South India Surgicals Co. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 3088/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8898 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 22-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL IRS
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Depreciation; Bad and doubtful debts; Commercial expediency; Revenue expenditure
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . , ! . ' , # $ BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBE R AND SHRI. G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 3088/MDS/2014 # % &% / ASSESSMENT YEAR : 2010-2011. M/S. SOUTH INDIA SURGICALS CO. LTD, NEW NO.117, OLD NO.65, WALLAJAH ROAD, ANNA SALAI, CHENNAI 600 002. [PAN AAACS 5091E ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(3) CHENNAI. ( / APPELLANT) ( /RESPONDENT) '( ) * / APPELLANT BY : SHRI. A.S. SRIRAMAN, ADVOCATE +,'( ) * /RESPONDENT BY : DR. B. NISCHAL, IRS, JCIT. ' ) - / DATE OF HEARING : 17-05-2016 .& ) - / DATE OF PRONOUNCEMENT : 01-07-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VI, CHE NNAI IN ITA NO.1381/13-14/A-VI, DATED 29.10.2014 FOR THE ASSESS MENT YEAR 2010- ITA NO.3088/MDS/2016. :- 2 -: 2011 PASSED U/S.143(3) AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE HAS RAISED THREE SUBSTANTIVE GROUNDS ( I) LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION OF CLAIM OF BAD DEBTS U/S.36(1)(VII) OF TH E ACT RS.1,84,99,595/- (II) DISALLOWANCE OF EXPENDITURE I NCURRED FOR GETTING CERTIFICATION OF ISO 9002 RS.2,07,075/- AND (III) DISALLOWANCE OF EXPENSES ON CONVEYANCE AND TRAVELLING BY THE EMPLOY EES/ DIRECTORS QUANTIFIED AT 15% RS.8,71,375/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DEALERSHIP AND MANUFACT URING OF SURGICAL EQUIPMENTS & INSTRUMENTS AND FILED RETURN OF INCOM E ON 15.10.2010 WITH TOTAL INCOME OF RS.2,32,80,610/- AND THE RETU RN OF INCOME WAS PROCESSED U/S.143(1) OF THE ACT. SUBSEQUENTLY UNDE R CASS, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S. 143(2) A ND 142(1) OF THE ACT ARE ISSUED ALONGWITH QUESTIONNAIRE. IN COMPLIANCE TO NOTICE, THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE APPEARED AND FILED DETAILS AND PRODUCED BOOKS OF ACCOUNT. THE LD. ASSESSING OFFIC ER VERIFIED DETAILS AND CORRECTNESS OF EXPENDITURE AND ADDITIONS TO FI XED ASSETS. FURTHER, THE LD. ASSESSING OFFICER ON PERUSAL OF BOOKS OF AC COUNTS FOUND THAT THE ASSESSEE HAS CLAIMED BRANCHWISE BAD DEBTS WRI TTEN OFF AGGREGATING TO B1,84,99,595/- AS UNDER:- ITA NO.3088/MDS/2016. :- 3 -: SL.NO BRANCHES AMOUNT (B) 1 AHMEDABAD 111370.00 2 BANGALORE 49702.92 3 CALCUTTA 3253287.72 4 CHENNAI 4997827.21 5 DELHI 2273472.16 6 HYDERABAD 2283546.45 7 MUMBAI 5412806.62 8 PONDICHERRY 82727.00 9 TRIVANDRUM 34855.00 TOTAL 18499595.08 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT MO RE THAN 95% OF BAD DEBTS PERTAIN TO GOVERNMENT MEDICAL COLLEGES, GOVERNMENT HOSPITALS AND RAILWAY HOSPITALS. THE ASSESSEE HAS CHOSEN TO WRITTEN OFF THE AMOUNT DUE FROM THE GOVERNMENT, BUT NOTHING WAS PLACED ON RECORD IN THE ASSESSMENT PROCEEDINGS TO JUSTIFY IRR ECOVERABLE TO DEBTS AS TIME BARRED AND WRITTEN OFF IN THE YEAR. BAD D EBTS ARE MEANT FOR DEBTS WHICH ARE BONAFIDE AND TO HAVE UNDERSTOOD BY ASSESSEE AS BAD. FURTHER, THERE IS NO EVIDENCE WAS FILED TO PRO VE THAT THE DEBTS ARE BAD NEITHER FROM THE SUNDRY DEBTORS WHO COULD NOT P AY THE OUTSTANDING AMOUNTS DUE TO FINANCIAL INSTABILITY OR ANY REFUSAL IN MAKING PAYMENTS AND IT IS DIFFICULT TO TREAT THE G OVERNMENT BEING THE DEBTOR AS UNABLE TO PAY AND IT IS A PREPOSTEROUS T O CONSIDER THAT THE GOVERNMENT WAS NOT IN A POSITION TO DISCHARGES THE ACKNOWLEDGED DEBT. FURTHER, IT WAS SURPRISING THAT THE ASSESSE E COMPANY CONTINUED BUSINESS TRANSACTIONS WITH THE GOVERNMENT HOSPITALS YEAR AFTER YEAR ITA NO.3088/MDS/2016. :- 4 -: AND SUPPLYING SURGICAL INSTRUMENTS. IN ASSESSEES OWN CASE THE JURISDICTIONAL HIGH COURT CONSIDERED AMENDMENT IN S EC. 36(1)(VII) OF THE ACT WITH EFFECT FROM 01.04.1989. THE ASSESSEE HAS ACCEPTED THE DECISION OF THE HIGH COURT IN SURGICAL CO. VS. ACIT (2006) 287 ITR 62 (MAD). BUT THE ASSESSEE FURTHER RELIED ON THE DECISION OF APEX COURT IN THE CASE OF TRF LTD. VS. CIT (2010) 323 ITR AND THE LD. ASSESSING OFFICER BASED ON ABOVE FINDINGS AND APEX COURT DE CISION OF M/S.TRF LTD CASE (SUPRA ) IS OF THE OPINION THAT THE CASE LAW IS INAPPLICAB LE TO GOVERNMENT DEBTS AND THE ASSESSEE COMPANY HAS ACCE PTED THE JUDICIAL DECISION OF SURGICAL CO. (SUPRA) AND NO APPEAL WAS PREFERRED BY THE ASSESSEE IN APEX COURT. THE LD. ASSESSING OFFICER FURTHER EMPHASIZED THAT THE GOVERNMENT DEBTS CANNOT BE WRIT TEN OFF AND DISALLOWED THE CLAIM OF B1,84,99,595/- UNDER PROVIS IONS OF SEC. 36(1)(VII) OF THE ACT WITH OTHER ADDITIONS AND PASS ED ORDER U/S.143(3) OF THE ACT DATED 28.03.2013. AGGRIEVED BY THE ORDE R, THE ASSESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX ( APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE ARGUED THE GROUNDS AND EXPLAINED TH AT THE LD. ASSESSING OFFICER HAS NOT APPRECIATED THE FACTS AND ERRED IN DISALLOWING THE CLAIM AS THE ASSESSEE IS ELIGIBLE TO WRITE OFF U/S.36(1)(VII) OF THE ACT WITHOUT CONSIDERING THE FACTS THAT THE ASSESSEE COMPANY HAS SUPPLIED SURGICAL EQUIPMENTS TO GOVERNMENT MEDICAL HOSPITALS AND THE ITA NO.3088/MDS/2016. :- 5 -: SALE AMOUNTS WERE NOT RECEIVED AND DUE TO NON RECE IPT OF THE SAID AMOUNT, THE ASSESSEE COMPANY HAS CHOSEN TO WRITTEN OFF IN THE BOOKS OF ACCOUNT RELYING ON THE DECISION OF APEX COURT IN THE CASE OF M/S. TRF LIMITED (SUPRA ) WHICH IS SUFFICIENT TO CLAIM BAD DEBTS. THE FINDINGS OF THE LD. ASSESSING OFFICER ARE DISTINGUI SHABLE. THE APEX COURT HAS NOT MENTIONED SPECIFICALLY ABOUT THE GOVE RNMENT DEBTS AND LD. AUTHORISED REPRESENTATIVE EXPLAINED THAT THE AS SESSEE COMPANY HAS WRITTEN OFF DEBTS IN THE FINANCIAL ACCOUNTS DUE TO LIMITATION OF TIME BARRED. THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) CONSIDERED THE SUBMISSIONS AND THE FINDINGS OF THE LD. ASSESSING O FFICER REFERRED AT PAGE 6 TO 8 OF HIS ORDER INCLUDING THE FACTUAL SUB MISSIONS OF THE ASSESSEE. FURTHER, THE LD. COMMISSIONER OF INCOME T AX (APPEALS) RELIED ON THE EVIDENCE PRODUCED IN HEARING PROCEEDI NGS THAT MOST OF THE DEBTS PERTAINING TO GOVERNMENT HOSPITALS OF EA RLIER YEARS AND THE ASSESSEE COMPANY COULD NOT PRODUCE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THE CLAIM THAT THE DEBTS HAVE BECOME BAD , IRRESPECTIVE OF BAD DEBTS HAVE WRITTEN OFF IN THE BOOKS OF ACCOUNT. FURTHER, THERE IS NO EVIDENCE FILED BEFORE THE LD. ASSESSING OFFICE R OR IN APPELLATE PROCEEDINGS TO PROVE THAT GOVERNMENT HOSPITALS ARE NOT CAPABLE TO MAKE PAYMENTS TO THE ASSESSEE AND CORRESPONDENCE IN RESPECT OF AMOUNT RECEIVABLE. THE ASSESSEE COMPANY HAS WRITTE N OFF DEBTS RELYING ON THE APEX COURT DECISION WHICH ARE APPLI CABLE TO THE ITA NO.3088/MDS/2016. :- 6 -: BONAFIDE CLAIM OF BAD DEBTS WERE AS THE ASSESSEE COMPANY UNILATERALLY, WITHOUT TAKING ANY STEPS FOR RECOVE RY HAS CLAIMED DEDUCTION. THE ASSESSEES IN OWN CASE ACCEPTED T HE DECISION OF THE JURISDICTIONAL HIGH COURT CONFIRMING THE DISALLOWAN CE OF LD. ASSESSING OFFICER U/S.36(1)(VII) OF THE ACT. THE LD. COMMISS IONER OF INCOME TAX (APPEALS) CONCURRED WITH THE FINDINGS OF THE LD. AS SESSING OFFICER AND CONFIRMED THE DISALLOWANCE. AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE F ILED AN APPEAL BEFORE TRIBUNAL. 5. BEFORE US, THE LD.AUTHORISED REPRESENTATIVE REITERA TED THE SUBMISSIONS MADE IN ASSESSMENT AND APPELLATE PROCEE DINGS AND THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING DISALLOWANCE OF BAD DEBTS AND FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THAT THE RATIO LAID DOWN IS B ASED ON THE ASSESSEES OWN CASE IS NOT ACCEPTABLE. THE LD. COM MISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE MADE A DISTINCTION WITH PROPER REASONS AND AS THE CLAIM OF THE ASSESSEE IS A WITHI N THE COMMERCIAL EXPEDIENCY OR ALTERNATIVELY THE CLAIM TO BE ALLOWED AS BUSINESS LOSS AND PRAYED FOR ALLOWING THE APPEAL. ITA NO.3088/MDS/2016. :- 7 -: 6. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES ORDER AND JUDICIA L HIGH COURT DECISION AND OPPOSED TO THE GROUNDS. 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERI AL ON RECORD AND JUDICIAL DECISION CITED. THE ONLY GRIEV ANCE OF THE ASSESSEE BEING DISALLOWANCE OF BAD DEBTS. THE ASSESSEE HAS WRITTEN OFF BAD DEBTS IN THE BOOKS OF ACCOUNT IRRESPECTIVE OF THE F ACT THAT THE SURGICAL EQUIPMENTS WERE SUPPLIED TO GOVERNMENT MEDICAL COLL EGE, HOSPITAL AND RAILWAY. THE ASSESSEE APPLYING THE PROVISION S OF LAW AS DEBTS HAVE BECOME TIME BARRED AND CLAIMED DEDUCTION U/S. 36(1)(VII) OF THE ACT. THE ASSESSEE WAS NOT ABLE TO EXPLAIN WITH ANY EVIDENCE HOW THE GOVERNMENT DEBTS HAS BECOME BAD. FURTHER, THE ASS ESSEE COMPANY CONTINUED ITS BUSINESS TRANSACTION SUBSEQUENT ASSE SSMENT YEAR BY SUPPLYING THE GOODS AND SURGICAL EQUIPMENTS TO THE GOVERNMENT HOSPITAL. THE ASSESSEE COULD NOT PROVE THAT WITH A NY CORRESPONDENCE OR EVIDENCE OF INABILITY OR INCAPACITY OF THE DEBTO R FOR PAYMENTS. THE REVENUE IN THE ASSESSMENT PROCEEDINGS DEALT ON THE PROVISIONS AND FURTHER FOUND THAT IN ASSESSEES OWN CASE 287 ITR 62 (MAD) WHICH CONFIRMED THE DISALLOWANCE OF BAD DEBTS BY LD. ASS ESSING OFFICER. EVEN BEFORE US THE LD. AUTHORISED REPRESENTATIVE COULD N OT SATISFY WITH ANY DOCUMENTARY EVIDENCE HOW THE GOVERNMENT DEBTS HAVE BECOME BAD ITA NO.3088/MDS/2016. :- 8 -: DEBTS EXCEPT WRITING OFF IN THE BOOKS OF ACCOUNTS A ND CLAIMED THE DEDUCTION. WE CONSIDERED THE JUDICIAL FINDINGS OF THE APEX COURT IN TRF LTD VS. CIT 323 ITR 0397 WERE IT WAS HELD THAT AFTER IST APRIL, 1989, IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTAB LISH THAT THE DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF TH E BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSE E. HOWEVER, IN THE PRESENT CASE, THE LD. ASSESSING OFFICER HAS NOT EXA MINED WHETHER THE DEBT HAS, IN FACT BEEN WRITTEN OFF IN ACCOUNTS OF T HE ASSESSEE. THIS EXERCISE HAS NOT BEEN UNDERTAKEN BY THE ASSESSING O FFICER. HENCE, THE MATTER IS REMITTED TO THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION OF THE ABOVE MENTIONED ASPECT ONLY AN D THAT TOO ONLY TO THE EXTENT OF THE WRITE OFF. FURTHER THE ASSESSE E COULD NOT ESTABLISH IN ASSESSMENT PROCEEDINGS WITH COMPLETE INFORMATION OF WRITING OFF BAD DEBTS, WHICH LD. ASSESSING OFFICER COULD VERIFY AND SATISFY WITH THE ASSESSEES ACTION. THEREFORE CONSIDERING APPA RENT FACTS, MATERIAL ON RECORD AND JUDICIAL DECISION, WE REMIT THE DISPU TED ISSUE TO THE FILE OF THE LD. ASSESSING OFFICER TO VERIFY WHETHER THE DEBT IS WRITTEN OFF IN THE ASSESSEE BOOKS OF ACCOUNT AND IF IT SO ALLOW TH E DEDUCTION AS CLAIMED BY THE ASSESSEE IN ACCORDANCE WITH THE RATI O LAID DOWN BY THE HONBLE APEX COURT IN CASE OF TRF LTD (SUPRA) DISCU SSED HEREINABOVE. IF SUCH DEBT IS NOT WRITTEN OFF IN THE BOOKS OF ACC OUNT PASS APPROPRIATE ITA NO.3088/MDS/2016. :- 9 -: ORDERS AS PER MERIT AND LAW AFTER PROVIDING OPPORT UNITY ADEQUATE OF BEING HEARD AND GROUND OF THE ASSESSEE IS PARTLY AL LOWED. 8. ON THE SECOND GROUND, THE ASSESSEE HAS CLAIMED EXPENDITURE OF B2,07,075/- FOR ISO 9002 CERTIFICATE AS REVENUE EXPENDITURE WHEREAS THE LD. ASSESSING OFFICER TREAT ED THE SAME AS INTANGIBLE ASSET AND ALLOWED DEPRECIATION @25% AND DISALLOWED THE EXCESS CLAIM. 9. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT ISO CERTIFICATE HAS F OR LIMITED LIFE AND NOT ONE TIME PAYMENT AND HAS TO BE RENEWED REGULAR LY. THE LD. CIT(A) CONSIDERED THE ARGUMENTS AND LETTER FILED B Y THE ASSESSEE DATED 7.10.2014 EXPLAINING THAT THERE IS NO ENDURIN G BENEFIT RECEIVED AND ISO CERTIFICATE ISSUED FOR A PERIOD OF THREE Y EARS ONLY AND RELIED ON THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. INFOSYS TECHNOLOGIES LTD 349 ITR 582. BUT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONCLUDES THAT THE CLAIM OF EXPENDITURE IS IN THE NATURE OF INTANGIBLE ASSETS UNDER PROVISIONS OF SEC.32(1)(II) OF THE ACT. SIMILAR TO KNOW- HOW, PATENTS, COPYRIGHTS AN D DISTINGUISHED THE JUDICIAL DECISION AND CONFIRMED THE ORDER OF THE L D. ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOM E TAX (APPEALS) THE ASSESSEE FILED AN APPEAL BEFORE TRIBUNAL ITA NO.3088/MDS/2016. :- 10 -: 10. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE ARGUE D THAT THE GROUNDS EXPLAINING THE NEED OF ISO CERTIFICATE 9002 . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN D ISTINGUISHING THE JUDGMENT AND ALSO THE FACT OF LIMITED LIFE AND IS IN THE NATURE OF REVENUE EXPENDITURE ALLOWABLE U/S.37(1) OF THE ACT AND CANNOT FIT INTO THE PROVISIONS OF INTANGIBLE ASSET AS THE BEING LIF E IN SHORTER AND LICENSE, HAS TO BE RENEWED REGULARLY AND PRAYED FO R ALLOWING THE APPEAL. 11. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND OPPOSED TO THE GROUNDS. 12. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD AND JUDICIAL DECISION CITED. THE LD. AUTHOR ISED REPRESENTATIVE CONTENTION THAT ISO 9002 IS A QUALITY CERTIFICATION AND THE PERFORMANCE OF THE ASSESSEE COMPANY NEEDS TO BE OBTAIN CERTIFI CATE FOR THE BUSINESS OF THE COMPANY. WHEREAS LD. DEPARTMENTAL R EPRESENTATIVE ARGUED THAT IT TAKES THE CHARACTERISTIC OF INTANGIB LE ASSETS IN THE NATURE OF LICENSE AND ELIGIBLE FOR DEPRECIATION @2 5%. WE PERUSED THE ASSESSMENT ORDER AND COMMISSIONER OF INCOME TAX (AP PEALS) ORDER, THE EXPENDITURE OF ISO 9002 IS A LICENSE FEE WITH L IMITED VALIDITY OF THREE YEARS AND DOES NOT HAVE ENDURING BENEFIT AND SHOULD BE ITA NO.3088/MDS/2016. :- 11 -: RENEWED BEFORE THE END OF VALID PERIOD. THE LD. AUT HORISED REPRESENTATIVE RELIED ON THE HIGH COURT DECISION BU T LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DISTINGUISHED AS NOT AP PLICABLE TO THE ASSESSEES CASE. WE ARE OF THE OPINION THAT THE EXP ENDITURE TAKES THE CHARACTER OF REVENUE AND THE REASONS BEING LICENSE FEES IS PAID FOR LESS THAN THREE YEARS AND RENEWED. CERTIFICATE REF LECTS THE STANDARD AND QUALITY CONTROL MEASURES OF THE ASSESSEE COMPAN Y AND THEREFORE WE SET ASIDE THE ORDER OF COMMISSIONER OF INCOME TA X (APPEALS) ON THIS GROUND AND DIRECT THE LD. ASSESSING OFFICER TO ALLOW DEDUCTION. THIS GROUND OF THE ASSESSEE IS ALLOWED. 13. IN THE LAST GROUND, THE ASSESSEE HAS CLAIMED CONVEY ANCE AND TRAVELLING EXPENDITURE IN THE BOOKS OF ACCOUNT AND THE ASSESSEE COMPANY IN THE ASSESSMENT PROCEEDINGS WAS ASKED TO PRODUCE LOG BOOK OF VEHICLES. IN COMPLIANCE, THE LD. ASSESSING OFFICER ON VERIFICATION FOUND THAT SOME OF THE EXPENDITURE ARE INCURRED FOR PERSONAL USAGE AND THEREFORE DISALLOWED 15% BEING B8,71,375/-. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEA L BEFORE COMMISSIONER OF INCOME TAX (APPEALS). 14. IN THE APPELLATE PROCEEDINGS, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF ASSESSI NG OFFICER. ITA NO.3088/MDS/2016. :- 12 -: AGGRIEVED BY THE COMMISSIONER OF INCOME TAX (APPEAL S) ORDER, THE ASSESSEE FILED AN APPEAL BEFORE TRIBUNAL. 15. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE ARGUE D THAT ADHOC DEDUCTION WAS MADE ON CONVEYANCE AND TRAVEL E XPENSES WITHOUT ANY REASONS. THE ASSESSEE PRODUCED LOGBOOK MAINTAINED FOR OFFICIAL VEHICLES AND USED ONLY FOR OFFICIAL PURPOS E AND THE LD. ASSESSING OFFICER HAS VERIFIED THE LOG BOOKS AND NOT POINTED OUT ANY SPECIFIC INSTANCE OF PERSONAL USAGE AND UNILATERALLY DISALLO WED 15% OF EXEMPTION . THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) ALSO CONFIRMED THE FINDINGS THAT THE VEHICLE WAS USED FO R PERSONAL USE OF EMPLOYEES AND PRAYED FOR ALLOWING THE APPEAL. 16. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELI ED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) A ND OPPOSED TO THE GROUNDS. 17. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD. THE LD. AUTHORISED REPRESENTATIVE CONTENTIO N BEING DISALLOWANCE OF PERSONAL EXPENDITURE IS WITHOUT ANY BASIS, JUSTIFICATION AND EVIDENCE. THE ASSESSEE COMPANY PRODUCED LOG BO OKS IN THE ASSESSMENT PROCEEDINGS AND THE LD. ASSESSING OFFICE R HAVING VERIFIED FOUND THAT THERE ARE SOME EXPENSES CLAIMED AS PERSO NAL IN NATURE AND NO PROPER EXPLANATIONS ARE PRODUCED OR CONTROVERT I N ASSESSMENT ITA NO.3088/MDS/2016. :- 13 -: PROCEEDINGS EXCEPT THAT THE ASSESSEE WAS USING TH E VEHICLE EXCLUSIVELY FOR OFFICIAL PURPOSE. EVEN IN APPELLA TE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE COULD NOT PRODUCE ANY EVI DENCE TO PROVE THAT EXPENDITURE ON VEHICLE WAS USED EXCLUSIVELY WH OLLY FOR THE BUSINESS. ON PERUSAL OF THE ASSESSMENT ORDER, WE FO UND THE LD. ASSESSING OFFICER HAS ONLY ESTIMATED THE DISALLOWAN CE WITHOUT REFERRING TO ANY SPECIFIC INSTANCE. SO, WE ARE OF THE OPINI ON THAT CONSIDERING THE VOLUME OF BUSINESS, NATURE OF EXPENSES AND THE CLAIM AND THE EXPLANATION FILED IN THE ASSESSMENT PROCEEDING, WE DIRECT THE LD. ASSESSING OFFICER TO RESTRICT THE CLAIM OF DISALLOW ANCE @7.5% OF EXPENDITURE AND ALLOW THE DEDUCTION AND THE GROUND OF THE ASSESSEE IS PARTLY ALLOWED. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 1ST DAY OF JULY , 2016, AT CHENNAI. SD/- SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER ( . ) (G. PAVAN KUMAR) !' / JUDICIAL MEMBER / CHENNAI / / DATED: 01.07.2016 KV 0 ) +#-12 32&- / COPY TO: 1. '( / APPELLANT 3. ' 4- () / CIT(A) 5. 2 78 +#-# / DR 2. +,'( / RESPONDENT 4. ' 4- / CIT 6. 8% 9 / GF