1981-VIL-19-ITAT-
Equivalent Citation: TTJ 013, 216,
Income Tax Appellate Tribunal CALCUTTA
Date: 04.11.1981
INCOME TAX OFFICER.
Vs
LAKE PALACE HOTELS & MOTELS (P) LTD.
BENCH
Member(s) : Y. Upadhyay., S. P. Kapur.
JUDGMENT
3. As regards ground No. 1, the disallowance has been made by the ITO with the reasoning that "travelling 'expenses' also includes taxi hire charges for guest. Therefore, Rs. 5,000 is disallowed on estimate basis being travelling expenditure on guest as this is of entertainment nature".
4. But for the above reasoning there is no material on record to sustain this disallowance which has justifiably on facts been deleted by the CIT (A), since apart from the fact that we do concur with the reasonings and conclusions arrived at by the CIT (A) the disallowance has been made on more surmises and conjectures and is not based on material on record, hence does not stand to reason.
5. As regards grounds No. 2, the reasoning of the ITO reads as under:
"The history of the case shows that every year a lumpsum disallowance was made to cover up sundry in admissibles. Last year Rs. 8,000 was added on this a/c. The same addition is made during this year. This disallowance covers all sundry inadmissibles under all heads of exp."
6. As observed above, the disallowance has to be based on material on record. It is not to be based on whims, surmises and conjectures and every assessment year is a distinct and separate entity for the purpose of assessment and disallowance if any has to be made on the facts of each years case and simply because the disallowance out of expenditure was made in any of the earlier years the same disallowance will merit to be made for assessment year under appeal does not stand to reason. We fully concur with the reasoning the conclusion arrived at by the CIT (A) in the impugned order on the above score, upholding the same we do hold that the disallowance made by the ITO has justifiably been deleted by him.
7. As regards ground No. 3, the reasoning of the ITO reads as under:
"The assessee has paid interest amounting to Rs. 4,10,737 on deposits received by it other than from banks. According to Sec. 40A(8) 15 per cent of such interest will be allowed as deduction. The assessee was supposed to add back 15 per cent of such interest but the assessee has failed to do so. Therefore, in view of Sec. 40A(8) 15 per cent of Rs. 4,10,737 being Rs. 61,610 is disallowed"
8. As regards the above reasoning, the CIT has observed that the interest paid is on unpaid purchase consideration and is not relatable to any deposit, hence provisions of s. 40A(8) of the Act did not apply. The CIT (A) vide paras 10 and 11 of the impugned order afforded relief to the assessee at Rs. 10,629 being 15 per cent of Rs. 70,864 which, according to him, was interest paid on unpaid purchase consideration for property which was purchase consideration for property which was purchased for business purposes. No material has been placed before us by the Revenue to controvert the facts as are contained in paras 10 and 11 of the impugned order of the CIT (A) and in that view of the matter we find ourselves in full agreement with the reasonings and conclusion contained therein, with the result that on this score also we so uphold the impugned order.
9. In the result, the appeal by the Revenue fails and stands dismissed.
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