Hemambika Chities and Loans (P) Ltd. vs Deputy Commissioner of Income Tax

G. Sivarajan, J.—An assessee under the IT Act is the appellant. It is a company incorporated with the main object of conducting chitties and kurries and lending money on interest. In the assessment of the appellant for the year 1994-95, the AO disallowed two sums of Rs. 4,42,972 and Rs. 1,21,875 claimed by them towards director''s travelling allowance and kuri canvassing commission respectively. The first appellate authority allowed the appeal and directed the assessing authority to allow the claim of travelling allowance and sustained the disallowance of kuri commission only to the extent of Rs. 21,875. In appeal by the Department, the Tribunal took the view that the AO was not justified in disallowing the entire claim of travelling allowance. It also took the view that the first appellate authority was also not justified in allowing the entire claim. The Tribunal thereafter considered the evidence in the case and came to the conclusion that justice demands grant of a portion of the travelling allowance to the extent of Rs. 2,33,972. Regarding the kuri canvassing commission claimed by the assessee as already noted, the AO disallowed Rs. 1,21,875. However, in appeal, the first appellate authority sustained the disallowance only to the extent of Rs. 21,875. The Tribunal upheld the order of the first appellate authority.

We have heard Shri P. Balachandran, learned counsel appearing for the appellant and also Shri P.K.R. Menon, senior standing counsel for the Revenue. Regarding the disallowance of travelling expenses, the Tribunal has found that the appellant had not produced valid documents to substantiate the said claim. However, the Tribunal has taken a practical view of the matter and directed the assessing authority to allow the travelling expenses to the extent of Rs. 2,33,972 as against Rs. 4,42,975 claimed by the assessee. Though it may appear that the Tribunal has arrived at the said amount in an arbitrary manner in the absence of evidence, the appellant cannot successfully contend that it is entitled to deduction of the entire amount without satisfactory evidence. There is no case that the appellant had furnished evidence to the satisfaction of the AO in regard to the entire expenses. In the circumstances of the case, we do not find any reason to interfere with the finding of fact entered by the Tribunal in this regard. Similarly, regarding the disallowance of kuri canvassing commission to the extent of Rs. 21,875, the Tribunal gave reasons for sustaining the same. The said disallowance relates to the amounts alleged to have been paid to Shri Rajesh who is the son of one of the directors of the appellant company. The Tribunal noted that though the AO wanted the said Rajesh to give instances of canvassing made by him, he was not able to recognise any one of the subscribers whom he claimed to have canvassed. In these circumstances, we are of the view that the Tribunal was perfectly justified in sustaining the disallowance. There is no merit in this appeal and it is accordingly dismissed.