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2019 (10) TMI 349 - AT - Income TaxProportionate disallowance of interest on advances to assessee’s related concern DTTIPL - AO disallowed the interest mainly on the ground that the assessee firm had used interest-bearing funds for the purpose of providing interest free advances - CIT-A deleted the addition - HELD THAT:- In the case of SA Builders [2006 (12) TMI 82 - SUPREME COURT] had held that the expression ‘commercial expediency’ is an expression of wide import and includes such expenditure as a prudent businessman incurs for the purpose of business. Once it is established that there is nexus between the expenditure and the purpose of business, the revenue cannot assume the role to decide as to how much is reasonable expenditure. FAA has also noted that the assessee firm had its own funds which were more than the amount of advances given to DTTIPL and, therefore, there was no occasion for the assessing officer to make disallowance on account of interest. While deleting the disallowance, it has also been noted by the Ld. First appellate authority that both the concerns pay tax at the same rates and, therefore, there was no loss of revenue. We are in full agreement with these observations and findings of the Ld. first appellate authority in this regard. DR could not point out if there was any perversity in these factual findings recorded by the Ld. first appellate authority - disallowance has been rightly deleted by the Ld. first appellate authority - Decided against revenue. Disallowance pertaining to subscription payments @ 25% - reason for AO for making the disallowance was that the same were excessive and not wholly and exclusively incurred for the purpose of the professional activities of the assessee - HELD THAT:- FAA while deleting the disallowance, has noted that the assessee firm contributes by way of subscription fees to Deloitte Global Services Holding Ltd and Deloitte Shared Services India (Pvt.) Ltd which is a global network of International Association of firms and companies rendering professional services. CIT (Appeals) had accepted the assessee’s contention that the assessee’s firm being a member of this global network and having ‘Deloitte’ in its name brings in professional work in the form of reference by other member firms. CIT (Appeals) has also noted that a similar disallowance had been made in assessment year 2010 – 11 which had been deleted by the Ld. first appellate authority. We also note that the Department did not file any further appeal against this deletion made by the Ld. CIT (Appeals) in assessment year 2010 – 11. - Decided against revenue. Payment made to the retired partners - HELD THAT:- We find that an identical issue had come up before ITAT Chennai bench in the case of a related concern of the assessee in assessment year 2011 – 12 after relying on an order of CC Chokshi & Co. [2010 (5) TMI 698 - ITAT MUMBAI] for assessment years 2000 – 01 and 2001 – 02 had held the issue in favour of the assessee. Also in the case of DCIT versus Wadia Ghandy & Company [2019 (2) TMI 1283 - BOMBAY HIGH COURT] also upheld an identical order of ITAT Mumbai and noted that payment to the partner would amount to diversion of income at source by overriding title. - Decided against revenue
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