PATMAN & G HOSPITALITY P. LTD, MUMBAI V. ITO 7(1)(3), MUMBAI

ITA 7337/MUM/2010

• Counselvise Citation: 733719914 RSA 2010
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 27-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: MRS ARATI VISSANJI
• Keywords: Earning of tax free income; Bad and doubtful debts; Corroborative evidences
• Section: 14A; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 7337/MUM/2010 ASSESSMENT YEAR 2007-08 PATMAN & G. HOSPITALITY PRIVATE LIMITED, 38, KAKAD UDYOG BHAVAN, L.J. CROSS ROAD NO.1, MAHIM (WEST), MUMBAI 400 016 PAN: AAACP 1821B VS. THE INCOME TAX OFFICER 7(1)(3), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. ARATI VISSANJI RESPONDENT BY : SHRI A.K. NAYAK, SR.DR DATE OF HEARING : 25-04-2012 DATE OF PRONOUNCEMENT : 16-05-2012 ORDER PER RAJENDRA, A.M. FOLLOWING ARE THE GROUNDS OF APPEAL FILED BY THE AP PELLANT AGAINST THE ORDER DATED 22.06.2010 OF CIT (A) -1.MU MBAI. 1.THE LEARNED CIT(APPEALS) 13 ERRED IN UPHOLDING T HE DISALLOWANCE OF ` 11,151/- PAID AS INTEREST FOR DELAY IN PAYMENT OF PROVIDENT FUND CONTRIBUTION, THOUGH THE SAME IS NOT IN THE NATURE OF PENALTY. 2.THE LEARNED CIT(APPEALS) 13 ERRED IN CONFIRMING THE DISALLOWANCE OF BAD DEBTS OF ` 2,41,486/- MADE BY AO WITHOUT VERIFYING THE BOOKS OF ACCOUNTS. 3.THE LEARNED CIT(APPEALS) 13 ERRED IN CONFIRMING THE DISALLOWANCE OF ` 1,21,151/- BEING CASH LOST BY THEFT. ITA NO. 7337/MUM/2010 PATMAN & G. HOSPITALITY PRIVATE LIMITED, 2 4.THE LEARNED CIT(APPEALS) 13 HAS ERRED IN CONFIRM ING THE DISALLOWANCE OF ` 4725/- U/S. 14A READ WITH RULE 8D(2)(II) & (III) THOUGH THERE IN NO DIRECT OR INDIRECT NEXUS BETWEEN THE EXEMPT INCOME OF THE EXPENDITURE INCURRED. 5.THE LEARNED CIT(APPEALS) 13 HAS ERRED IN CONFIRM ING THE DISALLOWANCE OF THE EXPENSES PERTAINING TO EARLIER YEARS THOUGH THE SAME WERE CRYSTALLIZED DURING THE PREVIOUS YEAR . ALTERNATIVELY THE LEARNED CIT (APPEALS) OUGHT TO HA VE DIRECTED AO TO ALLOW THE SAME IN THE YEAR PRECEDING THE PREVIOU S YEAR. 6.THE LEARNED CIT(APPEALS) 13 HAS ERRED IN CONFIRM ING THE DISALLOWANCE ON DELAY IN DEPOSITING OF EMPLOYEES CO NTRIBUTION TO PF/ECIS AMOUNT TO ` 9,51,972/- U/S. 2(4)(X) READ WITH SECTION 36(1)(VA) AND OUGHT NOT TO HAVE RELIED ON THE FOLLO WING JUDGMENTS: 1. CIT VS. SOUTH INDIA CORPORATION 2. HITECH (INDIA) PVT. LTD., V/S. UNION OF INDIA OTHER S 3. CIT V/S. PAMVI TISSUR LTD., 7. THE LEARNED CIT(APPEALS) 13 HAS ERRED IN CONFIR MING THE DISALLOWANCE OF DONATION PAID AS BUSINESS EXPENDITU RE 2. ON PAGE 3 PARA 4.3 ARE THE OBSERVATIONS OF THE A O ABOUT THE 1ST GROUND OF APPEAL- 'AS PER THE CLAUSE 17 (E) OF TAX AUDIT REPORT, THE AUDITOR HAS POINTED OUT THAT THE ASSESSEE HAS DEBITED RUPEES 11 ,151/-BEING PENALTY FOR DELAY IN PF PAYMENT WHICH IS INADMISSIB LE. HOWEVER, ON PERUSAL OF THE CONNOTATION, IT IS SEEN THAT THE ASSESSEE HAS NOT ADDED BACK. THE SAID PENALTY. THEREFORE, VIDE ORDE R SHEET NOTING DATED 9/11/2009, THE AUTHORISED REPRESENTATIVE OF T HE ASSESSEE WAS ASKED TO EXPLAIN THE ALLOWABILITY OF THE SAME. THE ASSESSEE IS AUTHORISED REPRESENTATIVE WIDE LETTER DATED 08. 12.2009, HAS SUBMITTED THAT THE PENALTY SHOWN IN THE TAX AUDIT R EPORT IS NOT DIS-ALLOWABLE IN NATURE IS PENALTY IS NOT FOR ANY I NFRINGEMENT OF LAW. BUT, GENERALLY FOR LATE PAYMENT OF DUES. THE C OPY OF LEDGER OF SAME HAS BEEN FURNISHED. THE EXPLANATION OFFERED BY THE ASSESSEE HAS BEEN CONSIDERED BUT FOUND TO BE NOT TE NABLE IN VIEW OF THE REMARK OF THE AUDITOR ITSELF IN THE TAX AUDI T REPORT, THAT THE SAID AMOUNT IS INADMISSIBLE. FURTHER, ON PERUSAL OF THE LEDGER SUBMITTED BY THE ASSESSEE, IT IS ALSO CLEARLY MENTI ONED THAT THE SAID AMOUNT IS PAID FOR PENALTY FOR PROVIDENT FUND. HENCE, THE SAME IS DISALLOWED AND ADDED TO THE TOTAL INCOME BE ING INADMISSIBLE EXPENSES.' ITA NO. 7337/MUM/2010 PATMAN & G. HOSPITALITY PRIVATE LIMITED, 3 IN THE APPELLATE PROCEEDING, CIT (A) HELD THAT SIN CE THE SAID PENALTY AMOUNT HAD BEEN PAID ON ACCOUNT OF VIOLATIO N OF STATUTORY PROVISIONS, SO, SAME WAS NOT ALLOWABLE. AR SUBMITTED THAT THE PAYMENT MADE TO PF AUTHORITI ES WERE COMPENSATORY NATURE AND NOT PENAL. AS PER THE DR PA YMENT MADE BY THE APPELLANT WAS PENAL HENCE, SHOULD BE DISALLOWED . WE HAVE HEARD BOTH THE SIDES. ALTHOUGH THE AR HAS CLAIMED THAT PAYMENT WAS COMPENSATORY IN NATURE, YET, NO EV IDENCE HAS BEEN PRODUCED TO PROVE THAT SAID DOCUMENT WAS NOT PENAL. RECEIPT ISSUED BY THE PF AUTHORITIES, IN THIS REGARD ,WOULD HAVE D ECIDED THE ISSUE IN FAVOUR OF THE APPELLANT. IN ABSENCE OF ANY DETAILS , CLEAR FINDING OF THE AUDITOR AND THE ENTRY IN THE LEDGER OF THE APPELLAN T WE UPHOLD THE ORDER OF THE CIT (A). GROUND NUMBER 1 IS DECIDED AGAINST THE APPELLANT. 3. GROUND NUMBER 2 IS ABOUT WRITING OFF OF BAD DATE S, AMOUNTING TO RS. 2.41 LAKHS. IN THIS REGARD. AO IN HIS ORDER HAS OBSERVED AS UNDER : 'THE ASSESSEE HAS DEBITED RS. 2,41,486/-TOWARDS THE BAD DEBTS. VIDE ORDER SHEET NOTING DATED 0 9.11 .2009 THE AUTHORISE D REPRESENTATIVE OF THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS AND J USTIFICATION FOR THE SAME, THE ASSESSEE WIDE LETTER DATED 16.11.2011 IN TAPAL ON 16.11.2011 IS FURNISHED THE LEDGER ACCOUNT OFF BAD DATES. ON PERUSAL OF THE SAID LEDGER, IT IS SEEN THAT BAD DATES AMOUN T IS THE OPENING BALANCE FROM 14 2006 RECEIVABLE FROM ZENZI AND THE NARRATION BELOW THE SAME IS GIVEN THAT BEING DEBTORS WRITTEN OFF AS PER RM'S INSTRUCTIONS. THE AUTHORISED A RELATIVE VIDE LETTER DATED 08.12.2 009. HAS STATED THAT THE BAD DEBTS WHICH ARE CLAIMED TO HAVE BECOME BAD ON ACCOUNT OF DEDUCTION MADE BY THE CLIENTS FOR VARIOUS REASONS L IKE DIFFERENCE IN QUALITY/QUANTITY OR AT THE TIME IS DELAYS, UNTIMELY SERVICES ETC. HOWEVER, THE ASSESSEE HAS NOT FURNISHED ANY DOCUMEN TARY EVIDENCE FOR THE SAME EXCEPT FURNISHING THE LEDGER COPY OF BAD D EBTS. THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCE IN SUPPO RT THAT DEBT WAS ACTUALLY BAD. HENCE, THE SAME IS DISALLOWED AND ADD ED BACK TO THE TOTAL INCOME OF THE ASSESSEE.' CIT (A) REFERRED TO THE CASE OF OMAN INTERNATIONAL BANK AND UPHELD THE DISALLOWANCE MADE BY THE AO. AR SUBMITTED THAT THE ASSESSEE WAS NOT IN A POSITIO N TO RECOVER THE DEBT, SO SAME WAS WRITTEN OFF, AND HENCE ALLOWA BLE. DR ON THE OTHER HAND SUBMITTED THAT THE PRIMA FACIE FACT OF T HAT BEING BAD HAD NOT BEEN ESTABLISHED BY THE ASSESSEE. SO, THE DISAL LOWANCE MADE BY THE AO WAS AS PER LAW. ITA NO. 7337/MUM/2010 PATMAN & G. HOSPITALITY PRIVATE LIMITED, 4 AFTER HEARING BOTH THE PARTIES AND PERUSING THE PAP ER BOOK WE FIND THAT APPELLANT HAD WRITTEN OFF THE BAD DEBTS I N HIS BOOKS OF ACCOUNTS. WE ARE OF THE OPINION THAT ONCE THE ASSE SSEE MAKES ENTRIES IN HIS BOOKS ABOUT DEBTS BEING BAD, FURTHER HE IS N O REQUIRED TO ESTABLISH THAT DEBT HAD BECOME IRRECOVERABLE. THE O BSERVATIONS OF THE CIT (A) WITH REGARD TO THE CASE OF OMAN INTERNATION AL BANK HAS TO BE SEEN IN THE BACKGROUND OF CASE OF T. R. F. LTD. V. COMMISSIONER OF INCOME-TAX, DECIDED BY THE HONBLE SUPREME COURT. R ESPECTFULLY FOLLOWING THE DECISION OF THE SUPREME COURT WE ALLO W THE APPEAL FILED BY THE APPELLANT. GROUND NUMBER 2 IS DECIDED IN FAVOUR OF THE APPELLA NT. 4. NEXT GROUND OF APPEAL IS ABOUT DISALLOWANCE CONFIRMED BY THE CIT (A) ON ACCOUNT OF CASH LOST BY THEFT. AO REJECT ED THE CLAIM OF THE APPELLANT WITH REGARD TO THE CASH LOST IN PARA 4.5 OF HIS ORDER IN FOLLOWING MANNER: ON PERUSAL OF THE MISCELLANEOUS EXPENSES SUBMITTED BY THE ASSESSEE, IT IS SEEN THAT THE SAME INCLUDES RS.1,21,151/-ON A CCOUNT OF CASH LOST BY THEFT. VIDE ORDER SHEET NOTING DATED 07.12. 2009 , THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF CASH LOST BY THEFT THE JUSTIFICATION AND SUPPORTING EVIDENCES . IN RESPONSE TO THE SAME, VIDE LETTER DATED 8.12.2009 THE AUTHORISED RE PRESENTATIVE HAS STATED THAT THE DETAILS OF CASH LOST BY THEFT OF RS . 1,21,151/- ON VARIOUS DATES ARE DEBITED TO MISCELLANEOUS EXPENSES. THE RE LEVANT DOCUMENTS TO EVIDENCE ACTION TAKEN BY THE ASSESSEE WILL BE SU BMITTED LATER ON. HOWEVER, TILL DATE, THE ASSESSEE HAD NOT FURNISHED ANY DOCUMENTARY EVIDENCE IS SUCH AS F I R, ETC., TO SUBSTANTIATE TH E CLAIM MADE ON ACCOUNT OF CASH LOST BY THEFT OF RS.1,21,151/- AS T HE CLAIM OF THE ASSESSEE IS HEREBY DISALLOWED AND ADDED TO THE TOTA L INCOME.' CIT (A) UPHELD THE ORDER OF THE AO. IT WAS ARGUED BY THE AR OF THE APPELLANT THAT ONE O F THE EMPLOYEES AT SURAT HAD EMBEZZLED THE AMOUNT AND THE APPELLANT HA D TO TAKE IN ACCOUNT THE SAID LOSS WHILE PREPARING THE BOOKS OF ACCOUNTS FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. DR SUBMITTED T HAT NO EVIDENCE WAS PRODUCED BEFORE ANY OF THE AUTHORITIES ABOUT TH E LOSS BY THEFT, THAT NO F I R WAS FILED AGAINST THE PERSON WHO HAD EMBEZZLED/STOLEN THE MONEY. WE HAVE HEARD BOTH THE PARTIES. FROM THE PERUSAL OF THE PAPER BOOK IT IS FOUND THAT APPELLANT HAD MADE ENTRIES IN HIS LED GER ABOUT THEFT OF CASH, BUT IT IS ALSO A FACT THAT TILL DATE NO EVIDE NCE IN THIS REGARD HAS BEEN PRODUCED BY THE APPELLANT. A CLAIM WITHOUT AN Y BASIS CANNOT BE ACCEPTED BY THE TAX AUTHORITIES. AS THE CLAIM WAS M ADE UNDER SECTION 37 OF THE ACT, ONUS WAS ON THE ASSESSEE TO PRODUCE EVIDENCE FOR THE ALLOWABILITY OF THE EXPENDITURE. WE ARE OF THE OPIN ION THAT THE APPELLANT HAS FAILED TO PRODUCE ANY EVIDENCE ABOUT THEFT OF CASH AND ITA NO. 7337/MUM/2010 PATMAN & G. HOSPITALITY PRIVATE LIMITED, 5 HENCE, SAID CLAIM CANNOT BE ALLOWED. WE UPHOLD THE ORDER OF THE CIT (A). GROUND NUMBER 3 IS DECIDED AGAINST THE APPELLANT. AR OF THE APPELLANT DID NOT PRESS GROUND NUMBER 4 H ENCE IT STANDS DISMISSED. 5. GROUND NO.5 IS ABOUT PRIOR PERIOD EXPENSES. AO HAS DISCUSSED THE ISSUE (ON PAGE NO.6) AS UNDER - PRIOR PERIOD EXPENDITURE: ON PERUSAL OF THE DETAILS FILED, IT IS SEEN THAT T HE ASSESSEE HAS CLAIMED PRIOR PERIOD EXPENDITURE OF ` 11,26,545/- VIDE ORDER SHEET NOTING DATED 09-11-2009, THE AUTHORISED REPRESENTAT IVE WAS ASKED TO FURNISH THE DETAILS AND ALLOWABILITY OF THE SAME. THE AUTHORISED REPRESENTATIVE VIDE LETTER DATED 16-11-2009 HAS FUR NISHED THE LEDEGER COPY OF PRIOR PERIOD EXPENSES. ON VERIFICATION OF THE SAME, IT IS SEEN THAT IT INCLUDES PROVISION FOR BONUS FOR F.Y. 2005- 06 OF ` 4,20,395/-. THE SAID PROVISION HAS BEEN DISALLOWED BY THE ASSES SEE IN THE COMPUTATION OF INCOME. HOWEVER, BALANCE OF ` 7,56,150/- WHICH PERTAINS TO PRIOR PERIOD LIABILITIES OF VARIOUS PAR TIES. WITH RESPECT TO THE SAME, THE AUTHORIZED REPRESENTATIVE, VIDE LETTER DT . 08-12-2009 HAS STATED THAT PARTIES ARE PAID THIS YEAR AS A DISPUTE IS SETTLED AND EXPENSES ARE CRYSTALLIZED THIS YEAR. IT IS ONLY FO R ACCOUNTING PRESENTATION IT IS SHOWN PRIOR PERIOD EXPENSES AS T HE EXPENSES ARE CRYSTALLIZED THIS YEAR, THE SAME ARE NOT DISALLOWED . THE EXPLANATION OFFERED BY THE ASSESSEE HAVE BEEN CONSIDERED AND TH E SAME IS NOT ACCEPTABLE AS THE ASSESSEE HAS NOT PRODUCED OR DEDU CED ANY DOCUMENTARY EVIDENCES IN SUPPORT OF THE SAME. FURT HER, IN THE INCOME TAX ACT, PRIOR PERIOD EXPENDITURE ARE NOT ALLOWABLE EXPENDITURE. HENCE, THE BALANCE PRIOR PERIOD EXPENDITURE OF ` 7,56,150/- WHICH ASSESSEE HAS NOT DISALLOWED SUO-MOTO ARE DISALLOWED BEING NO N-ALLOWABLE EXPENDITURE DURING THE YEAR UNDER CONSIDERATION AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. CIT(A) UPHELD THE ORDER OF THE AO BY OBSERVING AS U NDER: THE APPELLANT IS FOLLOWING MERCANTILE SYSTEM OF AC COUNTING. PRIOR PERIOD EXPENSES CANT BE ALLOWED THIS YEAR ON PAYME NT BASIS UNLESS THE APPELLANT PROVES THAT THE EXPENSES WERE IN DISPUTE AND CRYSTALLIZED DURING THE YEAR. NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE APPELLANT. THIS VIEW HAS ALSO BEEN UPHELD IN THE C ASE OF CALCUTTA CO. LTD., VS. CIT 37 ITR 1 (SC) ITA NO. 7337/MUM/2010 PATMAN & G. HOSPITALITY PRIVATE LIMITED, 6 AR SUBMITTED THAT PG. NOS. 8 TO 15 OF THE PAPERBOOK WERE ABOUT THE PRIOR PERIOD EXPENSES, THAT PAYMENTS WERE MADE DURI NG THE YEAR AS THE LIABILITY HAD CRYSTALLIZED DURING THE ASSESSMEN T YEAR UNDER CONSIDERATION ONLY. AR RELIED UPON 332 ITR 382, 32 1 ITR 580, 326 ITR 73 AND 313 ITR 41 IN THIS REGARD. DR SUBMITTED THAT THEE WAS NO EVIDENCE THAT THE SAID EXPENSES WERE OF EARLIER YEA RS, THAT ENTRIES IN THE LEDGER WAS UNILATERAL ACT. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON FILE. IN THE DETAILS FILED BY THE ASSESSEE, IT HAS BEEN CLAIMED THAT IN MANY A CASES, GOODS WERE RECEIVED IN THE MONTH OF A PRIL, 2006 THOUGH THE BILLS OF THE SAID GOODS PERTAINED TO MARCH, 200 6. AN AMOUNT OF ` 1.57 LAKHS HAS BEEN SHOWN WITH FOLLOWING DESCRIPTI ON (AT PG.NO. 16 OF PAPERBOOK) MATERIAL DISPUTED IN LAST YEAR - RES OLVED AND PAID IN CURRENT YEAR. SIMILAR IS THE POSITION OF ` 1.53 LAKHS UNDER THE HEAD EXPENSES PERTAINING TO A.Y. 2006-07 NOT PROVIDED F OR AND INCURRED IN THE CURRENT YEAR. AFTER GOING THROUGH THE MATERIA L PRODUCED BEFORE US, WE ARE OF THE OPINION THAT MATTER SHOULD BE REM ITTED BACK TO THE FILE OF THE AO. ASSESSEE IS DIRECTED TO PRODUCE TH E EVIDENCE BEFORE THE AO ABOUT THE CLAIMS MADE. AO IS DIRECTED TO DECIDE THE MATTER AFTER AFFORDING AN OPPORTUNITY TO THE ASSESSEE. WHILE DE CIDING THE ISSUE, AO SHOULD CONSIDER THE PRINCIPLES PROPOUNDED IN THE MA TTERS OF JAGATJIT INDIA LTD., (339 ITR 382) SAURASHTRA CEMENT & CHEMI CALS INDIA LTD., (213 ITR 523) APPEAL IS PARTLY ALLOWED. 6. NEXT GROUND OF APPEAL IS ABOUT DISALLOWANCE OF ` 9.51 LAKHS ON DELAY IN DEPOSITING OF EMPLOYEES CONTRIBUTION TO PF /ESIC WITH REFERENCE TO SEC. 2(24)(X) AND 36(1)(VA) OF THE ACT. AO HAS DISCUSSED THE ISSUE ON (PG 6-7 PARA 4.8) AS UNDER: DISALLOWANCE U/S. 2(24)(X) R.W.S. 36(1)(VA): ON PERUSAL OF THE CLAUSE 16(B) OF THE TAX AUDIT RE PORT, THE AUDITOR HAS POINTED OUT CERTAIN INSTANCES DELAY OF PAYMENTS OF EMPLOYEES CONTRIBUTION TOWARDS THE P.F. AND ESIC. THESE PAYM ENTS MADE BEYOND DUE DATE ARE ATTRACTS PROVISION OF SEC. 2(24)(X) R. W.S. 36(1)(VA). THEREFORE, VIDE ORDER SHEET NOTING DATED 09/11/2009 , THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE PAYMENTS MADE BEYOND DUE DATE SHOULD NOT BE DISALLO WED U/S. 2(24)(X) R.W.S. 36(1)(VA). THE REQUISITE DETAILS OR EXPLANA TION HAS NOT BEEN FURNISHED BY THE ASSESSEE OR ITS AUTHORIZED REPRESE NTATIVE TILL DATE INSPITE OF REMINDING ON VARIOUS OCCASIONS DURING TH E ASSESSMENT PROCEEDINGS. SINCE, MAKING PAYMENT BEYOND DUE DATE S SPECIFIED IN THAT ACT, ATTRACTS DISALLOWABLE PROVISION U/S. 2(24 )(X) R.W.S. 36(1)(VA) AS PER INCOME TAX ACT. ITA NO. 7337/MUM/2010 PATMAN & G. HOSPITALITY PRIVATE LIMITED, 7 AR SUBMITTED THAT PAYMENT MADE WERE ALLOWABLE AS P ER PROVISIONS OF LAW, THAT RATIO OF CASES OF SOUTH IND IA CORPORATION, HITECH PVT. LTD., PAMVI TISSUR LTD., SHOULD HAVE BE EN APPLIED WHILE DECIDING THE ISSUE IN QUESTION. DR RELIED UPON THE ORDER OF THE CIT(A). AFTER GOING THROUGH THE TABLE ON PAGE 6 OF THE ASS ESSMENT ORDER, WE ARE OF THE OPINION THAT MATTER NEEDS FURT HER VERIFICATION BY THE AO. WE REMIT BACK THE MATTER TO THE FILE OF TH E AO WITH A DIRECTION TO DECIDE THE ISSUE IN LIGHT OF THE CASES RELIED UP ON BY THE AR. ASSESSEES APPEAL IS PARTLY ALLOWED. 7. LAST GROUND OF APPEAL IS ABOUT DISALLOWANCE OF D ONATION PAID BY THE ASSESSEE. AO HAS DISCUSSED THE MATTER AS UNDER : ON PERUSAL OF THE MISC. EXPENSES, IT IS SEEN THAT THE ASSESSEE HAS DEBITED ` 27,226/- BEING DONATION. THE AUTHORISED REPRESENT ATIVE OF THE ASSESSEE VIDE ORDER SHEET NOTING DATED 07/12 /2009 WAS ASKED TO EXPLAIN THE ALLOWABILITY OF THE SAME. IN RESPON SE TO THE SAME, ASSESSEE VIDE LETTER DATED 08-12-2009 STATED THAT D ONATION PADI ARE NOT FOR NOT CHARITABLE IN NATURE BUT ARE PAID VOLUNTARI LY BUT NECESSARILY FOR THE PURPOSE OF BUSINESS FOR THE SMOOTH OPERATION. THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE ITS CLAIM AND ANY DONATION MADE IS NOT ALLOWABLE EXPENDITURE UNDER TH E INCOME TAX ACT WITHOUT THE SUPPORTING, HENCE THE SAME ARE HEREBY D ISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 8. CIT(A) CONFIRMED THE DISALLOWANCE IN THE FOLLOWI NG WORDS: SINCE THE APPELLANT HAS FAILED TO FURNISH ANY DOCU MENTARY EVIDENCE TO SUBSTANTIATE ITS CLAIM, THAT THEY WERE NECESSARY FOR SMOOTH RUNNING OF BUSINESS/HOW THE SAID DONATION WAS WHOLL Y AND EXCLUSIVELY RELATED FOR THE PURPOSE OF BUSINESS THE DISALLOWA NCE MADE BY THE APPELLANT IN THIS REGARD IS UPHELD. 9. AFTER HEARING BOTH THE SIDES, WE ARE OF THE OPIN ION THAT FOR CLAIMING A DEDUCTION U/S. 37, ASSESSEE HAS TO PRODU CE EVIDENCE THAT EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF CARRYING ON BUSINESS. THE ONUS IN SUCH CASES IS AL WAYS ON THE ASSESSEE. IN THE CASE UNDER CONSIDERATION, THE ASS ESSEE HAS FAILED TO PROVE THAT INCURRED EXPENDITURE WAS FOR BUSINESS PU RPOSES. AS A RESULT, GROUND NO.7 IS DECIDED AGAINST THE ASSESSEE . 10. APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLO WED. ITA NO. 7337/MUM/2010 PATMAN & G. HOSPITALITY PRIVATE LIMITED, 8 ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MAY, 2012. SD/- SD/- (N.V. VASUDEVAN) (RAJENDR A) JUDICIAL MEMBER AC COUNTANT MEMBER MUMBAI, DATE 16 TH MAY 2012 TNMM COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI