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Income Tax Appellate Tribunal, DELHI ‘B’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI ANUBHAV SHARMA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the ld. CIT(A) - 2, New Delhi dated 13.07.2018 pertaining to Assessment Year 2014-15.
The grievances of the assessee read as under:
“1. In view of the facts and under the circumstances of the case and in law, whether the ld. CIT(A)-2, New Delhi was justified in confirming the action of ht Assessing Officer and upholding the following additions:
(i) Foreign travel expenditure Rs. 4,09,690/- (ii) Repair & maintenance @ 20% [Adhoc disallowance under Transport Segment] Rs. 73,93,304/- (iii) Repair and maintenance @50% [Adhoc disallowance under Sanitization Segment] Rs. 1,82,298/-
2. In view of the facts and under the circumstances of the case and in law, whether the ld. CIT(A) was justified in invoking the provisions of sec. 145(3) of the Act while confirming adhoc disallowance @ 20% on account of expenditure for repair and maintenance [under Transport Segment].
At the very outset, the ld. counsel for the assessee stated that he is not pressing Ground No. 1(i) relating to foreign travel expenditure of Rs. 4,09,690/-. The same is dismissed as not pressed.
The only ground which survives relates to the adhoc disallowance under transport segment and sanitization segment.
While scrutinizing the return of income, the Assessing Officer noticed that the assessee has incurred repair and maintenance expenses at Rs. 1,89,04,401.00. The assessee was asked to furnish complete details. The assessee submitted details. On perusal of the same, the Assessing Officer noticed that the assessee has deducted tax at source on expenses of Rs. 20,22,126/- and no TDS has been deducted on balance expenses of Rs. 1,68,82,275/-.
The assessee was asked to substantiate its claim.
The assessee explained that repairs and maintenance expenses have been incurred by it towards owned vehicles and not vehicles taken on hire.
This contention of the assessee was dismissed by the Assessing Officer who went on to make adhoc disallowance of 20%. Further 5% was disallowed out of repair and maintenance expenses claimed under sanitation segment.
The assessee carried the matter before the ld. CIT(A) but without any success.
Before us, the ld. counsel for the assessee drew our attention to the explanation made during the assessment proceedings and pointed out that the assessee has specifically explained that no expenses were incurred on hired vehicles and all the expenses have been incurred on owned vehicles.
It is the say of the ld. counsel for the assessee that such details were supported by vouchers and the Assessing Officer neither expressed her appreciation nor dissatisfaction. The ld. counsel for the assessee further stated that it is eligible for deduction u/s 80IA of the Act and, therefore, any disallowance of expenses would not make in difference in itself, as the enhanced profit would become eligible for deduction u/s 80IA of the Act.
Per contra, the ld. DR supported the findings of the Assessing Officer.
We have carefully perused the orders of the authorities below. It is true that during the course of assessment proceedings itself the assessee has explained that repairs and maintenance expenses were incurred by it on its own vehicles and not on hired vehicles.
Explanation of the assessee was supported by bills/vouchers. It is true that the Assessing Officer has neither pointed out any defect nor any infirmity in the explanation of the assessee.
Considering the fact that addition has been made on adhoc basis, the same deserves to be deleted. We, therefore, direct the Assessing Officer to delete the impugned disallowance.
In the result the appeal of the assessee in is partly allowed.
The order is pronounced in the open court on 13.07.2023.