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2021 (7) TMI 269 - AT - Income TaxDisallowance of Rent - Payment of Rent to OPC Assets Solutions Private Limited - disallowance made on the ground that the payment needs to be equally distributed over the entire duration of the agreement - whether the arrangement entered into by the Appellant was to achieve commercial expediency? - HELD THAT:- We find that the assessee has taken on lease office equipment, furniture & fixtures for a period of 5 years pursuant to certain agreements between the assessee and M/s. OPC Asset Solutions Private Ltd. As per the terms of agreements, the assessee is required to pay yearly lease rent for a period of first three years.Undisputedly, the assessee has paid the said amount to the lessor pursuant to the terms of agreement after due compliances and claimed the deduction of the same during the year. The lessor is unrelated party to the assessee. The agreements between the two parties have not been held to be non-genuine and it is also not the case that the expenditure was not incurred wholly and exclusively for the purpose of assessee's business. This being so, in our considered opinion, it is not open for revenue authority to sit on the armchair of a businessman so as to ascertain the quantum of deduction allowable to the assessee, Another pertinent fact is that while framing assessment for AY 2013-14 (which is the first year of payment of rent), the lease rent paid the assessee as per the agreements has not been disturbed by Ld. AO. Therefore, on the facts & circumstances of the case, the revenue authorities were not justified in tinkering with the claim made by the assessee. Therefore, we delete the disallowance as made by Ld. CIT(A) in the impugned order and allow this ground of appeal. Disallowance of Professional Fees - allowable business expenditure or not? - HELD THAT:- Since the assessee failed to establish that the expenditure was laid out wholly and exclusively for the purpose of the business, the disallowance was confirmed. As against this, in this year, the assessee has furnished the copy of the Appointment Letter of both the employees which elaborate the nature of work assigned to them. The copies of the qualification certificates along with copies of TDS certificates have also been furnished. The claim of the appellant rest on the ground that both the employees worked on retainer-ship basis and were qualified professional. The appointment of both the employees was purely a commercial decision keeping in mind the benefit of the business as a whole as it would be very important that the family persons should be employed in the own family business to control the management, operations, staff etc. so that there should not be any difficulty in running the business. The lower authorities, without questioning the appointment letter of both the persons, questioned the genuineness of the transaction. We deem it fit to provide another opportunity to the assessee to substantiate its claim before lower authorities. Therefore, the matter of this disallowance stand remitted back to the file of Ld. AO for fresh adjudication.
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