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2023 (5) TMI 460 - ITAT KOLKATAAddition made in respect of rent paid for flat - Assessee has paid rent to Director of the assessee who is a person specified u/s. 40A(2)(b) - HELD THAT:- On enquiry in respect of this expenditure, no explanation was furnished in respect of purpose of said flat taken on rent from the Director. It is also noted that in the same tower, assessee owns a similar flat which is let out to one of its group company for an annual rent of Rs.48,000/-. Thus, there is an excess payment when compared to what the assessee is receiving for a similar size of flat in the same tower. Ld. AO has also noted the fact that assessee does not have any branch office for its business activities. Before the Ld. CIT(A), it was submitted that assessee has used this flat for accommodating executives of the company during their official visit to Kolkata. Nothing corroborative is placed on record to substantial this claim. CIT(A) noted that assessee has not been able to give any concrete evidence differentiating the two flats in terms of area or other amenities and thus upheld the disallowance made by the ld. AO. Considering these facts on record, we do not find any reason to interfere with the finding given by the Ld. CIT(A). Accordingly, this ground of appeal of assessee is dismissed. Disallowance on professional fees paid by the assessee - Proof of allowable business expenditure - HELD THAT:- AO enquired about the nature of services rendered in respect of these payments as well as details of TDS thereon which remained unverified as to whether it relates to assessee’s business or to earning of rental income or for acquisition of property. CIT(A) gave relief and allowed 50% of the said professional fees on estimate basis. In our view, Ld. CIT(A) has given appropriate relief to the assessee in absence of any details towards nature of service, TDS etc. and we have no reason to interfere with the same. Accordingly, ground taken by the assessee in this respect is dismissed. Disallowance towards business promotion expenses and telephone expenses - From the perusal of the observations made by Ld. AO as well as Ld. CIT(A) that these expenses could not be verified in absence of bills furnished by the assessee, we do not find any reason to interfere with the finding given by the Ld. CIT(A) and accordingly, both the grounds taken by the assessee in this respect are dismissed. Disallowance u/s. 14A - exempt dividend income and profit on sale of investment - HELD THAT:- There is no direct nexus which has been established by the Ld. AO for treating 50% of the remuneration of the Managing Director for disallowance u/s. 14A - provisions of Rule 8D under the Income Tax Rules, 1962 came into effect from 24.03.2008 by IT (5th Amendment) Rules, 2008. The case before us is in respect of AY 2005-06 and the other one being for AY 2007-08 for which Rule 8D cannot be applied. Accordingly, considering the provisions of law and the ad-hoc treatment of considering 50% of remuneration of the Managing Director towards earning of exempt income by the Ld. AO is uncalled for. Accordingly, this ground of appeal taken by the assessee is allowed. Denying the exemption on earning of agriculture income - HELD THAT:- Assessee did not furnish details in respect of wages and other expenses incurred in carrying out agriculture activity. A statement was furnished giving month wise sale of flowers and certain vegetable crops viz., Khira, Kakri, Bhindi which did not satisfy the authorities below - as noted that assessee had no assets viz., agriculture tools, irrigation facility, tractor etc. to produce the quantity of flowers and other vegetable crops on the said two lands stated to be at Delhi. Addition was made in respect of the agriculture receipts - Based on the submission made as noted in the orders of the authorities below and the material available on record, we do not find any reason to interfere with the finding given by the Ld. CIT(A) and accordingly, ground taken in this respect is dismissed.
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