts?

The assessee incurred various expenses, some of which were supported by self-generated vouchers, lacked supporting evidence, or were unavailable. The Assessing Officer made an ad-hoc disallowance of 1/5th of these expenses.

What were the issues?

Whether the ad-hoc disallowance of expenses made by the Assessing Officer was justified when the assessee provided ledger accounts and comparative figures, and the expenses were essential for business operations.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI ‘SMC’ BENCH,

Before: SHRI B.P. JAIN

For Appellant: Shri Ved Jain, Adv, Ms. Devina Sharma, Adv
Hearing: 10.10.2017

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘SMC’ BENCH, NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER [A.Y. 2012-13] Bernina International Pvt. Ltd Vs. The I.T.O First Floor, Parivartan House Ward 4(3) State Bank of Patiala Building New Delhi Mehrauli Mahipalpur Road Mahipalpur, New Delhi PAN : AAACB 4006 G [Appellant] [Respondent] Date of Hearing : 10.10.2017 Date of Pronouncement : 16 .10.2017 Assessee by : Shri Ved Jain, Adv Ms. Devina Sharma, Adv Revenue by : Shri T. Vasanthan Sr. DR ORDER This appeal of the assessee arises from the order of the ld. CIT(A)-35, New Delhi vide order dated 20.01.2017 for A.Y. 2012-13.

2.

The assessee has challenged the adhoc disallowance of Rs. 6,06,394/- as 1/5th of the expenses of Rs. 30,31,972/-.

3.

Brief facts of the case are that the assessee has incurred various expenses under nine heads as enumerated at pages 1 and 2 of the assessment order. As per the observations of the Assessing Officer, some vouchers are self generated vouchers, some bills and vouchers are not supported by supporting evidence and some bills and vouchers are not available. When controverted, the ld. counsel for the assessee appearing on behalf of the assessee submitted that the expenses are genuine but the Assessing Officer made disallowance of 1/5th of the expenses claimed and made additions which were confirmed by the ld. CIT(A).

4. I have heard the rival submissions and have perused the relevant material on record. At the very outset, it was pointed out by the ld. counsel for the assessee that the assessee submitted all ledger accounts of the assessee and the Assessing Officer has not pointed out how the expenses are excessive as compared to the expenses incurred in the preceding years and comparative figures were also submitted before the ld. CIT(A) in which no defect has been pointed out. Under the facts and circumstances of the case, such expenses are essential to be incurred for running business and therefore, no additions on this count can be made. Accordingly, the additions so made are directed to be deleted. Grounds raised by the assessee are allowed.

4.

In the result, the appeal of the assessee in is allowed. The order is pronounced in the open court on 16.10.2017.

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