Expenses of little amounts inherently have some element of personal nature – ITAT upheld 10% disallowance

Expenses of little amounts inherently have some element of personal nature – ITAT upheld 10% disallowance of community and social expenses

ABCAUS Case Law Citation:
ABCAUS 2593 (2018) (10) ITAT

The present appeal was preferred by the appellant assessee against the order of the Commissioner of Income Tax (Appeals) in confirming the disallowance on account of community and social expenses.

The assessee submitted that all the expenses incurred under the head of community and social expenses were verifiable with necessary documents, books of accounts were audited and therefore no disallowance should have been sustained.

The Tribunal observed that the Assessing Officer (AO) while framing the assessment u/s 143(3) of the Income Tax Act, 1961 (the Act) made disallowance of 20% of the impugned total expenses which was subsequently scaled down by the CIT(A) to 10% of the impugned expenditure.

The Tribunal further observed that the impugned expenses had been incurred towards Diwali Celebration, Christmas Celebration at plant, Sports day, Tree Plantation etc.

The Tribunal opined that even though the assessee pleaded that there was no personal element in the alleged expenditure but in a considered view and fair play, in these kinds of expenditure which are of little amounts inherently have some element of personal nature of expenditure.

Therefore, the Tribunal held that there was no infirmity in the finding of CIT(A), sustaining the disallowance of 10%.

Accordingly the Tribunal upheld the finding of CIT(A) and dismissed the ground raised by the assessee.

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