ORDER
S.R. Chauhan, J.M.
As the above appeals and COs are, inter-related, so I am disposing them off by this common order for the sake of convenience.
2. ITA Nos. 2585 to 2590/Jp/1994 are appeals by the revenue for assessment years 1984-85 to 1988-89 and 1991-92, and are directed against six separate orders of Commissioner (Appeals), Jodhpur, each dated 6-10-1994.
3. CO Nos. 4 to 9/Jdpr/1999 have been preferred to respect of the above six appeals being in respect of assessment years 1984-85 to 1989-90 and 1991-92, respectively.
4. I have heard the arguments of both the sides and also perused the records including the written submissions of learned Authorised representative of assessee furnished on record.
As regards assessee’s COs, it may be mentioned here that the learned Authorised representative of assessee-respondent has not pressed ground No. 1 of CO in all the assessment years under consideration, and so the said ground is dismissed accordingly in all the assessment years under consideration.
5. First, I take up ITA No. 2590/Jp/1994 and CO 9/Jdpr/1999 being both in respect of assessment year 1991-92, for the reason that the main order has been passed along with elaborate discussion by assessing officer in assessment year 1991-92, which has been followed in other assessment years.
6. Ground No. 1 in revenue’s appeal disputes the deletion of disallowance of Rs. 33,600 made by assessing officer under section 40(b) on account of fixed amount of conveyance allowance paid to partners. The learned Departmental Representative of revenue has relied upon the orders of assessing officer contending that the assessing officer had rightly made the disallowance. The learned Authorised representative of assessee has relied on his written submissions. In the written submissiors of assessee it has been contended that under section 40(b) it is only any payment of salary, interest, bonus commission or remuneration or whatever name called, which has been made disallowable but the said provision does not make any and every payment to partners as disallowable. It has been contended that the legislative intent is not to disallow any or all sorts of payments made to partners irrespective of their nature. It has been contended that the assessing officer has not questioned the reasonableness of the sums paid as conveyance allowance to the three partners towards discharge of their duties in the day-to-day business of the firm. It has been contended that the payment of conveyance allowance is not in the nature of any personal allowance to the partners but it is reimbursement of petrol expenses incurred by the partners in the discharge of their duties for conduct of firm’s business. It has been contended that the reimbursement has been done at a fixed sum but the fixation has been done looking to the nature of duties shouldered by each partner. It has been contended that the assessee-firm is a lodge (sarai) which has a 24 hours check-in and check-out, i.e., there is a traffic of customers during all the 24 hours, and to avoid the risk of embezzlement, one of the partners has to remain there always. It has been contended that when one of the partner goes back to home, the other has to be there at the lodge. It has been contended that even the run between the home and office is of 12-14 kilometers, and in addition thereto, the remaining run is there on account of Commissioner/Police department, tourism department, income-tax proceedings, local purchases of house-keeping material, and building maintenance and, repairs. It has been contended that the amount of conveyance allowance paid to each of the partner is reasonable. It has been contended that the conveyance allowance could have been accounted for on actual basis but, the partners, in their collective wisdom, thought to avoid any occasion of wasteful expenditure by any partner and to avoid any misunderstanding on this count, and so considered it more prudent to fix the sum which each partner can spend on the conduct of the firm’s business. K.C. Gokani v. Income Tax Officer (1985) 14 TTD 461 (Jp) has been cited and it has been contended that the Tribunal has held therein that the assessee was in receipt of conveyance allowance which was paid in the interest of business and proportionate to the business and the same was reimbursement of expenditure incurred, and merely because it was called as an allowance, its character does not change from reimbursement to allowance. CIT v. Yoganand Textile (1993) 202 TTR 869 (Guj) has also been referred to contending that it has been held therein that whatever expenditure is incurred by the partner in respect of such work done for the firm cannot be considered as remuneration or salary given by the firm to the partner and would be deductible as expenditure. It has also been contended that as regards the mentioning of Rs. 15,171 on account of petrol, etc., debited to the P&L a/c, the same comprises of Rs. 6,075 towards repairs and maintenance, Rs. 9,095 towards petrol. It has been contended that this petrol expenditure is after 12-9-1990, the date of search, and the same was incurred on a car which was used by the assessee’s counsel after the incident of search, for visiting Income Tax department in connection with the proceedings undertion 132(5), taking copies of orders of seized material, proceedings under section 131, etc. In para 2 on page No. 19 of paper book, being assessee’s written submissions before Commissioner (Appeals), it has also been contended that as regards the other conveyance expenses debited to P&L a/c of assessee, the same are expenses incurred by employees for the purpose of business.
7. I have considered the rival contentions, the relevant material on record as also the cited decisions. In my considered opinion, the contentions of the learned Authorised representative of assessee have substance. From the perusal of record I find that all the three partners, to whom the conveyance allowance is being paid, are working partners and one or the other of them is always to keep presence at the lodge during all the 24 hours, as there is a passenger traffic all the 24 hours around. It is revealed that the partners have to travel between home and hotel as also to various other offices for the purpose of hotel business, and so the reimbursement of conveyance expenses in the form of fixed amount per month does not change character of the reimbursement of the allowance; and the said reimbursement does not partake the nature of salary or remuneration to the partners. A regards the expenditure of Rs. 15,171, debited in the P&L a/c towards car, petrol, etc., the same has been explained by the learned Authorised representative of the assessee and it has been specifically elaborated in para 18 on page No. 6 of the assessee’s written submissions. I am also of the view that the assessing officer’s observation that the conveyance allowance is a perquisite paid to the partners is not correct inasmuch as a sum paid to an employee can be treated as a perquisite only if the sum is paid to the employee to meet the personal liability of the payee/employee, but when a sum is paid to reimburse the expenditure incurred by employee in discharging employer’s official duty it will not fall within the purview of perquisite. As such, considering all the facts and circumstances of the case, I find the conclusion drawn by the learned Commissioner (Appeals) on this count to be quite justified, and the learned Commissioner (Appeals)’s action in deleting the disallowance suffers from no fault/infirmity. I, therefore, decline to interfere with the same on this count.
8. Ground No. 2 of revenue in revenue’s appeal disputes the allowing of relief of Rs. 12,350 out of a disallowance of Rs, 24,700 under the head salary. This issue is also contained in assessee’s ground No. 2 of assessee’s CO No. 9/Jdpr/1999, wherein the assessee has disputed the sustenance of disallowance of Rs. 12,350 under the head salary. The learned Departmental Representative of revenue has relied on the orders of the assessing officer. As against this the learned Authorised representative of assessee has relied on his written submissions. In the written submissions of assessee, it has been contended that in all, statements of 22 persons were recorded but only 7 of them have been chosen to be used by assessing officer. It has been contended that the sole basis for making the disallowance has been the statements but the same were recorded at the back of the assessee and the assessee has not been given opportunity to cross-examine these employees, neither at the time of recording of the statements, nor during the course of assessment proceedings. It has also been contended that there are apparent discrepancies in the statements recorded, the salary register seized and the amount debited to the salary account. It has been contended that the assessee has regular books of accounts and has also duly receipted vouchers, and an explanation for the alleged difference. It has been contended that the so-called salary register was used to record payments made to employees from time to time even during the course of month. It has been contended that the employees of the assessee are very low paid clerks, shift incharge and sweepers, etc. who take salary in piecemeal at an interval of 7 to 10 days. It has been contended that the many of the room boys, shift incharge and sweepers, etc. take food or tea or refreshment depending upon the timings of their duties. It has been contended that the learned Commissioner (Appeals) has casually upheld 50 per cent of the disallowance. Asstt. CIT v. Govind Ram Agarwal (2001) 71 TTJ (Cal)(TM) 1 : (2001) 76 ITD 120 (Cal)(TM) has been cited in support of the contention that in the absence of full cross-examination the statements cannot be relied upon.
9. I have considered the rival contentions as also the relevant material on record, as also the cited decision. In (2001) 71 TTJ (Cal)(TM) 1 (supra), it has been held that in the absence of full cross-examination, the statement cannot be accepted. It may not be deniable that without affording the assessee an opportunity of cross-examining the deponents whose statements have been recorded, the said statement cannot be relied upon against the assessee. In the instant case also, the assessee having not been afforded an opportunity to cross-examine the employees whose statements have been recorded so the same cannot be relied upon and accepted against the assessee. However, apart from statements there is some other evidence on record also. Salary register R 87 contains the details regarding salary payments in the months of August and September, 1990, in which salary payments have been shown of less amounts whereas in the books of accounts bigger amounts of salary payments have been shown by assessee as specifically tabulated on page No. 14 of the assessment order. In this regard the explanation of assessee regarding the discrepancy being due to deductions in respect of food, tea and refreshment, etc. taken by the said employees is found to be not convincing and not acceptable for the reason that there is no supportive evidence in respect of the same; neither is there any documentary evidence to suggest that it was an agreement or a condition of employment that whenever an employee takes tea or food, the deduction in respect of the same shall be made from his salary, nor is there any documentary or oral evidence to suggest that the tea and food, etc. were in fact taken by the employees as even entered in the register. Besides, blank vouchers were also found during search which lent support to the falsity/unreliability of assessee’s explanation in respect of the aforesaid discrepancy regarding salary payment, as also to the conclusion drawn by the assessing officer. As such, considering all the facts and circumstances of the case, I find the conclusion drawn by the learned Commissioner (Appeals) in allowing the assessee 50 per cent relief in respect of the addition made by assessing officer and sustaining the balance addition out of disallowance made out of assessee’s claim for salary payment to be quite proper and justified. I, therefore, decline to interfere with the same.
10. Ground No. 3 of revenue disputes the allowing of relief of Rs. 23,140 out of the disallowance of Rs. 46,295 made by assessing officer out of assessee’s claim for Rs. 96,295 under the head washing charges. Ground No. 2 in assessee’s CO also contains the ground disputing the sustaining of disallowance of Rs. 23,155 under the head washing charges. The learned Departmental Representative of revenue has relied on the orders of assessing officer. The learned Authorised representative of assessee has relied on his written submissions. In the written submissions of assessee, it has been contended that the statement having been recorded at the back of assessee and the opportunity to cross-examine the employees in respect of their statements having not been afforded to the assessee, the said statements cannot be relied upon against the assessee. This contention of the assessee has substance and I accept the same as has already been held above. In the written submissions of assessee it has further been contended that the books of accounts, details, vouchers have been summarily brushed aside by assessing officer without rejecting the same. It has been contended that expenses under the head washing charges have been claimed by the assessee at quite a reasonable amount and so there should have been no disallowance. Some details in respect of the rules in the hotel as although clothes like bedsheets, pillow covers, etc. have also been given in para 5 on page No. 13 of the assessee’s written submissions to justify the assessee’s claim of washing charges.
11. I have considered the rival contentions, as also the orders of authorities below, together with the facts of the case. From the perusal of record, I find that the assessing officer has noted in his assessment order that no supporting vouchers are maintained by the assessee and the assessee has maintained only internal vouchers which cannot be relied upon. The assessing officer has also noted that some blank signed vouchers in connection with the washing charges were also found and seized during search. It has also been noted by the assessing officer from the details furnished regarding monthly washing charges that they are not directly linked with the lodge receipts as has been elaborated with details on page No. 18 of the assessment order. As such, considering all the facts and circumstances of the case, I find the impugned order of learned Commissioner (Appeals) in allowing the assessee relief of 50 per cent addition made by the assessing officer under the head washing charges and at the same time sustaining the balance 50 per cent of the said addition to be quite proper and justified. I, therefore, decline to interfere therewith.
12. The next issue in ground No. 2 of assessee’s CO disputes the sustenance of disallowance of Rs. 20,000 in aggregate out of expenses claimed by assessee under five heads, namely, building repairs, electric repairs, sanitary repairs, white-washing and furniture repairs. In the written submissions of assessee, it has been contended that the objection of assessing officer regarding there having been steep increase in the expenditure is not proper because the assessee is in a hotel business and there happens to be wear and tear of these items and such repairs are undertaken in a block of two to three years and so their incurrence cannot be justifted on the previous year’s basis. It has been contended that the assessing officer’s ground regarding these expenses having been claimed due to increase of expenditure on repair work at residence is also not proper because the assessee has shown Rs. 67,000 towards repairs at residence. It has also been contended that this building was built in 1940 and so the expenditure on building repair has to be quite high. As against this, the learned Departmental Representative of revenue has supported the orders of authorities below.
13. I have considered the rival contentions as also the relevant material on record. From the perusal of record, I find that the assessing officer has found that for these expenses, complete vouchers are not available with the assessee. The assessing officer has also found that large number of blank signed vouchers pertaining to these repair works were found with the assessee and the same were seized during search. As such, considering all the facts and circumstances of the case, I find the sustenance of disallowance of Rs. 20,000 in aggregate out of expenses, claimed under five heads, to be quite proper and in no way unreasonable or excessive. As such, I find no fault with the impugned order of learned Commissioner (Appeals) on this count and so I decline to interfere with the same.
14. The next issue in ground No. 2 in assessee’s CO disputes the sustenance of disallowance of Rs. 7,500 out of assessee’s claim for coolie commission expenses. It has been contended in the written submissions of learned Authorised representative of assessee that the assessing officer has made the disallowance brushing aside the register maintained showing recording of day-to-day and room-wise coolie commission paid. It has been contended that in a hotel business, due to stiff competition, payment to coolies, auto-rickshaw drivers, etc. of commission, is the order of the day. It has also been contended that such payees being coolies and auto-rickshaw drivers do not issue any bill for the commission paid to them. It has been contended that the disallowance is not justified. As against this, the learned Departmental Representative of revenue has supported the orders of authorities below.
15. I have considered the rival contentions, as also the relevant material on record. From the perusal of record, I find that the assessing officer has given a specific finding in para 3.4.4 of page No. 20 of the assessment order and he has noted therein that it is an admitted fact that no supportive evidence in the form of vouchers/ bills are available with the assessee; the bills of persons to whom such charges have been paid are not available; and that there is no correlation between the monthly coolie charges and lodge receipts. As such, considering all the facts and circumstances of the case, as also the defects/objections pointed out by the assessing officer, I do not find the above disallowance, which comes to about 10 per cent of the assessee’s claim to be excessive or unreasonable and, in turn, I find no fault with the impugned order of learned Commissioner (Appeals) on this count, and so I decline to interfere with the same.
16. The next grievance of assessee in assessee’s CO disputes the sustenance of disallowance of Rs. 2,500 in aggregate out of assessee’s claim for expenses under two heads, namely, office expenses and staff welfare. Considering the rival contentions as also the relevant material on record, and in particular the fact that the assessing officer has noted that complete vouchers are not available with the assessee and that these expenses also include expenses incurred on tea, coffee, etc., consumed by partners and guests, I find the disallowance sustained to be neither excessive nor unreasonable, and rather quite proper, and so I find no fault with the impugned order of learned Commissioner (Appeals), and so I decline to interfere with the same.
17. The next grievance of assessee in assessee’s CO disputes the sustenance of disallowance of Rs. 5,000 out of assessee’s claim under the head daily wages. Considering the rival contentions, the facts of the case, and, in particular, the fact that the assessing officer has noted that details regarding the names of persons to whom the payments have been made are not mentioned in the books of accounts and that there is no supporting evidence to prove the genuineness of these payments, and discrepancies that the non-co-relation between monthly payments of daily wages and the lodge receipts, I find no fault with the impugned order of learned Commissioner (Appeals) in sustaining the above disallowance which seems to be neither excessive nor unreasonable; and so I decline to interfere with the same.
18. The next grievance of assessee in assessee’s CO pertains to sustenance of disallowance of Rs. 5,000 out of assessee’s claim for Rs. 52,980 under the head telephone charges. Considering the rival contentions, the facts of the case and, in particular, the fact that personal user and non-business user cannot be ruled out, I find no infirmity in the above disallowance. As such, there being nothing laconic in the learned Commissioner (Appeals)’s impugned order, I decline to interfere with the same.
19. The next grievance of assessee in assessee’s CO disputes the sustenance of disallowance of Rs. 4,300 out of lodge expenses. Considering the rival contentions, the facts of the case, and, in particular, the assessing officer’s finding that supporting vouchers are not available with the assessee, I consider the disallowance to be not unreasonable nor excessive and so I find no fault with the impugned order of learned Commissioner (Appeals), and accordingly, I decline to interfere with the same.
20. The next grievance of assessee in assessee’s CO disputes the sustenance of disallowance of Rs. 1,534 under the head vehicle expenses and Rs. 3,453 out of assessee’s claim for depreciation. Considering the rival contentions, the facts of the case, and, in particular, the fact that personal and non-business use of the vehicle cannot be ruled out, I do not consider the aforesaid disallowance to be in any way excessive or unreasonable. As such, I find no fault with the impugned order of learned Commissioner (Appeals) on this count and so I make no interference therein.
21. In the result revenue’s appeal No. 2590/Jp/1994 is allowed in part as indicated above, and the assessee’s CO No. 9/Jdpr/1999 is also allowed in part as indicated above.
22. Now I take up ITA No. 2585/Jp/1994 in assessment year 1994-95 and CO No. 4/Jdpr/1999, for assessment year 1984-85. Ground No. 1 of revenue disputes the deletion of disallowance of Rs. 13,200 made by assessing officer under section 40(b) on account of fixed amount of conveyance allowance paid to the partners. The rival representatives have made the same contentions as made by them on similar issue contained in ground No. 1 in assessment year 1991-92 in revenue’s appeal No. 2590/Jp/1994. The facts and circumstances being identical, I follow my decision rendered above on similar issue in assessment year 1991-92, and accordingly, I hold the deletion of disallowance by learned Commissioner (Appeals) to be quite proper and justified. I, therefore, decline to interfere with the same.
23. Ground No. 2 of revenue’s appeal disputes the allowing of relief of Rs. 7,160 out of the disallowance made by assessing officer under the head salary. Assessee’s ground No. 2 also contains an issue pertaining to sustenance of disallowance of Rs. 7,160 under the head. salary claimed by the assessee. The learned Departmental Representative of revenue has relied on the orders of assessing officer. As against this, the learned Authorised representative of assessee has contended that this disallowance has been made without any specific finding for the year under appeal. He has contended that in assessment year 1991-92, search had taken place and in that year on the basis of material found during search some defects in books of accounts had been pointed out pertaining to the salary payment whereas there is no such factual finding for assessment years 1984-85 to 1988-89, but the assessing officer has applied the findings of assessment year 1991-92, and made the disallowance of salary, washing expenses and various other expenses, without showing that those findings of fact were present in those assessment years also. I have considered the rival contentions as also the relevant material on record. From the perusal of record, and, in particular, the assessing officer’s assessment order, it is revealed that the assessing officer has not pointed out any specific defects in respect of assessee’s accounts pertaining to salary payment for the year under appeal in para 3.2.1 on page No. 3 of assessment order. In that view of the matter, the fact situation containing the defects, as found in assessment year 1991-92, being not present in the assessment year 1984-85 under consideration, though following the same conclusion as was drawn in assessment year 1991-92, and in turn making similar disallowance in assessment year 1984-85, under consideration, cannot be said to be proper or justified. I, therefore, find no justification for making/sustaining any disallowance; and so I uphold the deletion of disallowance made by learned Commissioner (Appeals) and I delete the disallowance sustained by learned Commissioner (Appeals). This disposes of the revenue’s ground as also the assessee’s ground in CO.
24. Ground No. 3 of revenue’s appeal disputes the allowing of relief of Rs. 5,000 out of the disallowance made by assessing officer under the head washing charges. Assessee’s ground No. 2 in CO also contains similar issue disputing the sustenance of disallowance of Rs. 5,000 under the head washing charges. The rival representatives have made similar contentions as made by them above in respect of ground No. 2 of revenue and similar ground in assessee’s CO. Considering the rival contentions, as also the facts and circumstances of the case, and in particular, the fact that the assessing officer has not pointed out any specific defect in the accounts of assessee pertaining to washing charges, in the year under appeal in para 3.2.2 on page No. 3 of his assessment order, I find no justification for making/sustaining any disallowance during the year under appeal. I, therefore, uphold the relief allowed by learned Commissioner (Appeals) and I delete the disallowance sustained by learned Commissioner (Appeals); and thus the assessee gets relief in respect of the whole addition made by assessing officer, under the head washing charges.
25. The next issue in ground No. 2 of assessee’s CO disputes the sustenance of disallowance of Rs. 5,000 in aggregate out of assessee’s claim of expenses under three heads, namely, building repairs, electric repairs, and sanitary repairs. Considering the rival contentions, the relevant material on record, and, in particular, the fact, that the assessing officer has given a specific finding that the assessee is not having complete vouchers for these expenses, which I do not find to have been shaken, I find the disallowance of Rs. 5,000 sustained by learned Commissioner (Appeals) to be quite proper. I, therefore, decline to interfere with the same.
26. The next issue in ground No. 2 of assessee’s CO disputes the sustenance of disallowance of Rs. 2,500 under the head ‘coolie commission’. Considering the rival contentions, as also the facts of the case as also the fact, in particular, that the assessing officer has not pointed out any specific defect in assessee’s accounts pertaining to coolie commission charges in para 3.2.4 on page No. 4 of his assessment order, I find the disallowance sustained by learned Commissioner (Appeals) to be not proper and so I delete the disallowance sustained by him.
27. The next issue in ground No. 2 of assessee’s CO disputes the sustenance of disallowance of Rs. 5,000 in aggregate out of assessee’s claim for expenses under four heads, namely, staff welfare expenses, daily wages, telephone and lodge expenses. Considering all the facts and circumstances of the case, the rival contentions, and, in particular, the assessing officer’s finding that complete vouchers for these expenses are not available with the assessee, together with the nature of expenses, I find the disallowance of Rs. 5,000 sustained by learned Commissioner (Appeals) to be quite proper and neither unreasonable nor excessive; and so I decline to interfere with the same.
28. The next issue in ground No. 2 of assessee’s CO disputes the disallowance of Rs. 586 under the head vehicle expenses. The next issue in ground No. 2 of assessee’s CO disputes the disallowance of Rs. 2,287 out of depreciation on vehicle. Considering the rival contentions, the relevant material on record and the nature of expenses, and that personal and non-business use of the vehicle cannot be ruled out, the disallowance at 1/10th of the expenses/depreciation claimed by assessee and sustained by learned Commissioner (Appeals) cannot be said to be unreasonable or excessive. As such, I find no fault with the impugned order of learned Commissioner (Appeals) on this count and so I decline to interfere with the same.
29. In the result revenue’s appeal No. 2585/Jp/1994 is allowed in part as indicated above; and assessee’s CO No. 4/Jdpr/1999 is also allowed in part as indicated above.
30. Now I take up revenue’s appeal No. 2686/Jp/1994 for assessment year 1985-86 and assessee’s CO 5/Jdpr/1999 for assessment year 1985-86.
31. Ground No. 1 of revenue’s appeal disputes the deletion of disallowance of Rs. 13,500 made by assessing officer under section 40(b) on account of fixed amount of conveyance allowance paid to the partners. The rival representatives have made the same contentions as made by them above on similar issue contained in ground No. 1 in assessment year 1991-92 in revenue’s appeal No. 2590/Jp/1994, wherein I have upheld the deletion of disallowance. The facts and circumstances being identical, I follow my decision rendered above on similar issue in assessment year 1991-92 and accordingly, I hold the deletion of disallowance by learned Commissioner (Appeals) to be quite proper and justified. I, therefore, decline to interfere with the same.
32. Ground No. 2 of revenue’s appeal disputes the allowing of relief of Rs. 6,400 from the disallowance made by assessing officer under the head salary. Assessee’s ground No. 2 also contains an issue pertaining to sustenance of disallowance of Rs. 6,450 under the head salary claimed by the assessee. The rival representatives have made their same contentions as made by them above on similar issue contained in similar ground in assessment year 1984-85 in revenue’s appeal No. 2585/Jp/1994 and CO No. 4/Jdpr/1999. Considering the rival contentions, the relevant material on record and the fact that the assessing officer has not pointed out any specific defects in assessee’s accounts pertaining to salary payment in the year under appeal in para 3.2.1 on page No. 3 of his assessment order and thus the facts of this year being identical to those of assessment year 1984-85, I follow my decision rendered above in assessment year 1984-85, and accordingly I find no justification for making any disallowance out of salary expenses. I, therefore, uphold the relief allowed by learned Commissioner (Appeals) and delete the disallowance sustained by learned Commissioner (Appeals). The assessee thus gets relief in respect of the whole addition made by assessing officer under the head salary payments.
33. Ground No. 3 of revenue’s appeal disputes the allowing of relief of Rs. 5,000 from the disallowance made by assessing officer under the head washing charges. Assessee’s ground No. 2 in CO also contains similar issue disputing the sustenance of disallowance of Rs. 5,000 under the head washing charges. The rival representatives have made their same contentions as made by them above on similar issue contained in similar ground in assessment year 1984-85 in revenue’s appeal No. 2585/Jp/1994 and CO No. 4/Jdpr/1999. The facts and circumstances being identical, I follow my aforesaid decision rendered on similar ground in assessment year 1984-85, wherein I have held that no specific defects having been pointed out by the assessing officer in the year under appeal, the conclusion drawn in assessment year 1991-92, cannot be applied in this year, and in turn, no justification for making/sustaining any disallowance under the head washing charges. I accordingly hold similarly in the year under appeal being assessment year 1985-86 and so I uphold the relief allowed by learned Commissioner (Appeals) and delete the disallowance sustained by learned Commissioner (Appeals); and thus there is deletion of the whole disallowance made by assessing officer under this head in the year under appeal.
34. The next issue in ground No. 2 of assessee’s CO disputes the sustenance of disallowance of Rs. 5,000 in aggregate out of assessee’s claim of expenses under three heads, namely, building repairs, electric repairs and sanitary repairs. Considering the rival contentions, the relevant material on record and, in particular, the fact that the assessing officer has given a specific finding that the assessee is not having complete vouchers for these expenses, I find no fault with the impugned order of the learned Commissioner (Appeals) in sustaining the disallowance of Rs. 5,000. I, therefore,, decline to interfere with the same.
35. The next issue in ground No. 2 of assessee’s CO disputes the sustenance of disallowance of Rs. 2,500 under the head ‘coolie commission charges’. Considering the rival contentions, the relevant material on record, as also the fact, in particular, that the assessing officer has not pointed out any specific defects in assessee’s accounts pertaining to coolie commission charges in para 3.2.4 on page No. 4 of his assessment order, I find no justification for any disallowance under this head in the year under, and so I delete the disallowance sustained by learned Commissioner (Appeals).
36. The next issue in ground No. 2 of assessee’s CO disputes the sustenance of disallowance of Rs. 5,000 in aggregate out of assessee’s claim for expenses under three heads, namely, staff welfare expenses, daily wages and telephone expenses. Considering all the facts and circumstances of the case, the rival contentions and, in particular, the assessing officer’s finding that complete vouchers for these expenses are not available with the assessee, ag has been specifically pointed out by the assessing officer in para 3.2.5 on page No. 5 of his assessment order, and which’ I do not find to have been shaken, I find the disallowance sustained by learned Commissioner (Appeals) to be quite proper and neither unreasonable nor excessive; and so I decline to interfere with the leaned Commissioner (Appeals)’s impugned order on this count.
37. The next issue of the assessee’s CO disputes the sustaining of disallowance of Rs. 1,037 out of assessee’s claim for vehicle expenses. The next issue in assessee’s CO pertains to the sustenance of disallowance of Rs. 3,175 out of assessee’s claim for depreciation of vehicle. Considering the rival contentions, the facts of the case and the fact, in particular, that the use of vehicle for personal and non-business purposes cannot be ruled out, as has also been specifically found by assessing officer, I find no fault with the impugned order of learned Commissioner (Appeals) in sustaining the above disallowance. I, therefore, decline to interfere with the same.
38. In the result revenue’s appeal No. 2586/Jp/1994 is allowed in part as indicated above; and assessee’s CO No. 5/Jdpr/1999 is also allowed in part as indicated above.
39. Now, I take up revenue’s appeal No. 2587/Jp/1994 for assessment year 1986-87 assessee’s CO 6/Jdpr/1999 for assessment year 1986-87.
40. Ground No. 1 of revenue’s appeal disputes the deletion of disallowance of Rs. 17,700 made by assessing officer under section 40(b) on account of fixed amount of conveyance allowance paid to the partners. The rival representatives have made their same contentions as made by them above on similar issue contained in ground No. 1 in assessment year 1991-92 in revenue’s appeal No. 2590/Jp/1994, wherein I have upheld the deletion of disallowance. The facts and circumstances being identical, I follow my decision rendered above on similar issue in assessment year 1991-92 and accordingly, I uphold the deletion of disallowance by learned Commissioner (Appeals) to be quite proper and justified. I, therefore, decline to interfere with the same.
41. Ground No. 2 of revenue’s appeal disputes the allowing of relief of Rs. 7,200 from the disallowance made by assessing officer under the head salary. Assessee’s ground No. 2 also contains an issue pertaining to sustenance of disallowance of Rs. 7,200 under the head salary claimed by the assessee. The rival representatives have made their same contentions as made by them above on similar issue contained in similar ground in assessment year 1984-85 in revenue’s appeal No. 2585/Jp/1994 and CO No. 4/Jdpr/1999. Considering the rival contentions, the relevant material on record and the fact that the assessing officer has not pointed out any specific defects in assessee’s accounts pertaining to salary payment in the year under appeal in para 3.2.1 on page No. 3 of his assessment order and thus the facts of this year being identical to those of assessment year 1984-85, I follow my decision rendered above in assessment year 1984-85, and accordingly I find no justification for making any disallowance out of salary expenses. I, therefore, uphold the relief allowed by learned Commissioner (Appeals) and delete the disallowance sustained by learned Commissioner (Appeals) under the head salary payment. The assessee thus gets relief in respect of the whole addition made by assessing officer under the head salary payments.
42. Ground No. 3 of revenue’s appeal disputes the allowing of relief of Rs. 6,000 from the disallowance made by assessing officer under the head washing charges. Assessee’s ground No. 2 in CO also contains similar issue disputing the sustenance of disallowance of Rs. 6,000 under the head washing charges. The rival representatives have raised their same contentions as made by them above on similar issue contained in similar ground in assessment year 1984-85 in revenue’s appeal No. 2585/Jp/1994 and CO No. 4/Jdpr/1999. The facts and circumstances being identical, I follow my aforesaid decision rendered on similar ground in assessment year 1984-85, wherein I have held that no specific defects having been pointed out by the assessing officer in the year under appeal, the conclusion drawn in assessment year 1991-92, cannot be applied in this year, and, in turn, no justification for making/sustaining any disallowance under the head washing charges. I accordingly hold similarly in the year under appeal being assessment year 1986-87 and so I uphold the relief allowed by learned Commissioner (Appeals) and I delete the disallowance sustained by learned commissioner (appeals) and thus there deletion of the whole disallowance made by assessing officer under this head in the year under appeal.
43. The next grievance of assessee in assessee’s CO disputes the sustenance of disallowance of Rs. 5, 000 in aggregate out of assessee’s claim for expenses under three heads, namely, building repairs, electric repairs and sanitary repairs. Considering the rival contentions, the facts and circumstances of the case and, in particular, the fact that the assessee is not having complete vouchers for these expenses as specifically found by assessing officer vide para 3.2.3 on page No. 3 of his assessment order, and which finding I do not find to have been shaken, I find no fault with the impugned order of learned Commissioner (Appeals) in sustaining the aforesaid disallowance. I, therefore, decline to interfere with the same.
44. The next grievance of the assessee in his CO is the sustenance of disallowance of Rs. 2,500 under the head ‘coolie commission charges’. Considering the rival contentions, the fact of the case as also the fact, in particular, that the assessing officer has not pointed out any defect/discrepancy in assessee’s account pertaining to coolie commission charges vide para 3.2.4 on page No. 4 of assessment order. I find no justification for sustaining the aforesaid disallowance. I, therefore, delete the same.
45. The next grievance of assessee in assessee’s CO pertains to disallowance of Rs. 6,000 in aggregate out of disallowance of Rs. 12,000 made by the assessing officer from assessee’s claim for three expenses, namely, staff welfare, daily wages and telephone expenses. Considering all the facts and circumstances of the case, the rival contentions as also the fact, in particular, that complete vouchers for these expenses are not available with the assessee, as has specifically been pointed out by assessing officer vide para 3.2.5 on page No. 4 of assessment order, and which finding I do not find to have been shaken on record, I find the disallowance sustained by the learned Commissioner (Appeals) to be suffering from no infirmity and quite justified. I, therefore, decline to interfere with the same.
46. The next grievance of assessee the assessee’s CO disputes the sustaining of disallowance of Rs. 2,110 out of assessee’s claim for vehicle expenses. The next grievance of assessee in assessee’s CO pertains to the sustenance of disallowance of Rs. 2,476 out of assessee’s claim for depreciation of vehicle. Considering the rival contentions, the facts of the case and the fact, in particular, that the use of vehicle for personal and non-business purposes cannot be ruled out as has also been specifically found by assessing officer in para 3.2.6 on page No. 4 of his assessment order, I find the said two disallowances to be quite proper and justified. I, therefore, decline to interfere with the same.
47. In the result revenue’s appeal No. 2587/Jp/1906 is allowed in part while assessee’s CO No. 6/Jdpr/1999 is also allowed in part as indicated above.
48. Now I take up revenue’s appeal No. 2588/Jp/1994 and assessee’s CO 7/Jdpr/1999, both being for assessment year 1987-88.
49. The revenue’s ground No. 1 disputes the deletion of disallowance of Rs. 16,600 made by assessing officer under section 40(b) on account of fixed amount of conveyance paid to partners. The facts being identical, this issue is squarely covered in assessee’s favour vide my decision rendered above on similarly issue in assessment years 1984-85, 1985-86 and 1986-87. I, therefore, follow my aforesaid decision and accordingly uphold the deletion of disallowance.
50. Ground No. 2 of revenue’s appeal disputes the allowing of relief of Rs. 7,240 from the disallowance made by assessing officer out of salary claimed. The same issue is also involved in assessee’s CO, wherein the assessee’s grievance pertains to the sustenance of disallowance of Rs. 7,240 out of salary payment. Considering the rival contentions, the facts of the case and, in particular, the fact that the assessing officer has not pointed out any defect or discrepancy in the accounts of assessee pertaining to salary payment, in the year consideration, I find no justification for any disallowance under the head salary payments. I, therefore, delete the disallowance sustained by learned Commissioner (Appeals) and uphold the relief already allowed by learned Commissioner (Appeals).
51. Ground No. 3 of revenue’s appeal disputes the allowing of relief of Rs. 6,000 from the disallowance made by assessing officer under the head washing charges. In assessee’s CO also there is a ground disputing the sustenance of disallowance of Rs. 6,000 under the head washing charges. Considering the rival contentions, the facts of the case as also the fact, in particular, that the assessing officer has not pointed out any discrepancy or defect in assessee’s accounts pertaining to washing charges as revealed from para 3.2.2 on page No. 3 of his assessment order, I find no justification for any disallowance under the head of washing charges for the year under consideration. I, therefore, delete the disallowance sustained by the learned Commissioner (Appeals) and also uphold the relief already granted by the Commissioner (Appeals).
52. The next grievance of assessee in assessee’s CO disputes the sustenance of disallowance of Rs. 7,500 in aggregate out of assessee’s claim for expenses under three heads, namely, building repairs, electric repairs and sanitary repairs. Considering the rival contentions, the facts of the case and, in particular, the fact that the assessee is not having complete vouchers for these expenses, I find no fault with the impugned order of learned Commissioner (Appeals) in sustaining the aforesaid disallowance. I, therefore, decline to interfere with the same.
53. The next grievance of the assessee in his CO is the sustenance of disallowance of Rs. 2,500 under the head ‘coolie commission’. Considering the rival contentions, the facts of the case as also the fact, in particular, that the assessing officer has not pointed out any defect/discrepancy in assessee’s account pertaining to coolie commission charges, I find no justification for sustaining the aforesaid disallowance. I, therefore, deleted the same.
54. The next grievance of assessee in assessee’s CO pertains to disallowance of Rs. 6,000 in aggregated out of assessee’s claim for expenses under four heads, namely, staff welfare, daily wages, telephone and lodge expenses. Considering all the facts and circumstances of the case, the rival contentions as also the fact, in particular, that complete voucher for these expenses are not available with the assessee as has been specifically found by assessing officer as observed by him in para 3.2.5 on page No. 4 of his assessment order, I find the disallowance sustained by the learned Commissioner (Appeals) to be suffering from no infirmity and quite justified. I, therefore, decline to interfere with the same.
55. The next grievance of assessee in the assessee’s CO disputes the sustaining of disallowance of Rs. 990 out of assessee’s claim for vehicle expenses. Considering the rival contentions, the facts of the case and the fact, in particular, that the use of vehicle for personal and non-business purposes cannot be ruled out as has also been specifically found by assessing officer in para 3.2.6 on page No. 4 of his assessment order. I find the disallowance to be quite proper and justified and suffering from no infirmity. I, therefore, decline to interfere with the same.
56. The assessee’s next grievance in assessee’s CO disputes the sustenance of disallowance of Rs. 6,430 out of assessee’s claim for expenses pertaining to valuation of hotel building. Considering the rival contentions, the facts of the case and also the fact, in particular, that the assessee’s explanation/plea regarding this expenditure is found to be not convincing inasmuch as the loan from RFC had been taken long back, i.e., in assessment year 1985-86 whereas this expenditure on valuation of hotel building pertains to assessment year 1987-88, I do not find any other evidence on record to support assessee’s plea regarding the expenditure to have been incurred for business purposes during the year under consideration. As such, considering the rival contentions, as also the facts and circumstances of the case, I find no fault with the action of learned Commissioner (Appeals) in sustaining the disallowance. I, therefore, decline to interfere with the same.
57. In the result revenue’s appeal No.-2588/Jp/1994 is dismissed whereas the assessee’s CO 7/Jdpr/1999 is allowed in part as indicated above.
58. Now, we take up revenue’s appeal No. 2589/Jp/1994 and assessee’s CO No. 8/Jdpr/1999, both being for assessment year 1988-89. The revenue’s ground No. 1 disputes the deletion of disallowance of Rs. 27,200 made by assessing officer under section 40(b) on account of fixed amount of conveyance paid to the partners. Considering the rival contentions as also the facts of the case, I find that the facts of this year pertaining to this issue are identical with those of similar issue raised in earlier years being for assessment years 1984-85 to 1987-88 as also in assessment year 1991-92. I find this issue squarely covered by my decision rendered above on similar issue raised in assessment years mentioned above wherein I have upheld the deletion of disallowance. I follow my aforesaid decision and accordingly find no fault with the impugned order of learned Commissioner (Appeals) in deleting the disallowance.
59. Ground No. 2 of revenue’s appeal disputes the allowing of relief of Rs. 8,000 from the disallowance made by assessing officer out of assessee’s claim for salary payment. Ground No. 2 in assessee’s CO also contains assessee’s grievance pertaining to sustenance of disallowance of Rs. 8,900 under the head salary. Considering the facts and circumstances of the case, the rival contentions and, in particular, the fact that the assessing officer has not pointed out any discrepancy/defect in assessee’s account pertaining to salary payments in the year under consideration, as revealed from assessing officer’s findings in para 3.2.1 on page No. 3 of assessment order, I find no justification for the sustenance of any disallowance; and in the circumstances I also uphold the relief allowed by learned Commissioner (Appeals) under this head.
60. Ground No. 3 of revenue’s appeal disputes the allowing of relief of Rs. 7,500 from the disallowance made by assessing officer under the head washing charges. Ground No. 2 of assessee in assessee’s CO also contains the assessee’s grievance disputing the sustenance of disallowance of Rs. 7,500 under the head washing charges. Considering the rival contentions, the facts of the case and also the fact that the assessing officer has not pointed out any defect/discrepancy in assessee’s accounts pertaining to washing charges during the year under consideration, I find no justification for sustaining any disallowance, nor do I find any fault with the learned Commissioner/assessing officer’s action in allowing the relief to the assessee which has been disputed in his ground. I, therefore, delete the disallowance sustained by learned Commissioner (Appeals). I order accordingly.
61. The next grievance of assessee in assessee’s CO disputes the sustenance of disallowance of Rs. 34,500 out of assessee’s claim for building repairs. Pertaining to the issue of building repairs the revenue has raised ground No. 4 in revenue’s appeal which disputes the deletion of disallowance of Rs. 32,500 out of the building repairs. The learned Departmental Representative of revenue has supported the orders of the assessing officer. As against this, the learned Authorised representative of assessee has contended in his written submissions, that the details of current repairs to the building were furnished before assessing officer. It has been contended that the increase in current repair expenses as compared with those of the earlier assessment year 1987-88 has been due to the fact that major repairs, renovation and provision of amenities to the rooms was under taken during the year. It has also been contended that the provision of toilet cannot be treated as capital expenditure. It has also been contended that a sum of Rs. 27,238 was spent on providing attached bathrooms to the existing rooms and that no occupancy capacity of the assessee hotel has increased due to these attached bathrooms. It has also been contended that the term ‘current repairs’ as envisaged by section 31 does not suggest any distinction between revenue or capital in nature of expenditure. It has been contended that the only requirement for allowance of expenditure is that the repair/renewal should not result in any increase of production capacity or the capacity of the hotel. It has been contended that the condition regarding the expenditure to be of revenue nature and not of capital nature applies only when the expenditure is claimed as deduction under section 37(1). Nathmal Bankatlal Parikh & Co. v. CIT (1980) 122 ITR 168 (AP), CIT v. Chowgule & Co. (P) Ltd. (1995) 214 ITR 523 (Bom) and Asstt. CIT v. Dyer’s Stone Lime Co. (P) Ltd. (1982) 136 ITR 8 (Del) have been referred to in support.
62. I have considered the rival contentions, the relevant material on record, as also the cited decision. As regards the statutory provisions from section 32(30) to section 37 of Income Tax Act, it may be noted that the provisions of section 30 apply in respect of repairs to the premises/building used for business purposes; and provisions of section 31 apply to repairs in respect of machinery, plant or furniture used for business purposes. Thus, it is the provision of section 30 which applies to the repairs of a building and not the provisions of section 31. It has been held by Hon’ble Apex Court in the case of CIT v. Anand Theatres, Etc. Etc. (2000) 160 CTR (SC) 492 that a hotel building is not a plant. It may also be noted that the expenses pertaining to repair become allowable under section 37(1) only when the same do not fall in any of the provisions of section 30 to section 36. When the expenses incurred on repairs are claimed under the residuary provision of section 37(1) the same are allowable only when these are outside the scope of capital expenditure as has been specifically provided in the relevant statutory provision. In section 30(a)(ii), the expenditure, which is allowable, is that incurred on current repairs to the premises. The construction of attached toilets/bathrooms in the existing rooms does not fall within current repairs inasmuch as the current repairs referred to restoration of the asset by such repairs as are needed at the moment. The toilets/bathrooms, for which the expenses have been incurred have been freshly/newly provided in the existing rooms. Besides, the construction of toilet/bathroom does result in new benefit/advantage of enduring nature. In that view of the matter, considering all the facts and circumstances of the case, and also taking a circumspect view of the entire fact situation, I find the assessee’s claim for deduction in respect of the said building repairs to be neither allowable under section 30 nor under section 37(1). In the result the learned Commissioner (Appeals)’s order on this count is reversed and the entire addition made by assessing officer is upheld. This decides the issue of building repairs as contained in the ground of revenue as also in the ground of assessee in CO.
63. The next grievance of assessee in assessee’s CO disputes the sustenance of disallowance of Rs. 5,000 in aggregate out of assessee’s claim for three expenses, namely, electric repairs, sanitary repairs and furniture repairs, Considering the rival contentions, the facts of the case and, in particular, the fact that the complete vouchers are not available with the assessee in respect of these expenses as has been specifically noted by the assessing officer in para 3.2.4 on page No. 5 of his assessment order, I find no fault with the sustenance of amount of Rs. 5,000 as disallowance out of assessee’s claim for the aforesaid expenses. I, therefore, decline to interfere with the same.
64. The next grievance of the assessee in his CO is the sustenance of disallowance of Rs. 5,000 under the head ‘coolie commission’. Considering the rival contentions, the facts of the case as also the fact, in particular, that the assessing officer has not pointed out any defect/discrepancy in assessee’s account pertaining to coolie commission charges, I find no justification for sustaining the aforesaid disallowance. I therefore, delete the same.
65. The next grievance of assessee in assessee’s CO pertains to disallowance of Rs. 10,000 in aggregated out of assessee’s claim for expenses under four heads, namely, staff welfare, daily wages, telephone and lodge expenses. Considering all the facts and circumstances of the case, the rival contentions as also the fact, in particular, that complete vouchers for these expenses are not available with the assessee as has been specifically found by assessing officer as observed by him in para 3.2.6 on pages 5 and 6 of his assessment order, I find the disallowance sustained by the learned Commissioner (Appeals) to be suffering from no infirmity and quite justified. I, therefore, decline to interfere with the same.
66. The next grievance of assessee in the assessee’s CO disputes the sustaining of disallowance of Rs. 682 out of assessee’s claim for vehicle expenses. Considering the rival contentions, the facts of the case and the fact, in particular, that the use of vehicle for personal and non-business purposes cannot be ruled out, I find the disallowance to be quite proper and justified, and suffering from no infirmity. I, therefore, decline to interfere with the same.
67. In the result revenue’s appeal No. 2589/Jp/1994 is allowed in part as also the assessee’s CO No. 8/Jdpr/1999 is allowed in part as indicated above.