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Facts
The assessee is aggrieved by the disallowance of salary and sales promotion expenses by the lower authorities on an ad-hoc basis of 50% and 70% respectively. The assessee had not provided sufficient evidence to support these expenditure claims.
Held
The tribunal held that while the business activity and allowability of the expenses in principle were not disputed, the assessee failed to prove the claims with necessary evidence. Consequently, a 5% lumpsum disallowance was deemed appropriate for both expenses.
Key Issues
Whether the disallowance of salary and sales promotion expenses on ad-hoc basis by the lower authorities was justified due to lack of evidence, and if so, to what extent.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI
Before: SHRI SATBEER SINGH GODARA
ORDER This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)/Addl./JCIT(A)- 1, Nashik’s DIN and order no. ITBA/APL/S/250/2025- 26/1078982530(1), dated 28.07.2025 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.
It transpires during the course of hearing that the assessee/appellant herein is aggrieved against both the learned lower authorities’ respective findings inter alia disallowing its salary and sales promotion expenses on ad-hoc basis @ 50% and 70%; involving varying sums, respectively, in assessment order dated 23rd December, 2019 as upheld in the lower appellate discussion.
The tribunal has given due consideration to both the parties’ respective vehement rival submissions against and in support of the impugned twin disallowances. It is made clear that there is no dispute about the assessee’s regular business activity as well as allowability of both these expenditure claims in principle. The fact also remains that the assessee has not successfully pleaded and proved the impugned twin claims of expenditure by filing all the necessary supportive evidence(s) to the entire satisfaction of the learned lower authorities. Be that as it may, it thus deemed appropriate in these peculiar facts that a 5% lumpsum disallowance of both these impugned expenditure claims would be just and proper with a rider that the same shall not be treated as a precedent. Necessary computation shall follow.