ITAT Grants Partial Relief to Exporter; Rs. 10 Lakh Consultancy Claim Sent Back for Fresh Review

The case had been filed by Amrita Prabhakar Deodhar before the ITAT Mumbai, challenging an order passed by the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] ON August 07, 2025, under section 250 of the Income-tax Act, 1961. The order in question originated from an order passed on December 31, 2008, by the Assistant Commissioner of Income Tax 20(1), Mumbai.

Amrita is the owner of M/s Intel Exports Corporation. She filed her income tax return (ITR) under section 139(1) of the Act. The assessment was completed under section 143(3), where the tax department made three different additions (Rs. 10,00,000 – Legal & professional fees, Rs. 33,424 – Motor car expenses & depreciation and Rs. 23,517 – Telephone expenses) to her income. The dissatisfied Amrita filed an appeal before CIT(A); however, CIT(A) upheld the additions. Thereafter, Amrita approached ITAT Mumbai.

There were a total of three issues on which this case is based. Amrita, in the first issue, had paid Rs. 10 lakh to a consultant named Nitin Barve way back in 2001-02. However, she claimed this expense only in the financial year 2005-06, saying the consultant’s work contributed to her business until 2003-04. The tax department claimed that she failed to prove these payments; no TDS was deducted either in 2001-02 or in 2005-06; hence, the expense claimed was not justified and thus should not be allowed. On this point, the tribunal ruled that she should get one more chance to prove the payment and TDS details. Therefore, the issue is sent back to the tax department for fresh verification.

In the second issue, Amrita stated that the motor car expenses and depreciation were only for the purposes of business. However, she failed at maintaining a logbook to show business use. Here, CIT(A) had disallowed 20% of the expenses as personal use. On this point, the tribunal reduced the disallowance to 10% only.

In the third and last issue, the tax officer disallowed Rs. 23,517, saying part could be personal. However, there was no evidence or specific reason for the disallowance. On this point, the tribunal deleted the entire disallowance.

The outcome is that in the issue of consultancy expense, the tribunal has remanded the case to the tax authorities for fresh consideration. For motor car expenses, the tribunal has reduced the disallowance to only 10% and in the issue of telephone expenses, the tribunal has fully allowed it. Overall, the appeal was partly allowed for statistical purposes.