Disproportionate increase in expenses in relation to turnover can not be reason in itself for making adhoc disallowance without cogent material – ITAT
ABCAUS Case Law Citation:
ABCAUS 2076 (2017) (09) ITAT
Assessment Year : 2012-13
Brief Facts of the Case:
The Petitioner assessee had claimed certain expenses. On being called upon to explain the reason for increase in expenses as compared from the previous year’s figure the assessee submitted that there was increase in the turnover as well.
The Assessing Officer (AO) rejected the assessee’s contention on the ground that the turnover increased only by 110% as against the increase in the particular expenses to the tune of 300%. Considering these facts, he made a disallowance at 20% of the said expenses, which resulted into an addition.
No relief was allowed in the first appeal. Aggrieved against sustenance of disallowance, the assessee was before the Tribunal.
Observations made by the Tribunal:
The ITAT observed that as contended by the assessee, the actual incurring of Sampling expenses to the extent claimed in the Profit & Loss Account had not been controverted by the authorities with any cogent material.
The ITAT opined that simply because such expenses had increased disproportionately in relation to the increase in the turnover, could not be a reason in itself for making disallowance of part of the expenses on ad hoc basis.
The ITAT observed that no worthwhile reason had been assigned by the authorities for making and sustaining disallowance @ 20% on particular expenses incurred by the assessee.
Held:
The order was set aside with direction to allow deduction of expenses as claimed by the assessee.
Ground taken by assessee that he was not aware of the order cannot be brushed aside so lightly in absence…
In an order rejecting stay of income tax demand there should be a recital of the merits whether it is…
CBDT has extended the due date for furnishing Return of Income for Assessment Year 2026-27 (FY 2025-26) in respect of…
Denying the accumulation of u/s 11(2) merely on grounds of a procedural delay in filing Form No. 10 is unsustainable…
Engagement of 05 Young Professionals CAs in the Office of Central Registrar of Cooperative Society on contractual basis The office…
Immunity u/s 270AA(2) in respect of a single transaction can not be denied to one assessee when the penalty was…