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2019 (5) TMI 1310 - AT - Income TaxDisallowance of legal & professional fees - assessee was advertising agency rendering various services - payment to a marketing and PR consultants - HELD THAT:- We find that the assessee, during assessment proceedings, had placed on record the copies of bills issued by Ms.Sharon Dias indicating the nature of expenditure etc. The copy of agreement entered into with Percept Ltd. for provision of services was also placed before Ld. AO. However, the Ld. AO, completely disregarding the same, proceeded on wrong footing that the assessee had not carried out any business during the year and therefore, the expenditure was not allowable either u/s 37(1) or u/s 57(iii). The stated facts also controvert the argument of the revenue that the Ld. first appellate authority erred in admitting additional evidences. Another undisputed fact is that the assessee has made similar payments to these payees in AY 2009-10 which has been allowed as business expenditure by revenue in an assessment u/s 143(3) and therefore, the additions, in our opinion, on similar facts, was not justified. No infirmity in the stand of Ld. first appellate authority, in this regard. Accordingly, ground Nos. 1 to 3 stands dismissed. Addition u/s 41(1) - substantial accounts of Sundry Creditors have been squared off by the assessee during impugned AY itself - HELD THAT:- The balance amount has been paid in subsequent years. Therefore, under the circumstances, nothing would suggest that there was remission or cessation of liability within the meaning of Sec. 41(1), in any manner. In fact, AO, in the process of making addition u/s 41(1), has disallowed entire expenditure claimed by the assessee against those Sundry Creditors, which was never the case of AO. No material has been brought on record to establish that the assessee’s liability with respect to Sundry Creditors ceased to exist, in any manner. Further, during assessment proceedings, the assessee had placed on record most of the account confirmations from these parties. This being the case, no infirmity could not be found in the impugned order with respect to this addition. By upholding the stand of Ld. first appellate authority, we dismiss the revenue’s grounds of appeal.
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