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Income Tax Appellate Tribunal, DELHI BENCH: ‘G NEW DELHI
Before: SH. BHAVNESH SAINI & SH.L.P.SAHU
PER BHAVNESH SAINI, JUDICIAL MEMBER
This appeal by the assessee has been directed by the Ld.CIT(A)-1, Dehradun dated 11.10.2011 for A.Y. 2008-09.
We have heard Ld. representatives of both the parties and perused the orders of the authorities below.
On Ground No.1(a), the assessee challenged the disallowance of Rs.2,00,000/- out of sale promotions expenses. The assessee is an individual, proprietor of M/s Devine International and is engaged in the business of manufacturing and trading of brass, Iron and wooden handicrafts. The assessee produced ledger account of sale promotion expenses, however, vouchers have not been produced. The assessee claimed sales promotion expenses amounting to Rs.9,25,579/-. It was Page 2 of 4 found that bills of credit cards and other expenses of personal nature like purchase from Woodland, Ritu Wears and Pizza etc. amounting to Rs.5,34,064/- which were debited under the “sale promotion expenses”.
The AO issued show cause notice as to why the ‘sale promotion expenses’ should not be disallowed u/s 37 of the Act. The assessee submitted before the AO that expenses have been made for the purpose of business. The AO, however, found that the amount of Rs.5,34,064/- is incurred for personal purposes and, therefore, this cannot be said that same have been incurred for business purposes. The AO disallowed Rs.5,34,064/-. The Ld.CIT(A) considering the explanation of the assessee in detail noted that some of the expenses were personal in nature and as such the entire expenses cannot be said to be incurred for the purposes of business. The Ld.CIT(A) accordingly, sustained the disallowance in a sum of Rs.2 lacs.
After considering the rival submissions, we do not find any merit in this ground of appeal of the assessee. Since the assessee claimed deduction of the expenditure, therefore, onus is upon the assessee to prove that expenses have been incurred wholly and exclusively for the purposes of business. The authorities below found that the assessee incurred many expenses which are personal in nature like purchase from Woodland, Ritu Wears and pizza etc. The Ld. counsel for the assessee submitted that the assessee purchased these items for his sister however, he was not able to explain as to how the amount incurred on his sister were connected with Page 3 of 4 the business activity of the assessee. Thus, the assessee failed to explain that these expenses were incurred wholly and exclusively for the purpose of business. The Ld.CIT(A) was justified in sustaining the addition of Rs.2lacs out of sale promotion expenses. We may also note that Ld.CIT(A) has already allowed sufficient benefit to the assessee, therefore, no further relief could be granted. This ground of appeal of the assessee is dismissed.
5. On Ground No.1(b), the assessee challenged the addition of Rs.50,000/- out of travelling and convenience for personal purposes. The assessee claimed expenses of Rs.7,17,315/- on account of travelling and convenience and Rs.2,26,050/- on account of telephone. The AO disallowed 30% of the expenditure on the ground that the assessee did not produce the details of his expenses in the assessment proceedings. As a result, she could not quantify the exact amount of these expenses under these heads which had not been incurred for the purposes of business.
The assessee did not produce the vouchers and the payments have been made mostly through credit cards, the AO, therefore, disallowed Rs.2,83,009/-. The Ld.CIT(A), however, considering that the assessee is in export business which requires extensive travel as well as long distance telephone calls reduce the addition to Rs.50,000/-
Considering the rival submissions, we do not find any merit in this ground of appeal of the assessee. The assessee did not produce any voucher and payment in the case of travelling and convenience expenses
Page 4 of 4 have been made mostly through credit cards. Personal element in this expenditure could not be ruled out. No specific details of expenses have been produced before us, therefore, no inference is called for in the matter.
This ground of appeal is dismissed.
In the result, the appeal of the assessee is dismissed.
The order is pronounced in the open court.