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In this appeal filed by the Revenue, it has raised two effective grounds. First one is against allowance of staff welfare expenses and second one is against allowance of consultancy charges.

2. Short facts relating to the first issue are that assessee engaged in the business of development of computer software, had incurred staff welfare expenses of ` 19,58,232/-. Finding that staff welfare expenses for financial year 2004-05 were only ` 5,52,079/- and there was a steep increase in the claim for impugned assessment year, Assessing Officer required the assessee to substantiate the claim with adequate proof. Assessee's reply was that a sum of ` 9,15,709/- was spent on restaurant coupons issued to its staff numbering 250. The A.O. was of the opinion that assessee could not produce any proof for coupons given to its staff and there was substantial decrease in turnover also for the impugned assessment year when compared to immediately preceding assessment year. He, therefore, disallowed 50% of claim of ` 19,58,232/-.