#ad hoc disallowance

ITAT Delhi rules that interest-free advances to wholly owned subsidiaries are justified under commercial expediency, rejecting Revenue's notional interest addition. The tribunal also deleted ad-hoc disallowances, emphasizing documentary evidence over presumptive additions, reinforcing tax treatment of intra-group transactions.

The ITAT Bangalore has ruled that the Assessing Officer cannot impose ad hoc disallowance under Section 69C when audited books of account substantiate genuine purchases from agriculturists, even in the absence of PAN details. This sets a critical precedent for small traders and farmers' suppliers, affirming that procedural compliance cannot override substantive verification of transaction authenticity.

ITAT Bangalore struck down an 8% ad hoc disallowance of transportation expenses, holding that consistent banking records and the commercial reality of the business outweigh the absence of formal vouchers. This sets a critical precedent for transporters and logistics firms relying on digital payment trails to substantiate legitimate operational costs in tax assessments.

ITAT Agra struck down an ad hoc disallowance of nearly Rs 98 lakh, holding that the Assessing Officer cannot estimate expenses under Section 37 without first rejecting the assessee’s books of account. This reinforces a critical procedural safeguard for businesses, ensuring estimation is a last resort-not a shortcut-protecting taxpayers from arbitrary adjustments.

The ITAT Ahmedabad has struck down the arbitrary 20% disallowance of truck rent expenses, ruling that tax authorities cannot impose such adjustments without conducting a proper comparative analysis or invoking Section 133(6) to verify genuineness. This sets a critical precedent for transport businesses and SMEs facing mechanical tax adjustments, reinforcing that procedural fairness is non-negotiable even in scrutiny assessments.