Plea against disallowance of 20% of computer expenses

The Income Tax Appellate Tribunal has allowed an appeal filed by M/s. C.S. Datamation Research Services Pvt. Ltd. The Assessing Officer had disallowed 20% of computer expenses, amounting to Rs. 8,04,179, due to a lack of proper bills. However, the Tribunal found that the assessee had provided the necessary details and the disallowance was made on an ad-hoc basis without proper scrutiny. Consequently, the Tribunal directed the Assessing Officer to delete the addition.

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES “B” : DELHI
[THROUGH VIDEO CONFERENCING]
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER
AND
SHRI AMIT SHUKLA, JUDICIAL MEMBER
ITA.No.3668/Del./2017
Assessment Year 2012-2013

M/s. C.S. Datamation
Research Services Pvt.
Ltd., B-12, Swashtya
Vihar, New Delhi.
PAN AACCC6969K

(Appellant)

vs.

The Income Tax Officer,
Ward – 5 (4),
New Delhi.

(Respondent)

For Assessee : Ms. Piyush Baranwal, C.A.
For Revenue : Shri Mahesh Thakur, Sr. DR
Date of Hearing : 22.07.2021
Date of Pronouncement : 27.07.2021
ORDER

This appeal by the Assessee is directed against the Order Dated 31.03.2017 of the Ld. CIT(A)-2, New Delhi, relating to the A.Y. 2012-2013.

2. During the course of assessment proceedings, the A.O. noted that assessee has debited an amount of Rs.40,20,897/- for computer expenses under the head “Administrative Expenses”. On being questioned by the A.O, it was explained by the assessee that these expenses are on account of hiring of computers for the day to- day working of the company. According to the A.O, the assessee could not produce proper bills for which he disallowed an amount of Rs.8,04,179/- being 20% of such expenses and completed the assessment determining the total income at Rs.1,37,55,750/-.

3.We have heard the rival arguments made by both the sides, perused the Orders of the A.O. and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us.

4. It is the submission of the Learned Counsel for the Assessee that assessee had filed the requisite details before A.O. and the A.O. without pointing out any defect in the details filed before him has made the disallowance on adhoc basis.

5.The Ld. CIT(A), in the instant case has neither perused the details filed before the A.O. nor applied her mind. We, therefore, set aside the Order of the Ld. CIT(A) and direct the A.O. to delete the addition. Grounds raised by the assessee are accordingly allowed.

6. In the result, appeal of the Assessee is allowed.

Please find attached the enclosed file for the full judgement