Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (8) TMI 716 - AT - Income TaxScope of limited scrutiny under CASS - additional ground that the Assessing Officer grossly erred in exceeding his jurisdiction in making huge disallowances on issues which were not the basis for initiating Limited Scrutiny - HELD THAT:- From the perusal of Assessment order, it can be seen that the Limited Scrutiny was conducted for reasons:- Depreciation claimed at higher rates/higher additional depreciation claimed and Mismatch in amount paid to related persons u/s 40A(2)(b) reported in Audit Report and ITR. Thus, the scope of limited scrutiny was properly taken into consideration by the Assessing Officer while making addition in respect of the above mentioned reasons. Therefore, the additional ground taken by the assessee does not sustain. As the scope of assessment order does not override the reasons mentioned in the limited scrutiny, additional ground taken by the assessee is dismissed. Business expenditure in respect of payment of royalty u/s 37 disallowed - HELD THAT:- Transaction under reference was a commercial arrangement between two parties which was entered into during AY 2015-16. No royalty was paid till a license agreement dated 22.07.2014 was entered into between the assessee and the proprietor ship concern of Ms. Rai, namely Indian Inc. As per the agreement, a payment of 2% of net revenue was to be made by the assessee to Indian Inc. on account of royalty for the use of the name “Indian Inc.”. The tax was duly deducted at source and deposited under Section 194J of the Income Tax Act, 1961. Besides this, Ms. C.E. Rai had offered the said amount in here individual income tax return where she was taxed at the rate of 34.61% whereas the tax rate applicable for the company was 33.06%. All these factual aspects were not at all disputed by the Revenue authorities. Merely on the ground that trademark was earlier i.e. prior to present assessment year not registered cannot be the ground for making disallowance. In fact, in the earlier assessment years, the said expenditure was allowed by the Revenue. Thus, the Assessing Officer as well as the CIT(A) was not correct in disallowing the said claim of business expenditure in respect of payment of royalty under Section 37 - Decided in favour of assessee. Disallowing depreciation on the new office building - use of property for business purposes - HELD THAT:- The fact remains that property was not fit for business purposes till March, 2015. In fact the letter dated 23.03.2015 was addressed to the builder stated that basic amenities was not completed such as Lift and other facilities. Besides this the assessee has not supported by any documents on record its contention that the assessee started using the new office as a warehouse and also for the purpose of display of samples through the visits of overseas buyers. So the contention of the assessee that the property was in use, does not survive. The Assessing Officer rightly rejected the claim of depreciation to the assessee. - Decided against assessee. Disallowance in respect of travel expenses - Proof of expenditure for business purpose - HELD THAT:- It is pertinent to note that the disallowance in respect of travel expenses was made by the Assessing Officer on ad-hoc basis. CIT(A) also notes that there is travel expenses for business purposes. From the perusal of the records it can be seen that all the relevant evidence was brought on record by the assessee before the Assessing Officer as relates to the said expenses was done for business purpose only. Thus, the Assessing Officer as well as the CIT(A) was not right in disallowing the travel expenses - Decided in favour of assessee.
|