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Income Tax Appellate Tribunal, “B”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN, JM
ननधाारयती की ओर से /Assessee by : Shri Satish Jain याजस्व की ओर से /Revenue by : Shri Vivek Batra सुनवाई की तायीख / Date of Hearing : 08/09/2015 घोषणा की तायीख/Date of Pronouncement 08/12/2015 आदेश / O R D E R PER R.C.SHARMA (A.M):
This is an appeal filed by the assessee against the order of CIT(A), dated 18-1-2012 for the assessment year 2006-07, in the matter of order passed u/s.143(3) of the I.T.Act, wherein the assessee is aggrieved for adhoc disallowance on account of telephone expenses and sales promotion expenses.
Rival contentions have been heard and record perused. Facts in brief are that the assessee is engaged in exporting of Dyes and Dye Intermediates & Wind Power Generation. During the year under consideration assessee’s export turnover increased from Rs.8.5 crores to 2 16.8 crores. However, postage and telephone expenses was incurred Rs.6 lakhs in the earlier year and Rs.6.10 lakhs for the year under consideration. The AO disallowed 1/5th of the same on the ground that there is no controlling mechanism to monitor the use of telephones. By the impugned order the CIT(A) reduced the disallowance to 50%.
We have considered rival contentions and found that assessee is in the business of international trade, most of the telephone calls have to be made at odd hours from the residents. Keeping in view the totality of facts and circumstances of the case, we direct the AO to restrict the disallowance to 10% of the expenses incurred on account of personal use.
The assessee has claimed sales promotion expenses of Rs.9.45 lakhs. The AO disallowed 1/5th of the same on adhoc basis. By the impugned order the CIT(A) restricted the disallowawnce to 20% of amount of Rs.9,38,757/-.
We have considered rival contentions and found that major expenses was pertaining to the expenses for participation in an exhibition in Spain. The assessee has produced the details of expenditure incurred, genuineness of the expenditure was not in doubt. During the year assessee has incurred loss of Rs.2.44 crores, therefore, there does not appear any reason to claim bogus expenses. Keeping in view the totality of facts and circumstances of the case, we restrict the disallowance to 5% of the expenditure of Rs.9,38,757/-. We direct accordingly.