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2019 (6) TMI 1368 - AT - Income TaxAddition of business promotion expenses - purchase of diamond set and watches - personal purposes - HELD THAT:- The AO merely doubted nature of two expense vouchers incurred on account of purchase of diamond set and watches, aggregate of which comes to ₹ 8,82,684/-, came to a conclusion that the entire expenditure was not wholly incurred for business purposes. Thus the AO made the disallowance of expenditure on ad-hoc basis. The concept of ad-hoc disallowance has been repeatedly deterred by the Hon’ble High Court and addition made on such basis is liable to be set aside. The Hon’ble Delhi High Court in case of CIT vs. Ms. Shehnaz Hussain, [2003 (7) TMI 27 - DELHI HIGH COURT] held that addition made on estimate and hypothetical grounds without any concrete material or evidence cannot be sustained. Addition made u/s 40A(3) - reimbursements made b to various employees of the company and no single payment exceeds ₹ 20,000/- - HELD THAT:- It is pertinent to mention that the amount booked by the assessee company is in the form of reimbursement and not the payment to the outside party in excess of ₹ 20000. From the records it can be seen that no single expenditure incurred by Mr. P. Bala Krishnan is in excess of ₹ 20000/-. All these facts were taken into consideration by the CIT(A) and has rightly given the findings by deleting the disallowance. Addition of legal and professional charges for compliance - ignoring the fact that separate auditing fees has been paid - HELD THAT:- The assessee had duly furnished supporting evidences in the form of ledger, confirmation from other part, etc. Payments were made vide banking channel. TDS was duly deducted on the said payments. The said receipts were made part of its income by the other company. All these facts and evidences were not controverted by the Assessing Officer in the remand report. The assessee also clarified before the Revenue that the services received from such party were not on account of auditing but on account of monthly accounting services and Annual Compliance Services to take care of statutory functions as mentioned in the order of the CIT(A). Thus, there is no need to interfere with the findings of the CIT(A). Addition of legal and professional charges paid to sister concern - no written agreement with the sister concern from whom the company takes services. - HELD THAT:- M/s ND Satcom Grintex Communication Ltd. has provided services to the company related to proposals which include satellite communication component for the projects the company proposes to take up with the Indian Navy, Air Force, Army DSA, ISRO and with system integrators such as BEL, ECIL, Tata, HCL, L&T etc. The parties have confirmed that the services were rendered and responded to notice u/s 131 of the Act. Therefore, the CIT(A) has rightly deleted this addition. Addition of office expenses - HELD THAT:- The Assessing Officer merely on the basis of conjectures and surmises made the ad-hoc additions without bringing any specific reasons to that effect. The CIT(A) has rightly deleted this addition and there is no need to interfere with the findings. Addition of travelling and conveyance expenses - HELD THAT:- In the remand report itself, the Assessing Officer remarked that “I have examined the bills and vouchers of the assessee company which seems to be genuine..” Thus, the Assessing Officer has not disputed the genuineness of the evidences produced before the CIT(A). Therefore, after going through the evidences and Remand Report, the CIT(A) has arrived at a proper conclusion of deleting the said addition. - Revenue is dismissed.
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