Tamura Elcomponics Technologies Private Ltd. Vs National E-Assessment Centre (ITAT Delhi)
ITAT Delhi held that disallowance @10% of personnel expenditure not justified since AO mistakenly presumed expenses claimed by assessee as personal expenditure instead of personnel expenditure. Thus, appeal allowed.
Facts- The case of the assessee was selected for complete scrutiny. Accordingly, notices u/s 143(2) and 142(1) of the Income-tax Act, 1961 were issued. During assessment proceedings, AO observed from the profit & loss account of the assessee that assessee has claimed personal expenses of Rs.2,72,21,201/- in connection with business. AO observed that assessee had not produced any relevant details in support of the personal expenses incurred by it. Thus, AO disallowed the same u/s 37 of the Act @ 10% and brought to tax.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that AO noticed from the Profit and Loss account statement that assessee has claimed expenditure of personnel expenditure, however he has mistook that assessee has claimed personal expenditure without providing any documentary evidences. Accordingly, he made ad hoc disallowance @ 10% of the personnel expenditure. After considering the facts on record, we observed that the addition made by AO is nothing but elementary mistake by presuming the expenses claimed by the assessee as personal expenditure instead of personnel Since the assessee has brought to our notice details of payment of salaries and wages to various employees and even Assessing Officer failed to ask for any details before making such ad hoc disallowances, we are inclined to delete the addition made by the Assessing Officer which is a mistake apparent on record and clearly mistaken presumption. Accordingly, the grounds taken by the assessee are allowed.
