The ACIT, Circle-6, Surat V. M/s. J.B. Exports, Surat

ITA 1932/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5541 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 26-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U S RAINA
• Assessee Lawyers: JAYMIN GANDHI
• Keywords: Business expenditure; Revenue expenditure; Capital expenditure
• Section: 10(10D); 37(1); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' BEFORE SHRI MUKUL SHRAWAT, JM & SH. A N PAHUJA, AM ITA NO.1932/AHD/2008 (ASSESSMENT YEAR:-2005-06) ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-6, ROOM NO. 623,AAYAKAR BHAVAN,MAJURA GATE, SURAT V/S M/S J B EXPORTS, 270, BINDAL HOUSE, SURAT KADODARA ROAD, KUMBHARIA, SURAT [PAN: AABFJ 9320M] [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI U S RAINA, DR ASSESSEE BY:- SHRI JAYMIN GANDHI, AR O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATED 05-03-2008 OF THE LD. CIT(APPEALS)-IV, SURAT, RAIS ES THE FOLLOWING GROUNDS:- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADD ITION OF RS.3,17,011/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF KEYMAN INSURANCE. [2] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A)-IV, SURAT HAS ERRED IN RESTRICTING THE A DDITION OF TELEPHONE EXPENSES TO RS.89,500/- INSTEAD OF RS.1,7 5,503/- MADE BY THE ASSESSING OFFICER. [3] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDI TION OF DISALLOWANCE OF RS.62,871/- BEING, 20% OF TRAVELLIN G & CONVEYANCE EXPENSES MADE BY THE ASSESSING OFFICER. [4] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A)-IV, SURAT HAS ERRED IN RESTRICTING THE A DDITION OF DISALLOWANCE OF ADMINISTRATIVE AND MAINTENANCE EXPE NSES TO A LUMPSUM AMOUNT OF RS.50,000/- INSTEAD OF RS.2,16,91 4/- MADE BY THE ASSESSING OFFICER. ITA NO.1932/AHD/2008 2 [5] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A), SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. [6] IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A)-III, SURAT MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER REST ORED. 2 ADVERTING FIRST TO GROUND NO.1 IN THE APPEAL, FAC TS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT THE RETURN DECLARING INCOME OF RS.35,44,944/-FILED ON 27.7.2005 BY THE ASSESSEE, I N THE BUSINESS OF EXPORT OF FABRICS, AFTER BEING PROCESSED U/S 143(1 ) OF THE INCOME- TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT ], WAS SELECTED FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 29-06-2006. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER [AO IN SHORT] NOTICED THAT THE ASSESSEE CLAIMED A N AMOUNT OF RS.3,17,011/- ON ACCOUNT OF INSURANCE PREMIA PAID ON LIFE OF PARTNERS, TREATING THE PARTNERS AS A KEYMEN . TO A QUERY BY THE AO, THE ASSESSEE EXPLAINED THAT THE INSURANCE PREMIUM W AS PAID ON THE LIFE OF PARTNERS BY TREATING THEM AS KEYMEN. THE AO WAS OF THE OPINION THAT THE EXPENDITURE ON ACCOUNT OF PREMIA UNDER KEYMAN INSUR ANCE POLICY TAKEN ON THE LIFE OF THE PARTNERS WAS NOT ALLOWABLE AS REVENUE E XPENDITURE. IN RESPONSE TO A SHOW CAUSE NOTICE, THE ASSESSEE DID NOT FURNISH ANY SATISFACTORY REPLY .IN THESE CIRCUMSTANCES, THE AO DID NOT ACCEPT THE CONTENTION S OF THE ASSESSEE ON THE GROUND THAT PROPOSER AS WELL PREMIUM PAYER UNDER TH E KEYMAN INSURANCE POLICY ,IS EMPLOYER WHILE THE LIFE TO BE INSURED IS THAT OF AN EMPLOYEE. THE BENEFIT, IN THE EVENT OF A CLAIM, GOES TO THE EMPLOYER. ACCORDING TO THE AO, THE EXISTENCE OF AN EMPLOYER EMPLOYEE RELATIONSHIP IS SINE-QUA-NON FO R THE DEDUCTIBILITY OF KEYMAN INSURANCE PREMIA. SINCE SUCH KIND OF RELATIONSHIP D ID NOT EXIST BETWEEN THE FIRM AND THE PARTNERS, EXPENDITURE ON ACCOUNT OF PREMIA UNDER A KEYMAN INSURANCE POLICY ON THE LIFE OF PARTNERS BESTOWED PERSONAL BE NEFITS TO THE PARTNERS, THE AO OPINED. SINCE PERSONAL EXPENDITURE WAS NOT DEDUCTIB LE, THE AO DISALLOWED THE CLAIM FOR DEDUCTION, RELYING INTER ALIA, UPON THE D ECISION IN THE CASE OF CIT VS KHODIDAS MOTIRAM PANCHAL (1986) 161 ITR 99 (GUJ) A ND C B D T CIRCULAR NO. 762 DATED 18-2-1998. ITA NO.1932/AHD/2008 3 3. ON APPEAL, THE LEARNED CIT(A) DELETED THE DISAL LOWANCE WITH THE FOLLOWING OBSERVATIONS:- I HAVE CONSIDERED THE SUBMISSIONS AND FIND TH AT THE DECISION OF HON'BLE GUJARAT HIGH COURT RELIED UPON BY THE AO PE RTAINS TO AY. 1971-72. SUBSEQUENT TO THAT SECTION 2(24)(XI) WAS AMENDED WI TH EFFECT FROM 1.10.1996 BY THE FINANCE ACT, 1996 AS A RESULT OF W HICH ANY SUM RECEIVED UNDER A KEYMAN INSURANCE POLICY INCLUDING THE SUM A LLOCATED BY WAY OF BONUS ON SUCH POLICY WOULD FORM PART OF THE TOTAL I NCOME AND THE EXPRESSION KEYMAN INSURANCE POLICY HAS THE SAME MEA NING ASSIGNED TO IT IN THE EXPLANATION-2 IN THE CLAUSE 10D OF SECTION 1 0 WHICH SAYS THAT ANY SUM RECEIVED UNDER A KEYMAN INSURANCE POLICY WOULD FORM PART OF THE TOTAL INCOME OF A PERSON. IT IS ALSO IMPORTANT TO N OTE THAT FIRM IS AN ARTIFICIAL ENTITY CONSTITUTED BY THE PARTNERS WHO ARE SEPARATE ENTITIES ALTHOUGH JOINTLY AND SEVERALLY LIABLE TO THE FIRM BUT A PARTNERSHIP FIRM WOULD HAVE AN INSURABLE INTEREST IF BY THE DEATH OF ANY PARTNER, IT WILL SUSTAIN A LOSS OR A PECUNIARY LIABILITY. I HAVE ALSO GONE THROUGH THE I NSURANCE REGULATORY AND DEVELOPMENT AUTHORITY ACT (IRDA), 1999 WHICH SPECIF ICALLY ALLOWS REDUCTION OF INSURANCE PREMIUM UNDER PARTNERSHIP IN SURANCE AS EXPENSES U/S 37(1) OF THE I.T. ACT. IT IS SEEN THAT THE AMEN DMENT TO SEC. 2(24)(XI) HAS RESULTED IN AN AMOUNT RECEIVED ON MATURITY OR O N THE DEATH OF A PARTNER UNDER THE KEYMAN INSURANCE SCHEME AS INCOME CHARGEABLE TO TAX. BY THE SAME LOGIC, THE PREMIUM PAID FOR OBTAIN ING SUCH INSURANCE POLICY WOULD BE AN EXPENDITURE ALLOWABLE U/S 37(1) OF THE I.T. ACT. FURTHER, THE AO'S OBSERVATION THAT SUCH PREMIUM COULD BE ALL OWED ONLY IF AN EMPLOYEE-EMPLOYER RELATIONSHIP EXISTED BETWEEN THE PREMIUM PAYER AND THE KEYMAN IS ALSO WITHOUT MERITS SINCE AS PER EXPL ANATION TO SECTION 10(10D), 'KEYMAN INSURANCE POLICY MEANS A LIFE INSU RANCE POLICY TAKEN BY A PERSON ON THE LIFE OF ANOTHER PERSON WHO IS OR WAS THE EMPLOYEE OF THE FIRST MENTIONED PERSON OR IS OR WAS CONNECTED I N ANY MANNER WHATSOEVER WITH THE BUSINESS OF FIRST MENTIONED PER SON.' IN THE INSTANT CASE, THE FIRST MENTIONED PERSON IS THE PARTNERSHIP FIRM WHILE THE POLICY HAS BEEN TAKEN ON THE LIFE OF THE PARTNER WHO IS THE SE COND MENTIONED PERSON. THEREFORE, THE AO'S ACTION IN DISALLOWING THE INSUR ANCE PREMIUM PAID BY THE FIRM UNDER KEYMAN INSURANCE POLICY IS NOT IN OR DER AND THE ADDITION IS DIRECTED TO BE DELETED. THE CBDT CIRCULAR READ IN I TS ENTIRETY IS ALSO IN FAVOUR OF THE APPELLANT. 4. THE REVENUE IS NOW IN APPEAL AGAINST THE AFORESA ID FINDINGS OF THE LD. CIT(A).THE LEARNED DR MERELY SUPPORTED THE ORDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE RELIED ON THE FINDINGS OF THE LD. CIT(A) IN THE LIGHT OF DECISION DATED 6.3. 2009 OF THE ITAT ITA NO.1932/AHD/2008 4 AHMEDABAD BENCH-D IN THE CASE OF ACIT VS. M/S GEM A RT, SURAT IN ITA NO.1722/AHD/2008 FOR THE AY2005-06. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE ITAT AHMEDABAD BENCH-D( TO WHICH ONE OF US WAS A PARTY) WHILE ADJUDICATING A SIMILAR CLA IM IN THE CASE OF M/S GEM ART(SUPRA) CONCLUDED IN THEIR ORDER DATED 06-03-2009 AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES AN D GONE THROUGH THE FACTS OF THE CASE. THE AO DISALLOWED THE CLAIM FOR DEDUCTI ON MERELY ON THE GROUND THERE IS NO EMPLOYER EMPLOYEE RELATIONSHI P BETWEEN THE PARTNERS AND RELIED UPON THE CIRCULAR NO. 762 DATE D 18-2-1998 , WHICH READS AS UNDER: TAXATION OF A SUM RECEIVED UNDER TH E KEYMAN INSURANCE POLICY 14.1 KEYMAN INSURANCE POLICY OF THE LIFE INSURANCE CORPORATION OF INDIA, ETC. PROVIDES FOR AN INSURANCE POLICY TAKEN BY A BUSINESS ORGANIZATION OR A PROFESSIONAL ORGANIZATION ON THE LIFE OF AN EMPLOYEE, IN ORDER TO PROTECT THE BUSINESS AGAINST THE FINANC IAL LOSS, WHICH MAY OCCUR FROM THE EMPLOYEES PREMATURE DEATH. THE KEY MAN IS AN EMPLOYEE OR A DIRECTOR, WHOSE SERVICES ARE PERCEIVE D TO HAVE A SIGNIFICANT EFFECT ON THE PROFITABILITY OF THE BUSI NESS. THE PREMIUM IS PAID BY THE EMPLOYER. 14.2 THERE WERE SOME DOUBTS ON THE TAXABILITY OF TH E INCOME INCLUDING BONUS, ETC. FROM SUCH POLICY AND ALSO REG ARDING THE TREATMENT OF THE PREMIUM PAID WHETHER IT SHOULD B E ALLOWED AS A CAPITAL EXPENDITURE OR AS REVENUE EXPENDITURE. THE FINANCE (NO.2) ACT, 1996, THEREFORE, LAYS DOWN THE TAX TREATMENT O F THE KEYMAN INSURANCE POLICY. 14.3 CLAUSE (10D) OF S.10 OF THE IT ACT EXEMPTS CERTAIN INCOME FROM TAX. THE FINANCE (NO.2) ACT, 1996, AMENDS CL. (10D) OF S.10 TO EXCLUDE ANY SUM RECEIVED UNDER A KEYMAN INSURANC E POLICY INCLUDING THE SUM ALLOCATED BY WAY OF BONUS ON SUCH POLICY FOR THIS PURPOSE. 14.4 THE FINANCE (NO.2) ACT, 1996, ALSO LAYS DOWN T HAT THE SUMS RECEIVED BY THE SAID ORGANIZATION ON SUCH POLICIES, BE TAXED AS BUSINESS PROFITS; THE SURRENDER VALUE OF THE POLIC Y , ENDORSED IN FAVOUR OF THE EMPLOYEE (KEYMAN), OR THE SUM RECEIVE D BY HIM AT ITA NO.1932/AHD/2008 5 THE TIME OF RETIREMENT BE TAKEN AS PROFITS IN LIEU OF SALARY FOR TAX PURPOSES; AND IN CASE OF OTHER PERSONS HAVING NO EM PLOYER- EMPLOYEE RELATIONSHIP, THE SURRENDER VALUE OF THE P OLICY OR THE SUM RECEIVED UNDER THE POLICY BE TAKEN AS INCOME FROM O THER SOURCES AND TAXED ACCORDINGLY. THE PREMIUM PAID ON THE KEYM AN INSURANCE POLICY IS ALLOWED AS BUSINESS EXPENDITURE. 14.5 THE AMENDMENTS TAKE EFFECT FROM THE 1 ST DAY OF OCTOBER 1996. A BARE PERUSAL OF THE AFORESAID CIRCULAR REVEALS T HAT THERE IS NOTHING IN THE CIRCULAR WHICH DEBARS THE ALLOWANCE OF DEDUCTION O F PREMIA PAID ON THE LIFE OF PARTNERS BY THE FIRM. IN PARA 14.4 OF THE AFORESAID CIRCULAR IT IS ONLY MENTIONED THAT IN CASE OF OTHER PERSONS HAVING NO EMPLOYER- EMPLOY EE RELATIONSHIP, THE SURRENDER VALUE OF THE POLICY OR THE SUM RECEIVED U NDER THE POLICY BE TAKEN AS INCOME FROM OTHER SOURCES AND TAXED ACCORDINGLY. A PPARENTLY, ONLY EMPLOYER AND EMPLOYEE RELATIONSHIP IS NOT ENVISAGED TO ALLOW THE PREMIUM PAID ON KEYMAN INSURANCE POLICY AS BUSINESS EXPENDITURE AND THERE CAN EXIST OTHER TYPES RELATIONSHIP. IT IS ALSO PERTINENT TO NOTE TH E TERM PERSON OR PERSONS HAVE BEEN USED IN THE EXPLANATION TO SECTION 10(10D) WHI CH MAY REFER TO NATURAL PERSON OR ARTIFICIAL I.E. LEGAL PERSONS OR ENTITIES TREATED AS HAVING LEGAL ENTITY UNDER THE PROVISIONS OF INCOME TAX ACT, 1961 AND IN THJS VIEW OF THE MATTER, THE A.O.S CONCLUSION IN DISALLOWING THE CLAIM IS NEIT HER IN ACCORDANCE WITH THE AFORESAID CIRCULAR NOR IN ACCORDANCE WITH LAW. 5.1 NOW ADVERTING TO THE DECISION IN THE CASE O F P. G. ELECTRONICS (SUPRA) RELIED UPON BY THE LD. AR, WHEREIN IT WAS HELD AS U NDER: IT MAY BE SEEN FROM PARA 14.2 OF THE CIRCULAR THAT THE BOARD WAS AWARE OF THE DOUBTS RELATING TO THE TREATMENT O F THE PREMIUM PAID IN RESPECT OF A KEYMAN INSURANCE POLICY ISSUED BY THE LIC OF INDIA AND HAS ACCORDINGLY CLARIFIED, TO PUT THE DOU BTS AT REST, IN THE LAST SENTENCE OF PARA 14.4 THAT THE PREMIUM PAID O N THE KEYMAN INSURANCE POLICY IS ALLOWED AS BUSINESS EXPENDITURE . IN THE LIGHT OF THE ABOVE AMENDMENTS AND THE CIRCUL AR CLARIFYING THE POSITION RELATING TO THE ALLOWABILITY OF THE PREMIU M PAID ON KEYMAN INSURANCE POLICY, THE CIT, IN MY VIEW, WAS NOT JUST IFIED IN DIRECTING THE AO TO DISALLOW THE PREMIUM PAID BY THE ASSESSEE FIRM IN RESPECT OF THE LIFE OF PARTNER ANURAG GUPTA, ASSURED UNDER THE KEYMAN INSURANCE POLICY, AS CAN BE SEEN FROM PARA 2 OF THE ORDER OF THE CIT. THEREFORE, THE ORDER OF THE CIT CANNOT BE SUST AINED AS IT RUNS COUNTER TO THE AMENDMENTS MADE TO THE ACT AS CLARIF IED BY THE CIRCULAR ISSUED BY THE CBDT. IT IS WELL-SETTLED THA T CIRCULAR ISSUED BY THE CBDT REGARDING THE EXECUTION OF THE ACT ARE BIN DING ON THE IT AUTHORITIES. THE AMENDED LAW IS APPLICABLE TO THE Y EAR UNDER ITA NO.1932/AHD/2008 6 CONSIDERATION. THE CIT WAS, THEREFORE, NOT JUSTIFIE D IN ASSUMING JURISDICTION TO REVISE THE ASSESSMENT UNDER S.263, CONTRARY TO THE LAW AND CIRCULAR ISSUED BY THE BOARD. HE COULD NOT HAVE CONSIDERED THE ASSESSMENT ERRONEOUS SINCE THE ALLOWANCE OF THE PREMIUM AS A DEDUCTION AS BUSINESS EXPENDITURE WAS IN CONFORMITY WITH THE CIRCULAR OF THE BOARD WHICH WAS BINDING ON THE AO. EVEN ON MERITS, HIS VIEW THAT THE PREMIUM PAID ON KEYMAN INSURANCE POLICY SHOULD BE DISALLOWED IS NOT TENABLE, ALSO BECAUSE OF THE CIRCULAR CITED ABOVE. I THEREFORE CANCEL THE ORDER UNDER S.263 ON BOTH COUNTS AND ALLOW THE APPEAL. 5.2. IN THE LIGHT OF THE AFORESAID DECISION, CIRCUL AR DATED 18-2-1998 AND EXPLANATION TO SECTION 10(10D) OF THE ACT , WE ARE OF THE OPINION THAT THE PREMIUM PAID UNDER THE KEYMAN INSURANCE POLICY ON THE LIFE OF PARTNERS CAN NOT BE DISALLOWED. THEREFORE, THERE IS NO GROU ND FOR INTERFERENCE WITH THE FINDINGS OF THE LEARNED CIT(A). ACCORDINGLY, GR OUND NO.1 IS DISMISSED. 5.1 IN THE LIGHT OF VIEW TAKEN IN THE AFORESAI D DECISION, WE ARE OF THE OPINION THAT THE PREMIUM PAID UNDER THE KEYMA N INSURANCE POLICY ON THE LIFE OF PARTNERS CAN NOT BE DISALLOWED. THEREFORE , THERE IS NO GROUND FOR INTERFERENCE WITH THE FINDINGS OF THE LEARNED CIT(A ). ACCORDINGLY, GROUND NO.1 IS DISMISSED. 6. GROUND NO.2 RELATES TO RESTRICTION OF DISALLOWAN CE OF TELEPHONE EXPENSES TO RS.89,500/- INSTEAD OF RS.1,75,503/- MA DE BY THE AO WHILE GROUND NO.3 RELATE TO DELETION OF DISALLOWANC E OF 20% OF THE EXPENDITURE ON TRAVELLING AND CONVEYANCE. GROUND NO . 4 RELATES TO RESTRICTION OF DISALLOWANCE OF ADMINISTRATIVE AND M AINTENANCE EXPENSES TO RS. 50,000/- INSTEAD OF RS. 2,16,914/- MADE BY THE AO. THE AO DISALLOWED 20% OF THE EXPENDITURE TOWARDS TELECOMMUNICATION, TRAVELLING & CONVEYANCE, OTHER A DMINISTRATIVE AND REPAIR AND MAINTENANCE EXPENSES ON THE GROUND T HAT DETAILS WERE NOT MENTIONED IN THE SELF SERVING VOUCHERS WHI LE PERSONAL USE OF TELEPHONES/MOBILES WAS NOT DENIED. 7. ON APPEAL, THE LEARNED CIT(A) RESTRICTED TH E DISALLOWANCE TO 20% OF THE EXPENDITURE OF RS. 4,47,031/- ON TELEPH ONES WHILE ITA NO.1932/AHD/2008 7 HOLDING THAT NO DISALLOWANCE OUT OF POSTAGE AND COU RIER CHARGES CAN BE MADE. THE DISALLOWANCE OUT OF TRAVELLING AND CONVEYANCE WAS DELETED ,BEING IN THE NATURE OF RE-IMBURSEMENT OF TRAVELLING AND CONVEYAN CE CHARGES TO THE STAFF. SIMILARLY, DISALLOWANCE OUT OF ADMINISTRATIVE AND R EPAIR/MAINTENANCE EXPENSES WAS RESTRICTED BY THE LD. CIT(A) TO RS.50,000/- ON THE GROUND THAT SUFFICIENT DETAILS WERE NOT AVAILABLE ON SOME OF THE VOUCHERS. 8. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LD. CIT(A). THE LEARNED DR MERELY RELIED ON THE ORDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE A SSESSEE SUPPORTED THE FINDINGS OF THE LD. CIT(A). TO A QUERY BY THE B ENCH, THE LD. AR ADMITTED THAT THE ASSESSEE IS NOT IN APPEAL AGAINST THE FINDINGS OF THE LD. CIT(A). 9. AFTER HEARING BOTH THE PARTIES AND CONSIDERING THE FACTS OF THE CASE, WE FIND THAT THE REVENUE HAVE NOT REFERRED US TO ANY M ATERIAL WARRANTING INTERFERENCE WITH THE FINDINGS OF THE LD. CIT(A). SINCE PERSONAL USE OF TELEPHONE BY THE ASSESSEE AND HIS FAMILY MEMBERS OR STAFF HAS NO T BEEN DENIED NOR IT WAS CLAIMED THAT THE ASSESSEE OR HIS FAMILY HAD ANY I NDEPENDENT TELEPHONES FOR PERSONAL USE, THE LD. CIT(A) RESTRICTED THE DISAL LOWANCE TO 20% OF THE EXPENSES ON TELEPHONES/MOBILES, EXCLUDING POSTAGE AND COURIE R CHARGES. THE DISALLOWANCE OUT OF TRAVELLING AND CONVEYANCE WAS RIGHTLY DELETE D , BEING IN THE NATURE OF RE- IMBURSEMENT OF TRAVELLING AND CONVEYANCE CHARGES TO THE STAFF. SIMILARLY, RESTRICTION OF DISALLOWANCE OUT OF ADMINISTRATIVE AND REPAIR/MAINTENANCE TO RS.50,000/- IS REASONABLE. THEREBEING NO MATERIAL WHICH COULD ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INC LINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A) .ACCORDINGLY, GROUND NOS. 2 T O 4 IN THE APPEAL ARE DISMISSED. 10. GROUND NOS. 5 & 6, BEING MERE PRAYER, DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE, THEREFORE, DISMISSED . ITA NO.1932/AHD/2008 8 11. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 30-07-2010 SD/- SD/- (MUKUL SHRAWAT) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 30-07-2010 COPY OF THE ORDER FORWARDED TO: 1. M/S J B EXPORTS, 270, BINDAL HOUSE, SURAT KADODA RA ROAD, KUMBHARIA, SURAT 2. THE ACIT, CIRCLE-6, ROOM NO. 623, AAYAKAR BHAVAN , MAJURA GATE, SURAT 3. CIT CONCERNED 4. CIT(A)-IV, SURAT 5. THE DR, BENCH-A, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD