CHATTERJEE MANAGEMENT SERVIVES PVT. LTD.,KOLKATA vs. THE DCIT, CIR-8, KOLKATA, KOLKATA

A.Y. 2005-06 C.M.S.P. Ltd. Vs. DCIT, Cir-8 Kol. Page 2 3. During the course of assessment proceedings, the Assessing Officer has observed that assessee has claimed travel and conveyance expenses of ₹20,59,268/- includes a sum of ₹7,23,054/- is expense incurred for the director. The assessee has not filed any bill & vouchers etc. The AO of the opinion that above expenses are personal in nature in the absence of details 20% of ₹7,23,054/- i.e. ₹1,44,620/- being disallowed.

On appeal before Ld. CIT(A) the Ld. CIT(A) has confirmed the order of AO.

Before us Ld. counsel for the assessee has submitted that all the bills and vouchers file before AO without examining the simply the AO has disallowed 20% of the expense incurred by the assessee which are for the purpose of business and same is confirmed by Ld. CIT(A) without any basis. Ld. DR has submitted that no details were filed before the AO even before Ld. CIT(A). He strongly supported the order passed by Authorities Below.

We have heard both the parties and perused the record and gone through the order of Authorities Below. We find that assessee has incurred conveyance expense of ₹7,23,054/- and before AO assessee is not able to substantiate that these expenses are incurred fully for the purpose of business. Therefore, the AO has disallowed 20% of the expense incurred by assessee by considering it as personal expense. Ld. CIT(A) confirmed the order of AO subsequently. We find that by taking into consideration of entire facts and circumstance of the case and in the interest of justice the disallowance made by AO is higher side under the same is scaled down to 10%. Accordingly, we set aside the order passed by Ld. CIT(A). The ground of appeal is allowed partly. AO is directed accordingly.

We have heard both the sides and gone through facts and circumstances of the case. We find that assessee had incurred an expense for the purpose of office expense which is connected with the business of assessee and there is increase of consultancy fee received is more than 60% in this year under consideration comparatively earlier year. The case of the Assessing Officer is that assessee has not filed any details in respect of expense incurred by the assessee. Therefore, he is of the opinion that there is A.Y. 2005-06 C.M.S.P. Ltd. Vs. DCIT, Cir-8 Kol. Page 4 possibility of incurring personal expense. Therefore it is disallowe 10% of the total expense incurred by the assessee and same is confirmed by Ld. CIT(A). We have considered the facts and circumstances and we are of the opinion that disallowance made by the AO is higher side. Therefore, we scale down the disallowance made by AO from 10% to 5%. In view of the above, we set aside the order passed by Ld. CIT(A). The ground raised by assessee is partly allowed. AO is directed accordingly.