SHRI RAJENDRA PRASAD CHWRASIA,HOOGHLY vs. ITO, WARD - 1(2), HOOGHLY, HOOGHLY

That out of total expenditure a sum of Rs.6,83,416.00 for repair and maintenance and the AO only allowed 50% expenses and disallowed rest 50% which was extremely bad in law and ultravires and so the total expenditure shall be allowed.

That the ITO passed in his Remand Report dated 22.08.2011 and contained a certain percentage of disallowance of the repair to lorry but without cognizance of such report, AO allowed only 50% of total expenses incurred by your Appellant and disallowed in full amount of Rs.3,63,589.00 against repair of rented lorry.”

Briefly stated facts are that the AO without any reason disallowed the claim out of other expenses of Rs.26,70,426/- at 50% i.e. Rs.13,35,213/-. These expenses include repair and maintenance on account of replacement of tyres of rented lorries, own lorries and other expenses of Rs.10,47,005/-, which includes expenses incurred for repair and replacement of tyres of rented lorries at Rs.3,63,589/-. Apart from this, the AO also disallowed expenditure on replacement of tyres and repairs of assessee’s own lorries at Rs.6,83,416/-, thereby the total expenditure under this head disallowed at Rs.10,47,005/-. The CIT(A) confirmed the disallowance of repairs and replacement of tyres of rented lorries at Rs.3,63,589/- but restricted the disallowance of expenses of own lorries at Rs.3,41,708/- i.e. 50% of the total expenditure of Rs.6,83,416/-. Accordingly, the CIT(A) confirmed the addition on account of rented lorries of Rs.3,63,589/- plus expenses on own lorries at Rs.3,41,708/- totaling to Rs.7,05,297/-. Aggrieved, assessee came in appeal before Tribunal.

We have heard Ld. A.R. of the assessee and gone through facts and circumstances of the case. We find that the assessment is ex parte u/s. 144 of the act and AO has disallowed the entire expenses on account of replacement of tyres and repair of lorries either rented or own lorries. First of all, there is no basis for disallowance of expenses of own lorries, which is restricted by CIT(A) at Rs.3,41,708/-. This addition made by AO and confirmed by CIT(A) on the basis of conjecture and surmises and totally on ad hoc basis. We find no reason to sustain this addition. Accordingly, the same is deleted. However, the assessee has claimed to have incurred expenses on rented lorries totaling to Rs.3,63,589/-. Even now before us assessee could not explain as to why he has incurred substantial repair for hired lorries i.e. replacement of tyres of these seven rented lorries. On hired lorries repair is to be done by the owner and not the hirer. Accordingly, we are of the view that the CIT(A) has rightly confirmed this addition and we also confirm the same. Hence, this issue of assessee’s appeal is partly allowed. 6. In the result, the appeal of assessee is partly allowed. 7. Order is pronounced in the open court on 29.10.2015 Sd/- Sd/- (Waseem Ahmed) (Mahavir Singh) Accountant Member Judicial Member