Section 37(1) – Business expenditure – Where assessee company had furnished names and PAN numbers of all vendors to whom it had paid repair and maintenance charges for their services, the Tribunal was justified in allowing expenditure on account of such repair and maintainence charges

11. Principal CIT vs. Rambagh
Palace Hotels (P.) Ltd.; [2018] 98 taxmann.com 167 (Delhi):

Date of order: 17^th
September, 2018

A. Y. 2005-06

Section 37(1) – Business expenditure – Where assessee company had
furnished names and PAN numbers of all vendors to whom it had paid repair and
maintenance charges for their services, the Tribunal was justified in allowing
expenditure on account of such repair and maintainence charges

During the year, i.e. A. Y.
2005-06, the assessee had claimed expenditure on account of repair and
maintenance charges paid by it to several parties. The Assessing Officer had
allowed repair and maintenance charges paid to four parties, who had appeared
before him and whose statements were recorded on oath. However, the balance
repair and maintenance expenditure was disallowed to the extent of 50 per cent,
on the ground of absence of supporting documents.

On appeal, the Commissioner
(Appeals) reduced the disallowance to 5 per cent. The Tribunal recorded that
the assessee had produced details of all vendors, including their PAN numbers,
invoices raised by them, etc., and held that the Commissioner (Appeals) was not
right in making disallowance of 5 per cent on the ground of mere suspicion and
accordingly allowed the full claim.

On appeal by the Revenue, the Delhi
High Court upheld the decision of the Tribunal and held as under:

“i)    The
finding of the Tribunal deleting disallowance of 50 per cent by the Assessing Officer
is primarily factual. One has quoted the reply filed by the respondent/assessee
before the first appellate authority. These documents and papers were relied
upon by the Tribunal and the Commissioner (Appeals). However, copies of the
said documents/papers have not been filed. There is nothing to show and
establish that the findings of the Commissioner (Appeals) and the Tribunal are
perverse and factually incorrect.

ii)    Given
the aforesaid facts, there is no any substantial question of law arises for consideration.
The appeal is accordingly dismissed.”