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2016 (9) TMI 750 - AT - Income TaxAddition on account of Bogus Expenditure - Expenditure disallowed based on the investigations done by EOW - Held that:- Assessee has claimed the expenditure as it has shown and cheques were issued in the name of Eureka corporation against services rendered by it. Irrespective of the fact that same has not reached destination in spite of their usual mode of payment through banking channel. Moreover, the said amount was paid after deducting TDS. It shows that bonafide of payment in this regard. In this situation, expenditure in question should not be disallowed on the basis of statements of somebody in proceedings before EOW. Moreover, there is nothing on record that the proceedings of EOW were confronted to the assessee in this regard in any manner. Sequence of the facts show that assessee made payment to Eureka Corporation, which was fraudulently cornered by Shri Piyush Chheda and other. As stated above, for the same, Dilip Mehta of M/s. Eureka Corporation filed a complaint for recovery of the amount in question. It shows that Dilip Mehta of M/s. Eureka Corporation has no grievances against assessee. So, the expenditure in question should not be disallowed in the hands of assessee, irrespective of the fact that same has been fraudulently cornered by somebody, for which, separate legal proceeding claimed to be subjudice. Accordingly, this amount in question should not be disallowed. Regarding other amounts, payments had been made of ₹ 1,19,755/- to Piyush Chheda and ₹ 1,01,390/- to Dhaval Naik. Those payments to Piyush Chheda and Dhaval Naik should not be disallowed on the analogy of Eureka Corporation as same have been paid to respective parties against their services rendered to assessee. The facts of Eureka Corporation are different from the payments made to Piyush Chheda and Dhaval Naik. These have been incurred by assessee for the business purpose. So, same should not be disallowed for reasons discussed above. Accordingly, these amounts in question are directed to be allowed. - Decided in favour of assessee
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