Jyoti Metal & Allied Industries (P) Ltd, New Delhi V. ITO, New Delhi

ITA 3473/DEL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81975 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 15-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Corroborative evidences
• Section: 234B; 133(6); 37(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI A.T. VARKEY : JUDICIAL MEMBER ITA NO. 1824 & 3473 /DEL/201 0 ASSTT. YR S : 200 5 - 06 & 2007 - 08 JYOTI METAL & ALLIED INDUSTRIES VS. INCOME - TAX OFFICER, (P) LTD., C - 22, NDSE PART - II, WARD 4(2), NEW DELHI. NEW DELHI. PAN: AABCJ 3790 J ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI GAUTAM JAIN CA ASSESSEE BY : SHRI VIVEK NANGIA SR . DR DATE OF HEARING : 2 2 - 09 - 2014 DATE OF ORDER : 31 - 1 0 - 2014. O R D E R PER S.V. MEHROTRA, A.M: - THESE APPEALS, PREFERRED BY THE ASSESSEE , ARE DIRECTED AGAI NST SEPARATE ORDERS OF THE LD. CIT(A) - VII, NEW DELHI , RELATING TO A.YRS. 200 5 - 0 6 & 200 7 - 08 . COMMON GROUNDS HAVE BEEN RAISED FOR ADJUDICATION IN BOTH THE APPEALS, THEREFORE, THE SAME WERE HEARD TOGETHER AND DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1824/DEL/2014 : ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT ON FACTS AND IN LAW THE ORDERS PASSED BY THE A.O. AND PARTLY CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 2 (HEREINAFTER REFERRED TO AS CIT(A) ) ARE BAD IN LAW AND VOID AB INITIO. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE OF CLAIM OF DEDUCTIONS OF RS. 4,63,367/ - REPRESENTING THE INTEREST PAID ON BORROWED CAPITAL UTILIZED FOR CONSTRUCTION OF HOUSE PROPERTY AND ELIGIBLE FOR DEDUCTION UNDER SECTION 24(1)(VI) OF T HE ACT. 2.1. THAT THE FINDING COMMISSIONER OF INCOME TAX (APPEALS) THAT THE LIABILITY INCURRED BY THE APPELLANT ON PURCHASE OF MATERIAL FOR CONSTRUCTION OF HOUSE PROPERTY DOES NOT REPRESENT BORROWED CAPITAL BY MECHANICALLY APPLYING THE DECISION OF THE ANDHRA PRADESH H IGH COURT IN THE CASE OF DOONDOO MOHAN RAO VS. CIT (1978) TAX LAW REPORTS 394 AND HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. FOREFIELD PRIVATE LIMITED REPORTED IN 231 ITR 262 WITHOUT GIVING OPPORTUNITY IS MISCONCEIVED, MISPLACED AND CONTR ARY TO THE FACTS AND STATUTORY PROVISIONS OF LAW. 2.2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT ONE THE APPELLANT HAD PROVIDED FOR INTEREST ON THE SUMS BORROWED BY WAY OF PURCHASE OF RAW MATERIAL, IT IS DENOMINATED THA T THERE WAS A RELATIONSHIP OF THE BORROWER AND LENDER BETWEEN THE PARTIES WHO HAD SUPPLIED RAW MATERIAL AND THE APPELLANT AND AS SUCH, INTEREST PAYABLE ON SUCH BORROWED CAPITAL WAS ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 24(1)(VI) OF THE ACT. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCES OF FOLLOWING EXPENSES INCURRED BY THE APPELLANT COMPANY IN THE COURSE OF BUSINESS OF THE APPELLANT COMPANY AND WERE ELIGIBLE DEDUCTION S UNDER SECTION 37(1) OF THE ACT: S.NO. NATURE OF EXPENDITURE AMOUNT OF DISALLOWNCE 1. SALARY 31,800/ - 2. TELEPHONE EXPENSES 6,500/ - 3. SECURITY EXPENSES 24,000/ - 4. CONVEYANCE EXPENSES 14,610/ - 5. STAFF WELFARE EXPENSES 14,780/ - 6. OFFICE EXPENSES 6,670/ - 3 3.1. THAT THE DISALLOWAN C E SO CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ARE BASED ON MERE ASSUMPTIONS AND PRESUMPTIONS AND ON ERRONEOUS ASSUMPTION THAT A PART DISALLOWANCE OF EXPENDITURE IS PERMISSIBLE IN TH E HANDS OF ACCOUNTS IS NOT JUSTIFIED. 3.2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT ONCE THERE IS UNDISPUTEDLY BUSINESS OF THE APPELLANT COMPANY, NO DISALLOWANCE OF EXPENDITURE WAS OTHERWISE WARRANTED AND AS SUCH, CONCLUSION IS ILLEGAL, INVALID AND UNSUSTAINABLE. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN LEVYING INTEREST UNDER SECTION 234B OF THE ACT WHICH IS NOT LEVIABLE ON THE FACTS OF THE INST A NT CASE . 2. BRIEF FACTS FOR A .Y. 2005 - 06 ARE THAT ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1,73,530/ - . THE AO NOTICED THAT COMPANY HAD EARNED RENTAL INCOME OF RS. 19,80,000/ - AND BUSINESS RECEIPTS OF RS. 25,850/ - AND CLAIMED EXPENSES OF RS. 13,74,694/ - . HE NOTED FROM THE COMPUTATION OF INCOME THAT PROPERTY TAX OF RS . 91,950/ - , 30% DEDUCTION FOR REPAI RS OF RS. 5,66,415/ - AND CONSULTANCY CHARGES OF RS. 2,40,000/ - HAD BEEN CLAIMED AS DEDUCTION FROM THE RENTAL RECEIPTS OF RS. 19,80,000/ - AND INCOME FROM HOUSE PROPERTY HAD BEEN DECLARED AT RS. 10,81,635/ - . A NET BUSINE SS LOSS OF RS. 9,08,104/ - HAD BEEN SHOWN AND AFTER SETTING OFF SUCH LOSS AGAINST THE INCOME FROM HOUSE PROPERTY, THE ASSESSEE HAD DECLARED A NET TAXABLE INCOME OF RS. 1,73,530/ - . 2.1. FROM P&L A/C THE AO NOTICED THAT ASSESSEE, INTER ALIA, HAD DEBITED INTE REST TO PARTIES AND CONSULTANCY CHARGES. HE EXAMINED THE DETAILS OF INTEREST DEBITED TO PARTIES AGGREGATING TO RS. 4,63,367/ - , WHICH WAS AS UNDER: 4 S.NO. NAME OF PARTIES AMOUNT IN RS. A. BHATIA CONSTRUCTIONS 1,22,910/ - B. KOMAL INTERIORS 1,16,794/ - C. NATASHA FURNISHERS, PROP. RENU DANG. 93,732/ - D. SONALI ENTERPRISES 42,290/ - E. SUPER SALES (INDIA) 87,641/ - 2.2. THE AO HAD ISSUED NOTICE U/S 133(6) TO VERIFY THE PAYMENT OF INTEREST AS CLAIMED BY THE ASSESSEE. HOWEVER, NOTICES REMAINED UNCOMPLIED. ACCORDINGLY, HE SHOW CAUSED THE ASSESSEE AS TO WHY THIS AMOUNT SHOULD NOT BE DISALLOWED. THE ASSESSEE IN ITS REPLY, INTER ALIA, SUBMITTED THAT INTEREST PAID ON MONEY BORROWED FOR CONSTRUCTION OF BUILDING IS AN ALLOWABLE DEDUCT ION U/S 24 OF THE I.T. ACT. THE ASSESSEE POINTED OUT THAT THESE PARTIES HAD SUPPLIED MATERIALS AND DONE SOME WORK RELATING TO THE CONSTRUCTION OF BUILDING IN FY 2002 - 03 FROM WHICH THE ASSESSEE WAS DERIVING RENTAL INCOME. THE AO AGAIN ISSUED NOTICE U/S 133( 6), CALLING FOR DETAILS OF TRANSACTION MADE BY THEM WITH THE ASSESSEE. HOWEVER, SINCE THERE WAS NO COMPLIANCE FROM M/S SONALI ENTERPRISES AND M/S SUPER SALES (INDIA), OTHER PARTIES ONLY SOUGHT TIME BUT NO DETAILS WERE FILED. THE AO DENIED THE ASSESSEE S CLAIM, INTER ALIA, FOR THE FOLLOWING TWO REASONS: (B) WHEN SPECIFICALLY ASKED, THE ASSESSEE HAS SUBMITTED AS AN AFTERTHOUGHT THAT THIS AMOUNT OF INTEREST IS ALLOWABLE FROM THE HOUSE PROPERTY INCOME AS THE INTEREST WAS PAID ON THE CREDIT BALANCE OF THE PARTIES WHO HAVE DONE CONSTRUCTION WORK OR SUPPLIED MATERIAL FOR CONSTRUCTION. NO PROOF WAS FILED TO SHOW THAT THE CREDITORS HAVE DONE ANY WORK OR SUPPLIED MATERIAL TO THE ASS ESSEE COMPANY. EVEN THE NOTICES U/S 133(6) ISSUED AND SERVED ON CREDITORS PARTIES ON THE ADDRESSES GIVEN BY ASSESSEE REMAINED UNCOMPLIED WITH. (C) AS PER THE PROVISIONS OF SECTION 24 OF THE IT ACT 1961, A DEDUCTION OF INTEREST PAID CAN BE CLAIMED ON BORR OWED CAPITAL AND NOT PAID TO THE CREDITORS. THE ABOVE DISCUSSION ON THE CLAIM OF THE ASSESSEE PUT FORTH AS AN AFTERTHOUGHT HAS BEEN MADE ONLY FOR THE SAKE OF ARGUMENTS. THE FACT REMAINS IS TH A T THE INTER E ST HAS NOT BEEN PAID AND IT IS MERELY 5 CREDITED IN THE ACCOUNTS OF THE PARTIES YEAR TO Y E AR. IT IS ALSO INEXPLICABLE AS TO HOW A PARTY WHO HAS ALREADY SUPPLIED MATERIALS OR PROVIDED SERVICES HAS NOT PRESSED THE ASSESSEE FOR PAYMENT AND THE ASSESSEE ON THE OTHER HAND IS DEBITING INTEREST ON THE AMOUNT SHOWN AS OUTST A NDING. EVEN THE INTEREST PORTION IS NOT BEING PAID BUT MERELY CREDITED IN THE PARTIES ACCOUNT AS BOOK ENTRIES. 2.3. BEFORE LD. CIT(A) , THE ASSESSEE REITERATED ITS SUBMISSIONS AND FURTHER SUBMITTED THAT MONEY OUTSTANDING AT THE CLOSE OF THE YEAR REPRESENTS MONEY BORROWED FOR CONSTRUCTION OF THE BUILDING. THE BILLS, CONFIRMATIONS OF THE PARTIES WERE ALSO FILED. LD. CIT(A) OBSERVED THAT FROM THE BILLS IT WAS EVIDENT THAT MATERIAL HAD BEEN SUPPLIED TO THE ASSESSEE WHICH HAD ALSO RESULTED INTO CONSTRUCTION OF BUILDING AND THE INTEREST WAS PAYABLE BY THE ASSESSEE TO SUCH PARTIES IN RESPECT OF THE MATERIAL SUPPLIED TO THE ASSESSEE FOR THE PURPOSE OF CONSTRUCTION OF THE B UILDING. HE ALSO NOTED THAT THE MATERIALS WERE NOT SUPPLIED IN THE ASSESSMENT YEAR UNDER APPEAL BUT IN THE PRECEDING ASSESSMENT Y E AR. HE REFERRED TO THE PROVISIONS OF SECTION 24(1)(IV), WHICH READS AS UNDER: 24. DEDUCTIONS FROM INCOME FROM HOUSE PROPERTY (1) INCOME CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY SHALL, SUBJECT TO THE PROVISIONS OF SUB - SECTION (2), BE COMPUTED AFTER MAKING THE FOLLOWING DEDUCTIONS, NAMELY: - (VI) WHERE THE PROPERTY HAS BEEN ACQUIRED, CONSTRUCTED REPAIRED, RENEWED O R RECONSTRUCTED WITH BORROWED CAPITAL, THE AMOUNT OF ANY INTEREST PAYABLE ON SUCH CAPITAL. 2.4. HE DENIED THE ASSESSEE S CLAIM OF ALLOWING DEDUCTION IN RESPECT OF INTEREST PAYABLE TO SUNDRY CREDITORS, INTER ALIA, OBSERV ING THAT THE RELATIONSHIP OF A B ORROWER AND A LENDER DID NOT EXIST . HE RELIED ON THE DECISION IN THE CASE OF DUNDOO MADAN MOHAN RAO VS. CIT (1978) TAX LR 394 (A) AND HAS POINTED OUT AS UNDER IN REGARD TO THIS DECISION: IN THE S AID CASE, THE ASSESSEE WAS A COMMON PARTNER IN TWO FIRMS, NAMELY (I) PENTAGON FIRM AND (II) PENTAIAH FIRM. THE ASSESSEE HAD PURCHASED A HOUSE PROPERTY BELONGING TO PENTAGON FIRM FOR A SUM 6 OF RS. 2,00,000/ - . OVER AND ABOVE THIS, THE ASSESSEE HAD ALSO UNDERT AKEN TO PAY A SUM OF RS. 1,45,000/ - TO ONE OF THE CREDITORS OF THE SAID FIRM. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 24(1)(VI) IN RESPECT OF INTEREST PAID BY HIM TO THE SAID CREDITOR. IT WAS HELD TH A T THERE WAS NO NEXUS OR CONNECTION BETWEEN THE PURC HASE CONSIDERATION OF RS. 2,00,000/ - AND THE UNDERTAKING GIVEN BY THE ASSESSEE TO PAY RS. 1,45,000/ - . THUS, IT COULD NOT BE SAID THAT THIS AMOUNT OF RS. 1,45,000/ - WAS BORROWED TOWARDS PURCHASE OF PROPERTY. THEREFORE, IT WAS HELD THAT SECTION 24(1)(VI) HAS NO APPLICATION TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.5. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US 3. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORD OF THE CASE. THE SHORT POINT FOR CONSIDERATION IS WHETHER THE INTEREST CREDITED TO SUNDRY CREDITOR S ACCOUNT PAR TAKES THE CHARACTER OF INTEREST PAYABLE AS CONTEMPLATED U/S 24( B ) OR NOT. IT CANNOT BE DENIED THAT FOR THE RELATIONSHIP OF LENDER (CREDITOR) AND BORROWER (ASSESSEE) , IT IS NOT NECESSARY THAT THERE SHOULD BE ACTUAL FLOW OF MONEY BETWEEN LENDER AND BORROWER , BUT THE BORROWING CAN TAKE PLACE IN DIFFERENT FORMS ALSO. THE TRUE NATURE OF RELATIONSHIP HAS TO BE CONSIDERED AND NO RESTRICTIVE MEANING CAN BE ASSIGNED TO THE TERM BORROWED CAPITAL IN SECTION 24( B ). IF THERE IS DIRECT NEXUS BETWEEN THE INTEREST PAYMENT AND CONSTRUCTION OF PROPERTY, WHICH IN THE PRE S ENT CASE IS THROUGH CREDITORS, BECAUSE THEY HA D SUPPLIED MATERIAL FOR CONSTRUCTION, THEN THE SAID INTEREST WOULD COME WITHIN THE AMBIT OF SECTION 24( B ). AS FAR AS RELIANCE ON THE JUDGME NT IN DUNDOO MADAN MOHAN RAO (SUPRA) IS CONCERNED, WE ARE OF THE OPI NION THAT THE SAID DECISION IS NOT AT ALL APPLICABLE TO THE FACTS OF THE PRESENT CASE BECAUSE THERE WAS NO NEXUS OR CONNECTION BETWEEN THE PURCHASE CONSIDERATION OF RS. 2 LACS AND THE UNDERTAKING GIVEN BY THE ASSESSEE TO PAY RS. 1,45,000/ - . IN THE PRESENT CASE THE ASSESSEE S CLAIM IS THAT INTEREST IS PAYABLE TO SUNDRY CREDITORS. THEREFORE, IN PRINCIPLE WE AGREE WITH THE ASSESSEE THAT INTER E ST PAYABLE TO SUNDRY CREDITORS , WHO SUPPLIED MATERIAL FOR CONSTRUCTION OF THE PROPERTY , IS AN ALLOWABLE DEDUCTION U/S 24( B ). 7 4. FROM OUR EARLIER DISCUSSION OF THE ASSESSMENT ORDER, IT IS EVIDENT THAT ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM REGARDING SUPPLY OF MATERIAL BY ALLEGED CREDITORS, INASMUCH AS THE AO, INTER ALIA, OBSERVED THAT THE INTEREST HAD NOT BEEN PAID AND IT WAS MERELY CREDITED IN THE ACCOUNTS OF THE PARTIES YEAR AFTER YEAR. THEREFORE, WE RESTORE THE MAT T ER TO THE FILE OF AO FOR VERIFICATION OF BILLS, CONFIRMATION OF PARTIES ETC. WHICH WERE FILED BEFORE LD. CIT(A) AND ALSO TO VERIFY WHETHER THE PAYMENT OF INTEREST HAD BEEN M ADE TO PARTIES IN SUBSEQUENT YEARS OR NOT , AS CLAIMED BY ASSESSEE. 5. APROPOS GROUND NO S . 3 , 3.1 & 3.2 , FACTS IN BRIEF, ARE THAT AO HAD DISALLOWED VARIOUS EXPENSES CLAIMED BY THE ASSESSEE U/S 37(1) OF THE ACT. IN APPEAL, LD. CIT(A) , INTER ALIA, OBSERVING THAT ASSESSEE HAD NOT BEEN ABLE TO FULLY ESTABLISH THE FACTS NECESSARY TO SUPPORT ITS C LAIM FOR DEDUCTION U/S 37(1) TO THE COMPLETE EXTENT OF 100%, RESTRICTED THE DISALLOW ANCE TO THE EXTENT OF 10% OUT OF SALARY CLAIMED TO HAVE BEEN PAID TO THE EMPLOYEES . LD. CIT(A) FURTHER RESTRICTED DISALLOWANCE , AND ON ESTIMATE BASIS, TO RS. 6,500/ - AS A GAINST 11,500/ - ON ACCOUNT OF TELEPHONE EXPENSES; RS. 24,000/ - AS AGAINST 54,000/ - ON ACCOUNT OF SECURITY EXPENSES; RS. 14,610/ - AS AGAINST 24,610/ - ON ACCOUNT OF CONVEYANCE EXPENSES; RS. 14,780/ - AS AGAINST 19,780/ - ON ACCOUNT OF STAFF WELFARE EXPENSES; AND RS. 6,670/ - AS AGAINST RS. 12,670/ - ON ACCOUNT OF OFFICE EXPENSES. HAVING HEARD BOTH THE PARTIES, WE SEE NO REASON TO INTERFERE IN THE CONCLUSION ARRIVED AT BY THE LD. CIT(A) ON THESE COUNTS. ACCORDINGLY, GROUNDS OF APPEAL NOS. 3, 3.1 AND 3.2 STAND DISMISSED. 6. APROPOS C HARGING OF INTEREST U/S 234B RAISED IN GROUND NO. 4, THE SAME IS CONSEQUENTIAL. L D. AO SHALL RECALCULATE THE CHARGING OF INTEREST U/S 234B, IF ANY, WHILE GIVING EFFECT TO APPELLATE ORDER. 8 7. IN THE RESULT, ASSESSEE S APPEAL IS PARTLY ALLOWED STATISTICAL PURPOSE. ITA NO. 3473/DEL/2010 (A.Y. 2007 - 08): 1. THAT ON FACTS AND IN LAW THE ORDERS PASSED BY THE A.O. AND PARTLY CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) (HEREINAFTER REFER RED TO AS CIT(A) ) ARE BAD IN LAW AND VOID AB INITIO. 2 . THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCES OF FOLLOWING EXPENSES INCURRED BY THE APPELLANT COMPANY IN THE COURSE OF BUSINESS OF THE APPELLANT COMPANY AND WERE ELIGIBLE DEDUCTIONS UNDER SECTION 37(1) OF THE ACT: S.NO. NATURE OF EXPENDITURE AMOUNT OF DISALLOW A NCE 1. SALARY EXP. 3 7 , 2 00/ - 2. SECURITY EXPENSES 22,000/ - 3. PROFESSIONAL CHARGES 10,000/ - 4 . TRAVELLING EXPENSES 50,000 / - TOTAL 1,19,200 2 .1. THAT THE DISALLOWANCE SO CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ARE BASED ON MERE ASSUMPTIONS AND PRESUMPTIONS AND ON ERRONEOUS ASSUMPTION THAT A PART DISALLOWANCE OF EXPENDITURE IS P ERMISSIBLE IN THE HANDS OF ACCOUNTS IS NOT JUSTIFIED. 2 .2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT ONCE THERE IS UNDISPUTEDLY BUSINESS OF THE APPELLANT COMPANY, NO DISALLOWANCE OF EXPENDITURE WAS OTHERWISE WARRANTED AND AS SUCH, CONCLUSION IS ILLEGAL, INVALID AND UNSUSTAINABLE. 3 . THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN LEVYING INTEREST UNDER SECTION 234B OF THE ACT WHICH IS NOT LEVIABLE ON THE FACTS OF THE INSTANT CASE . 9 8. GROUND NO. 1 IS GENERAL IN NATURE AND REQUIRES NO ADJUDICATION. 9. APROPOS GROUND NO. 2, 2.1 & 2.2, FACTS IN BRIEF, ARE THAT AO HAD DISALLOWED VARIOUS EXPENSES CLAIMED BY THE ASSESSEE U/S 37(1) OF THE ACT. IN APPEAL, LD. CIT(A), INTER ALIA, OBSERVING THAT ASSESSEE HAD NOT BEEN ABLE TO FULLY ESTABLISH THE FACTS NECESSARY TO SUPPORT ITS CLAIM FOR DEDUCTION U/S 37(1) TO THE COMPLETE EXTENT OF 100%, RESTRICTED THE DISALLOWANCE TO THE EXTENT OF 10% OUT OF SALARY CLAIMED TO HAVE BE EN PAID TO THE EMPLOYEES. 9.1. LD. CIT(A) , FURTHER RESTRICTED DISALLOWANCE, ON ESTIMATE BASIS, TO RS. 22 , 0 00/ - AS AGAINST 66,000/ - ON ACCOUNT OF SECURITY EXPENSES . 9.2. LD. CIT(A) CONFIRMED THE ACTION OF AO IN DISALLOWING RS. 1 0,000 / - ON ACCOUNT OF PROFESSIONAL CHARGES BY OBSERVING THAT ASSESSEE COULD NOT BE ABLE TO PROVE ITS CLAIM FOR DEDUCTION U/S 37(1) BY ADDUCING SUPPORTING EVIDENCE. 9.3. LD. CIT (A) RESTRICTED THE DISALLO W ANCE TO THE EXTENT OF 50% AMOUNTING TO RS. 50,000/ - AS A GAINST RS. 1,00,000/ - DISALLOWED BY AO. 9.4. HAVING HEARD BOTH THE PARTIES, WE FIND THAT IN ARRIVING AT ITS CONCLUSION THE LD. CIT(A) HAS PROPERLY TAKEN INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES OF THE CASE. WE SEE NO REASON TO INTERFERE IN THE OR DER OF LD. CIT(A) ON THESE COUNTS. ACCORDINGLY, GROUNDS OF APPEAL NOS. 2 , 2 .1 AND 2 .2 STAND DISMISSED. 10 10. CHARGING OF INTEREST U/S 234B IS CONSEQUENTIAL. THE LD. AO SHALL RECALCULATE THE CHARGING OF INTEREST U/S 234B, IF ANY, WHILE GIVING EFFECT TO APP ELLATE ORDER. 11. IN THE RESULT, ASSESSEE S APPEAL FOR A.Y. 2007 - 08 IS DISMISSED. 12 . IN THE RESULT, ITA NO. 1824/DEL/2010 IS ALLOWED FOR STATISTICAL PURPOSES AND ITA NO. 3473/DEL/2010 STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 31 - 1 0 - 2014. SD/ - SD/ - ( A.T. VARKEY ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31 - 1 0 - 2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR