The Indore bench of the Income Tax Appellate Tribunal (ITAT) directed the assessing officer to re-adjudicate the disallowance made on the ground of utilization of expenses for personal use or nonbusiness purposes.
Manish Kumar, the appellant assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the disallowance and addition made by the assessing officer in respect of payments said to have been made through a credit card.
S.S.Deshpande, the counsel for the assessee contended that the company provided a credit card to the assessee for payment related to business purposes, thus the expenses belonged to the company, a total payment of an amount was made by Company and the same was recorded in Company’s books and a statement of credit card was already submitted to the assessing office during the assessment proceedings.
It was further submitted that the payment made through credit card was only for business expenses and not only for personal use.
Ashish Porwal, the counsel for the revenue contended that the disallowance made by the assessing officer in the hands of the assessee on the footing that the expenses were incurred for personal use and not for business and relied on the decisions made by the lower authorities.
The bench observed that the expenditure belonged to Company and any disallowance, even if to be made on account of personal or non-business nature, could only be made in the hands of the Company and not in the hands of the assessee. Thus there was no justification for saddling the assessee with any disallowance.
The two-member bench comprising Vijay Pal Rao ( Judicial ) and B.M. Biyani ( Accountant) directed the assessing officer to delete the entire disallowance made by the authorities while allowing the appeal filed by the assessee.
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