Ashish Patodia, New Delhi V. ACIT, New Delhi

ITA 1858/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6622 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 28-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income; Earning of tax free income; Notional interest
• Section: 142(1); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUD ICIAL MEMBER I.T.A .NO. 1858/DEL/2014 (ASSESSM ENT YEAR-2008-09) ASHISH PATODIA D-395, DEFENCE COLONY NEW DELHI AGQPP7679C (APPELLANT) VS ACIT CIRLC-32(1) NEW DELHI (RESPONDENT) APPELLANT BY HIREN MEHTA, CA RESPONDENT BY SH. ANIL KUMAR SHARMA, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED AGAINST THE ORDER DATED 23/12/ 2013 PASSED BY CIT(A)-XXVIII, NEW DELHI, FOR ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2008-09 ON 30.09.2008 DISCLOSING A TOTAL INCOME AT RS.19,34,99 0/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 196 1. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER CASS. NOTICE U/S 143(2) OF THE ACT WAS ISSUED AND DULY SERVED ON THE ASSESSEE ON 13.08.2009. SUBSEQUENTLY, NOTICE U/S 142(1) OF THE ACT, CALLING FOR DATE OF HEARING 07.10.2016 DATE OF PRONOUNCEMENT 08.12.2016 BASIC DETAILS/DOCUMENTS IN SUPPORT OF THE RETURN, W AS SERVED ON 14.05.2010. IN RESPONSE, ASSESSEES REPRESENTATIVE APPEARED ON VARIOUS OCCASION AND FILED DOCUMENTS AND GAVE DETAI LS AS AND WHEN ASKED FOR BY THE ASSESSING OFFICER. DURING THE PREV IOUS YEAR RELEVANT TO ASSESSMENT YEAR 2008-09 THE ASSESSEE WA S ENGAGED IN THE BUSINESS OF TRADING OF SULPHUR, FABRICS AND SHA RES UNDER THE PROPRIETARY CONCERN IN THE NAME OF M/S. ATUL INTERN ATIONAL. HE HAS DERIVED INCOME FROM BUSINESS, INCOME FROM SALARY, I NCOME FROM SHORT TERM CAPITAL GAINS (LOSS), INCOME FROM LONG T ERM CAPITAL GAINS AND INCOME FROM OTHER SOURCES, BESIDES HAVING TAX EXEMPT INCOME FROM DIVIDEND AND LONG TERM CAPITAL GAINS. 3. DURING THE RELEVANT YEAR UNDER CONSIDERATION THE ASSESSEE HAS CLAIMED COMMISSION EXPENSES AMOUNTING TO RS.27,04,6 23/- IN THE BUSINESS OF TRADING OF SULPHUR, BESIDES AN AMOUNT O F RS. 5,27,602/- WHICH WAS PAID AS COMMISSION TO THE BROT HER OF THE ASSESSEE, SH. MANOJ PATODIA. WHILE THE ASSESSEE HAS MADE PAYMENT TO ALL THE PARTIES ON THE BASIS OF QUANTITY OF THE SULPHUR TRADED I.E. AT THE RATE OF RS. 1000 PER METRIC TON, SH. MANOJ P ATODIA HAS BEEN PAID COMMISSION ON THE BASIS OF PERCENTAGE OF TOTAL SALE OF SULPHUR I.E. AT THE RATE OF 0.2% ON THE TOTAL SALE OF SULPH UR. THE ASSESSING OFFICER DISALLOWED COMMISSION EXPENSES TO THE EXTEN T OF 2,63,801/-. 4. THE ASSESSING OFFICER ALSO MADE AN ADDITION OF R S.37,644/- AS NOTIONAL INTEREST BY OBSERVING THAT THE ASSESSEE CH ARGED LESSER RATE OF INTEREST. 5. THE ASSESSING OFFICER ALSO DISALLOWED 20% OF EXP ENSES INCURRED UNDER THE HEAD VEHICLE REPAIR AND MAINTENA NCE, TELEPHONE EXPENSES AND BUSINESS PROMOTION TRADING THE SAME AS INCURRED FOR PERSONAL PURPOSES. 6. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). TH E CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER EXCEPT IN RESPE CT OF PERSONAL EXPENSES INSTEAD OF 20% REDUCED IT TO 10% OF PERSON AL EXPENSES. 7. BEING AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS BEFORE US ON THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE ORDER PASSED BY CIT(A) IS CONTRARY TO FACT S AND BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING DISA LLOWANCE OF 50% OF COMMISSION PAID TO MANISH PATODIA AMOUNTI NG TO RS.2,63,801/- U/S 40A(2) (B) TREATING SAME AS UNREASONABLE AND EXCESSIVE. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING AN A DDITION OF RS.37,644/- AS NOTIONAL INTEREST INCOME BY OBSER VING THAT APPELLANT HAS CHARGED LESSER RATE OF INTEREST . 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING DISA LLOWANCE OF 10% OF EXPENSES INCURRED UNDER THE HEAD VEHICLE REPAIR AND MAINTENANCE, TELEPHONE EXPENSE AND BUSINESS PROMOTION TREATING SAME AS INCURRED FOR PERSONAL PU RPOSE AS AGAINST 20% DISALLOWED BY LD. A.O. 8. THE LD. AR SUBMITTED THAT THE TRANSACTION AGREEM ENT HAS CLEARLY GIVEN THE MECHANISM AS TO HOW THE COMMISSIO N TO BE FIXED. THUS, THE COMMISSION WAS NOT OUTSIDE THE SCOPE OF T HE TRANSACTION AGREEMENT AS WELL AS THE DOCUMENTS PRODUCED BEFORE THE LOWER AUTHORITIES. SECTION 40A (2) (B) SET OUT THE EXPEN SES OR PAYMENTS WHICH ARE NOT DEDUCTABLE. IN THE PRESENT CASE THERE WAS NO NECESSITY OF INVOKING THE SAME. THOUGH SHRI MANISH PATODIA IS BROTHER OF THE ASSESSEE, YET HE HAS ACTUALLY WORKED FOR THE ASSESSEE. THEREFORE, THE CIT(A) AS WELL AS THE ASSESSING OFFI CER WAS NOT JUSTIFIED FOR INVOKING PROVISIONS OF SECTION 40A (2 ) (B). THE INCENTIVE OF RS. 5,27,602/- TO SHRI MANISH PATODIA WAS PAID O N THE BASIS FIXED PERCENTAGE OF THE TOTAL TURNOVER OF SULPHER A T 0.2% ON TOTAL TURNOVER OF SULPHER OF RS.26,38,01,114/-. THIS COM MISSION WAS PAID FOR CARRYING OUT THE ADMINISTRATIVE ACTIVITIES AND PERFORMING MANAGERIAL ACTIVITIES. MERELY BECAUSE THE COMMISSIO N WAS PAID TO SHRI MANISH PATODIA WAS COMPUTED ON TURNOVER BASIS AS FIXED PERCENTAGE THEREOF AND THE COMMISSION PAID TO OTHER S ON THE BASIS OF QUANTITY SOLD CANNOT BE THE BASIS TO HOLD THAT T HE PAYMENT AS EXCESSIVE AND UNREASONABLE. THE OBSERVATIONS OF AS SESSING OFFICER WAS THAT THE COMMISSION PAID TO SHRI MANISH PATODIA IS ON THE DIFFERENT FOOTING IN COMPARISON TO THE OTHER PARTIE S AND IS THUS NOT DERIVE FROM THE ACTUAL FACT OF THE CASE. IT IS ALS O TO BE NOTED THAT TDS HAS BEEN DULY DEDUCTED AND THE SAME WAS CLAIMED BY SHRI MANISH PATODIA IS ALSO ASSESSED TO THE SAME JURISDI CTION. BY ADDING THE AMOUNT IN THE HANDS OF THE ASSESSEE WOUL D AMOUNT TO DOUBLE TAXATION OF THE SAME TRANSACTION. 9. THE LD. DR RELIED UPON THE ORDERS OF THE ASSESSI NG OFFICER AND THE CIT(A). THE ASSESSING OFFICER HAS RIGHTLY DISAL LOWED 50% OF THE COMMISSION PAID TO SHRI MANISH PATODIA ON THE BASIS THAT SAME IS COVERED UNDER SECTION 40A(2)(B) OF THE ACT, THE PAY MENT WAS EXCESSIVE AND HE WAS NEITHER EMPLOYEE NOR A SHAREHO LDER IN THE BUSINESS OF THE ASSESSEE. DURING THE APPELLATE PROC EEDINGS, THE ASSESSEE HAS REITERATED THAT THE INCENTIVE OF RS. 5 ,27,602/- TO SH. MANISH PATODIA WAS PAID ON THE BASIS OF FIXED PERCE NTAGE OF THE TOTAL TURNOVER OF SULPHUR @ 0.2% ON TOTAL TURNOVER OF SULPHUR OF RS. 26,38,01,114/-. THIS COMMISSION WAS PAID FOR CARRYI NG OUT THE ADMINISTRATIVE ACTIVITIES AND PERFORMING MANAGERIAL FUNCTIONS. THE BASIS FOR PAYMENT OF COMMISSION BY THE ASSESSEE IS VAGUE AND NOT AS PER ACCEPTED BUSINESS PRACTICES. COMMISSION/INCE NTIVE IS PAID FOR INCREASING THE SALES TURNOVER OF A BUSINESS. NO THING WAS BROUGHT ON RECORD TO SHOW THAT ANY SUCH SERVICES WE RE RENDERED BY SH. MANISH PATODIA. IN REGARD TO OTHER PERSONS THE PAYMENT WAS DIRECTLY AS A PERCENTAGE OF THE TOTAL SALES. THE CO NTRIBUTION OF SHRI MANISH PATODIA TO THE TURNOVER OR OF PROVIDING ADMI NISTRATIVE AND MANAGERIAL FUNCTION WAS NOT PROVED BY THE ASSESSEE. THEREFORE, THE CIT(A) RIGHTLY SUSTAINED THE ADDITION MADE BY THE A SSESSING OFFICER. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED RELE VANT DOCUMENTS ANNEXED TO THE PAPER BOOK WHICH WAS PRODU CED BEFORE THE LOWER AUTHORITIES AS WELL. GROUND NO. 1 IS GENE RAL IN NATURE. AS REGARDS TO GROUND NO. 2, IT IS FOUND THAT THE TRANS ACTION AGREEMENT HAS CLEARLY GIVEN THE MECHANISM AS TO HOW THE COMMI SSION TO BE FIXED. THUS, THE COMMISSION WAS NOT OUTSIDE THE SC OPE OF THE TRANSACTION AGREEMENT AS WELL AS THE DOCUMENTS PROD UCED BEFORE THE LOWER AUTHORITIES. SECTION 40A (2) (B) SET OUT THE CIRCUMSTANCES IN WHICH CERTAIN EXPENSES OR PAYMENTS ARE NOT DEDUC TABLE. IN THE PRESENT CASE THERE WERE NO CIRCUMSTANCES FOR INVOKI NG THE SAME. THOUGH SHRI MANISH PATODIA IS BROTHER OF THE ASSESS EE, HE HAS ACTUALLY WORKED FOR THE ASSESSEE. THEREFORE, THE CI T(A) AS WELL AS THE ASSESSING OFFICER WAS NOT JUSTIFIED FOR INVOKI NG PROVISIONS OF SECTION 40A (2) (B). THE INCENTIVE OF RS. 5,27,602/ - TO SHRI MANISH PATODIA WAS PAID ON THE BASIS FIXED PERCENTAGE OF T HE TOTAL TURNOVER OF SULPHER AT 0.2% ON TOTAL TURNOVER OF SULPHER OF RS.26,38,01,114/-. THIS COMMISSION WAS PAID AS SER VICES, BOTH ADMINISTRATIVE AND MANAGERIAL RENDERED BY MR. MANIS H PATODIA FOR THEIR SALES. MERELY BECAUSE THE COMMISSION WAS PAID TO SHRI MANISH PATODIA WAS COMPUTED ON TURNOVER BASIS AS FI XED PERCENTAGE THEREOF AND THE COMMISSION PAID TO OTHER S WERE ON THE BASIS OF QUANTITY SOLD CANNOT BE THE BASIS TO HOLD THAT THE PAYMENT AS EXCESSIVE AND UNREASONABLE. THE OBSERVATIONS OF ASSESSING OFFICER WAS THAT THE COMMISSION PAID TO SHRI MANISH PATODIA IS ON THE DIFFERENT FOOTING IN COMPARISON TO THE OTHER PA RTIES AND IS THUS NOT GENUINE IN CORRECT FACTS OF THIS CASE. IT IS A LSO TO BE NOTED THAT TDS HAS BEEN DULY DEDUCTED AND THE SAME WAS CLAIMED BY SHRI MANISH PATODIA IS ALSO ASSESSED TO THE SAME JURISDI CTION. MERELY BECAUSE A PERSON IS NOT AN EMPLOYEE BUT RENDERED TH E PROFESSIONAL SERVICES CANNOT BE THE BASIS TO HOLD THAT THE PAYME NT MADE TO SUCH PERSON IS EXCESSIVE AND UNREASONABLE. THE 0.2 % CO MMISSION FOR THE TURNOVER OF RS.26,38,01,114/- CANNOT BE HELD AS EXCESSIVE OR UNREASONABLE PAYMENT. IN RESULT, GROUND NO. 2 IS ALLOWED. 11. AS RELATES TO GROUND NO. 3, THE LD. AR SUBMITTE D THAT THE FUNDS BORROWED WERE MAINLY BROUGHT FORWARDED FROM P REVIOUS ASSESSMENT YEAR AND NO DISALLOWANCE OF INTEREST WAS MADE IN PAST. THE INTEREST BEARING FUNDS WERE BROUGHT FORWARD FRO M PREVIOUS YEAR AND WERE CROSS VERIFIABLE FROM THE SCHEDULE OF UNSE CURED LOANS ATTACHED TO THE AUDITED BALANCE SHEET OF THE PROPRI ETARY FIRM M/S. ATUL INTERNATIONAL AS ON 31.03.2008 WHEREIN PARTY W ISE DETAILS OF FUNDS BORROWED ARE APPEARING WITH THE CORRESPONDING OUTSTANDINGS AS ON 31.03.2007. SIMILARLY BORROWED FUNDS TAKEN IN PERSONAL CAPACITY ARE DULY APPEARING IN THE PERSONAL STATEME NT OF AFFAIRS OF THE ASSESSEE AS ON 31.03.2007 AND 31.03.2008. THE B ORROWED FUNDS WERE MAINLY AVAILED DURING THE PREVIOUS ASSES SMENT YEARS AND BROUGHT FORWARD TO THE YEAR UNDER ASSESSMENT. D URING THE YEAR UNDER CONSIDERATION LOANS WERE GIVEN TO SMT. JAYA P ATODIA AND MR. MANISH PATODIA (HUF) FROM THE FUNDS AVAILABLE IN PE RSONAL CAPACITY AND NOT OUT OF THE FUNDS BORROWED WHICH IS EVIDENT FROM THE PERSONAL STATEMENT OF AFFAIRS. 12. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND ORDER OF CIT(A). THE LD. DR FURTHER SUBMITTED THAT THE ASSES SEE HAS SHOWN INTEREST INCOME FROM RELATED PARTIES AT 9% AND PAID INTEREST ON LOANS RECEIVED FROM RELATED PARTIES AT 12%. IN CASE OF UNRELATED PARTIES THE INTEREST CHARGED IS 12%. THE ASSESSING OFFICER MADE ADDITION OF RS. 37,644/- AS NOTIONAL INTEREST RECEI VED FROM RELATED PARTIES. THERE IS NO PROVISION OF CHARGING NOTIONAL INTEREST UNDER INCOME TAX ACT, 1961. HOWEVER, THE INTEREST EXPENSE WHICH WAS CLAIMED AS INCURRED FOR THE PURPOSE OF BUSINESS MAY BE DISALLOWED UNDER SECTION 37(1) OF THE ACT. THE ASSESSEE CLAIME D THAT THE LOANS WERE BROUGHT FORWARD FROM PREVIOUS YEAR AND THEREFO RE THERE WAS NO DIRECT NEXUS BETWEEN THE TAKING OF LOANS AND ADVANC ING LOANS. HOWEVER, THE MERE FACT THAT THESE WERE BROUGHT FORW ARD BALANCES CANNOT BE A GROUND FOR LACK OF NEXUS BETWEEN THE LO ANS RECEIVED AND LOANS GIVEN. THE COPY OF THE BANK ACCOUNT FILED BY THE ASSESSEE SHOWS THAT THE ASSESSEE HAS MIXED FUNDS THAT IS IN THE SAME BANK ACCOUNT THE SALE PROCEEDS AS WELL AS LOANS TAKEN BY THE ASSESSEE ARE DEPOSITED. THERE IS NO DEMARCATION OF THE NATUR E OF FUNDS. THE ASSESSEE CHARGED A LESSER RATE OF INTEREST FROM HIS RELATIVES COMPARED TO THE INTEREST BEING PAID BY HIM ON THE L OANS TAKEN. PROPORTIONATE AMOUNT OF INTEREST I.E. RS. 37,644/- WAS RIGHTLY DISALLOWED BY THE ASSESSING OFFICER. 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED RELE VANT DOCUMENTS. THE FUNDS BORROWED WERE MAINLY BROUGHT F ORWARDED FROM PREVIOUS ASSESSMENT YEAR AND NO DISALLOWANCE O F INTEREST WAS MADE IN PAST. THE INTEREST BEARING FUNDS WERE BROUG HT FORWARD FROM PREVIOUS YEAR AND WERE CROSS VERIFIABLE FROM THE SC HEDULE OF UNSECURED LOANS ATTACHED TO THE AUDITED BALANCE SHE ET OF THE PROPRIETARY FIRM M/S. ATUL INTERNATIONAL AS ON 31.0 3.2008 WHEREIN PARTY WISE DETAILS OF FUNDS BORROWED ARE APPEARING WITH THE CORRESPONDING OUTSTANDING AS ON 31.03.2007. SIMILAR LY BORROWED FUNDS TAKEN IN PERSONAL CAPACITY ARE DULY APPEARING IN THE PERSONAL STATEMENT OF AFFAIRS OF THE ASSESSEE AS ON 31.03.20 07 AND 31.03.2008. THE BORROWED FUNDS WERE MAINLY AVAILED DURING THE PREVIOUS ASSESSMENT YEARS AND BROUGHT FORWARD TO TH E YEAR UNDER ASSESSMENT. DURING THE YEAR UNDER CONSIDERATION LOA NS WERE GIVEN TO SMT. JAYA PATODIA AND MR. MANISH PATODIA (HUF) F ROM THE FUNDS AVAILABLE IN PERSONAL CAPACITY AND NOT OUT OF THE F UNDS BORROWED WHICH IS EVIDENT FROM THE PERSONAL STATEMENT OF AFF AIRS. WHEN THE ASSESSEE HAS BOTH INTEREST FREE FUNDS AND INTEREST BEARING FUNDS, THE PRESUMPTION IS THAT INTEREST FREE FUNDS ARE UTI LIZED FOR INTEREST FREE LOANS. HENCE, THERE IS NO JUSTIFICATION FOR MA KING THE PROPORTIONATE DISALLOWANCE. THE ASSESSING OFFICER F AILED TO ESTABLISH THE NEXUS BETWEEN THE INTEREST BEARING BORROWED FUN DS AND THEIR UTILIZATION FOR LOAN GIVEN AT A LESSER RATE OF INTE REST. THE ADDITION WAS MADE PURELY ON NOTIONAL INTEREST INCOME WHICH N EITHER WAS CHARGED NOR THE SAME ACCRUED TO THE ASSESSEE. IN RE SULT, GROUND NO. 3 IS ALLOWED. 14. AS RELATES TO GROUND NO.4, THE LD. AR SUBMITS T HAT NEITHER THE ASSESSEE WAS CONFRONTED NOR ANY SHOW CAUSE NOTICE W AS ISSUED TO THE ASSESSEE, BEFORE MAKING THE ADDITION OF RS.56,0 52/- FOR DISALLOWANCE ON AD-HOC BASIS, BEING 20% EXPENSES IN CURRED UNDER THE HEAD VEHICLE REPAIR AND MAINTAIN, TELEPHONE EXP ENSES AND BUSINESS PROMOTION WHILE HOLDING THE SAME AS PERSON AL IN NATURE, BY THE LD. A.O. THE ASSESSING OFFICER HAS NOT POIN TED OUT ANY SPECIFIC EXPENSES WHICH AS PER HIM WERE INCURRED FO R PERSONAL PURPOSES. THE EXPENSES WERE FULLY VOUCHED AND DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS MAINTAINED BY THE ASS ESSEE SEPARATELY FOR HIS PROPRIETARY CONCERN NAMELY M/S A TUL INTERNATIONAL. THE BOOKS OF ACCOUNTS WERE DULY AUD ITED U/S 44AB OF THE ACT AND NOTHING ADVERSE WAS REPORTED BY THE TAX AUDITOR REGARDING PERSONAL USE OF THE BUSINESS ASSETS. 15. THE LD. DR RELIED ON THE ASSESSMENT ORDER AND C IT (A)S ORDER. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE HAD CLAIMED AN EXPENSE OF RS. 86,908/- UNDER THE HEAD VEHICLE RUNN ING AND MAINTENANCE AND RS. 58,113/- UNDER THE HEAD TELEPHO NE AND TELEX AND RS. 1,35,239/- AS BUSINESS PROMOTION EXPENSES. ON THE BASIS THAT NO RECORD HAD BEEN MAINTAINED REGARDING DETAIL S OF THE USE OF VEHICLE AND TELEPHONE, IT WAS HELD THAT SOME ELEMEN T OF PERSONAL USE COULD NOT BE RULED OUT, THE ASSESSING OFFICER M ADE A DISALLOWANCE OF 20% OF THE TOTAL CLAIM. THE ASSESSE ES BUSINESS CONCERN IS A PROPRIETORSHIP CONCERN. IN SUCH A SCEN ARIO THE CIT(A) HAS RIGHTLY RESTRICTED IT TO 10% OF THE TOTAL CLAIM . 16. WE HAVE HEARD BOTH THE PARTIES. THE EXPENSES IN CURRED BY THE ASSESSEE ARE PROPERLY JUSTIFIED BY THE ASSESSEE THR OUGH VOUCHERS. NEITHER THE ASSESSEE WAS CONFRONTED NOR ANY SHOW CA USE NOTICE WAS ISSUED TO THE ASSESSEE BEFORE MAKING THE ADDITION O F RS.56,052/- FOR DISALLOWANCE ON AD-HOC BASIS BEING 20% EXPENSES INCURRED UNDER THE HEAD VEHICLE REPAIR AND MAINTAINANCE, TEL EPHONE EXPENSES AND BUSINESS PROMOTION WHILE HOLDING THE S AME AS PERSONAL IN NATURE BY THE LD. A.O. THE ASSESSING O FFICER HAS NOT POINTED OUT ANY SPECIFIC EXPENSES WHICH AS PER HIM ARE PERSONAL EXPENSES. THE EXPENSES WERE FULLY VOUCHED AND DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS MAINTAINED BY THE ASS ESSEE SEPARATELY FOR HIS PROPRIETARY CONCERN NAMELY M/S A TUL INTERNATIONAL. THE BOOKS OF ACCOUNTS WERE DULY AUD ITED U/S 44AB OF THE ACT AND NOTHING ADVERSE WAS REPORTED BY THE TAX AUDITOR REGARDING PERSONAL USE OF THE BUSINESS ASSETS. ALL EXPENSES WERE SUPPORTED BY THE BILLS AND VOUCHERS. THE SAME WERE BEFORE THE ASSESSING OFFICER. THE DISALLOWANCE ON AD-HOC BASIS CANNOT BE SUSTAINED IN THE FACT AND CIRCUMSTANCES OF THIS CAS E. HENCE THE SAME IS DLETED. IN RESULT, GROUND NO.4 IS ALLOWED. 17. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 08 TH OF DECEMBER, 2016. (J. SUDHAKAR REDDY) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: 08/12/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 01/06/2016 PS 2. DRAFT PLACED BEFORE AUTHOR 02/06/2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 08.12.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 08.12.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.