YKM Holdings Pvt. Ltd. Vs DCIT (ITAT Delhi)
We find that, out of total expenses of Rs.10,96,510/- on the travelling and conveyance, a sum of Rs.7,99,769/- was incurred on booking of tickets and remaining for boarding and lodging, which is evident from the details given in the paper book at page 2. For booking of the tickets the relevant evidences have also been filed which were there before the Assessing Officer and the ld. CIT (Appeals). These expenses were claimed for specific business purposes wherein the assessee had made investment of Rs.27.21 crores in Great Eastern Energy Corporation Ltd. to off-load the assessee’s investment. The observations and the findings of the Assessing Officer while making the disallowance, is purely based on surmises. If the assessee has stated that it had undertaken travelling for getting consultations with solicitors for litigation connected with the business of the assessee and has produced the booking of tickets and other details to substantiate, we do not find why ad-hoc disallowance should have been made. Similarly with regard to miscellaneous expenses also, as noted above, these are petty expenses and mostly relating to telephone expenses, advertisement expenses etc. Such expenses could not be disallowed on ad-hoc basis especially in the case of a corporate entity. The ad-hoc disallowance made by the Assessing Officer and the ld. CIT (Appeals) are deleted.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The aforesaid appeal has been filed by the assessee against the impugned order dated 26.05.2017 passed by Ld. Commissioner of Income Tax (Appeals)-13, New Delhi, for the quantum of assessment passed under Section 143(3) of the Income Tax Act, 1961 (the Act) for the Assessment Year 2012-13.
2. In the grounds of appeal, the assessee has challenged the adhoc disallowance of Rs.10,00,000/- made towards expenses debited on account of; travelling and conveyance; and miscellaneous expenses.
3. The assessee is engaged in the business of investment in securities and lending of money. It has shown income from rent at Rs.1,74,85,640/-; consultancy charges of Rs.3,40,000/-; interest income of Rs.6,27,526/-; miscellaneous income of Rs.98,738/-; and dividend income of Rs.8,400/-.
4. The assessee has debited an amount of Rs.67,42,559/- under the head employee benefit expenses and other expenses. Out of the said amount the assessee had suo moto disallowed Rs.44,57,411/- as per the following details:-
