In a recent ruling, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the disallowance made by the AO as the AO presumed the expenses claimed by the assessee as ‘personal expenditures’ instead of ‘personnel expenditures’.
The assessee, Tamura Elcomponics Technologies Private Ltd, filed its Income Tax Returns ( ITR ) for the assessment year ( AY ) 2018-19 and declared total income at Rs. Nil. The assessing officer during the assessment proceedings observed from the profit and loss account of the assessee that the assessee has claimed ‘personal expenses’ of Rs. 2,72 crores in business.
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The AO disallowed the above-mentioned money under Section 37 of the Income Tax Act, 1961, as at 10% and brought to tax as according to the AO, the assessee had not produced any relevant details in support of the personal expenses incurred by it.
The assessee who was aggrieved by the above order, appealed before the Commissioner of Income Tax ( Appeals ) [ CIT ( A ) ]. The CIT( A ) remanded the matter back to the AO, and the remand report was also submitted by the AO. After considering the remand report, the CIT( A ) dismissed the appeal filed by the assessee.
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The council, on behalf of the assessee, submitted the relevant matter in the profit and loss account of the company, in which it was distinctly mentioned as ‘personnel expenditure’ claimed by the assessee of Rs. 2,72,21,201, and AO had wrongly presumed the same as ‘personal expenditure’ which was actually ‘personnel expenditure’.
The counsel also submitted that the AO did not ask for any documentary evidence before reaching his conclusions.
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The ITAT bench observed that the additions made by the AO were an elementary mistake, as the AO presumed the expenses claimed by the assessee as ‘personal expenditures’ instead of ‘personnel expenditures’. The bench deleted the addition made by the AO.
The ITAT bench, comprising Mr. Sudhir Kumar ( Judicial Member ) allowed the appeal filed by the assessee.
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