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Income Tax Appellate Tribunal, BENCH – “SMC”, AHMEDABAD
Before: SHRI RAJPAL YADAV
आदेश/O R D E R
Assessee is in appeal before the Tribunal against order of ld.CIT(A)-III, Baroda dated 12.5.2014 passed for the Asstt.Year 2011-12.
In the first ground of appeal, the assessee has pleaded that the ld.CIT(A) has erred in confirming disallowance of Rs.2,47,507/-.
Brief facts of the case are that the assessee has filed its return of income on 30.9.2011 electronically and declared total income at Rs.5,99,020/-. At the relevant time, the assessee was engaged in the business of imparting educational courses. It has collected fees from students and in some of the cases, it has to refund fees. The ld.AO observed that the assessee was not
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under obligation to refund fees, and therefore, he disallowed claim of the assessee at Rs.2,47,507/-. Appeal to the ld.CIT(A) did not bring any relief to the assessee.
The ld.counsel for the assessee, at the very outset submitted that in the Asstt.Year 2010-11 similar refund of Rs.1,58,000/- was made which was disallowed to the assessee. Dispute travelled upto the Tribunal, and the Tribunal in ITA No.64/Ahd/2014 has allowed claim of the assessee. He took us through order of the Tribunal at page no.93 of the paper book. The DR was unable to controvert this contention of the ld.counsel for the assessee.
I find that in similar circumstances, the Tribunal has allowed deduction of refund made by the assessee to the students. The finding of the Tribunal reads as under:
“2. We come to the former issue of disallowance of refund claim of Rs.l.581acs. The assessee is a company imparting various educational courses of MS Sparta Ltd., New Delhi. There is no dispute that it has shown total commission income of Rs.80,48,297/- alongwith net profit of Rs.5,23,151-. It claimed to have refunded the impugned sum of Rs.1.581acs to various students whose details are given in page 78 of the paper book. Necessary mode of payment is by way of banking channel. Both the lower authorities deny this refund as an expenditure claimed after concluding that there was no such obligation on the assessee to incur the said head as per its agreement with the above entity. They are fair enough in not disputing genuineness of the refund claim. It is very much evident from perusing the case file that the eight students in question submitted their refund request to assessee only at Baroda instead of the abovestated New Delhi based entity. It has already come on record that it is the assessee in fact who imparted the educational course in question to the said student after receiving income. We observe in these peculiar facts that the above refund amounts to expenditure incurred wholly and exclusively for assessee's business so as to be allowed u/s.37 of Act since it was an effort to
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garner garner more and more market goodwill. We therefore delete this former disallowance of refund claim amounting to Rs.1.581acs.”
Respectfully following the order of the Tribunal, I allow the first ground and delete disallowance of Rs.2,47,507/-.
In the next ground of appeal, grievance of the assessee is that the ld.CIT(A) has erred in confirming adhoc disallowance out of the various expenditure.
With the assistance of the ld.representatives, I have gone through the record carefully. It emerges out from the record that the assessee has incurred expenditure of Rs.2,08,877/-. The assessee failed to bring supporting details, therefore, the AO made adhoc disallowance at 20% of the total expenditure. On appeal, the ld.CIT(A) has reduced this disallowance to 10%. After considering the order of the ld.CIT(A), I am of the view that the ld.CIT(A) has already reduced the disallowance to a substantial extent. The assessee could not point out any defect in the orders of the Revenue authorities. It could not submit complete details in support of its claim. Therefore, estimated disallowance is justified. I do not find any merit in this ground of appeal. It is rejected.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the Court on 24th October, 2017 at Ahmedabad.
Sd/- (RAJPAL YADAV) JUDICIAL MEMBER
Ahmedabad; Dated 24/10/2017