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2015 (10) TMI 408 - ITAT DELHI

2015 (10) TMI 408 - ITAT DELHI - TMI - Disallowance under the provisions of Section 40A(2) (b) - payment made to Mr. M. H. Pandey on account of legal and Professional charges - Held that:- As Mr. M. H. Pandey himself is the director of the assessee company, thus Section 40A(2)(b) of the Act is correctly applied by the Assessing Officer as well as the CIT(A). In this case the assessee company has not given any details in respect of nature of service in the Bills as well as in the TDS certificates .....

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y disallowed this deduction. Besides that Mrs. Ranjana Pandey is wife of Mr. M. H. Pandey, the director of the assessee company thus the Assessing Officer has correctly applied Section 40A(2)(b) which is confirmed by the CIT(A).- Decided against assessee.

Disallowance of Photo Films and Software expenses - revenue v/s capital expenditure - Held that:- The evidence submitted before the AO was insufficient in respect of administrative expenses. The AR has pointed out certain documents w .....

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s fact that the expenses were paid in earlier year but pertained to this year. The assessee also did not furnish the relevant material to establish that it was the reimbursement of the expenses. We therefore in the absence of the clear facts on record, deem it appropriate to remand this issue back to the file of the AO to be adjudicated afresh, in accordance with law after providing due and reasonable opportunity of being heard to the assessee. Matter remanded back to the Assessing Officer.- Dec .....

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) has erred in law and on facts in sustaining the disallowance of ₹ 1,60,000/- made by Ld. AO, being the payment made to Mr. M. H. Pandey on account of legal and Professional charges under the provisions of Section 40A(2) (b) of the Income Tax Act, 1961. 2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in disallowing a sum of ₹ 1,80,000/- out of rent paid by the appellant. 3. That having rega .....

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on account of subscription expenses. 5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in treating the income of ₹ 33,46,469/- as income from other sources instead of business income as claimed the assessee. 6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234B and 234C of the Inc .....

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en to Mr. Sanjay Verma and ₹ 1,60,000/- were given to Mr. M. H. Pandey (wrongly mentioned as M/s Mukesh Aggarwal & Co.). When the AR of the assesses was confronted in this regard for furnishing of justification and evidences for deduction of Tax on sources, the AR of the assessee could not furnish any justification and evidences for deduction of Tax on source. The legal and professional charges claimed by the assessee to the extent of ₹ 4,20,000/- (Rs.2,60,000+1,60,000) was disal .....

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by the assessee regarding the nature of services rendered by Mr. Pandey for which the above payment of ₹ 160000/- has been made to him. In the absence of any details about the nature of services rendered by Mr. Pandey the expenditure incurred is unreasonable and therefore, not allowable under the provisions of Section 40A(2) (b) of the Act. The disallowance made by the AO out of legal and professional services to the extent of ₹ 160000/- on account of payment made to Mr. Pandey was u .....

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professional charges to Mr. M. H. Pandey. 6. The DR submitted that details were not submitted before the AO and thus the onus is on the Assessee. The DR also relied upon the Assessment Order as well as CIT(A) s order. 7. We have perused all records and heard the arguments of both the sides, as Mr. M. H. Pandey himself is the director of the assessee company, thus Section 40A(2)(b) of the Act is correctly applied by the Assessing Officer as well as the CIT(A). In this case the assessee company ha .....

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006, it was paid @ ₹ 50,000/-p.m. and for March 2006 to same landlord @ ₹ 55,000/-. The AR of assessee was asked to furnish justification for variation for the abnormality in increase of rent to above mentioned landlady. The assessee company could not furnish any justification and evidences including lease agreement in support of substantial increase in rent for Jan., 2006 to March, 2006 to the same landlady. In view of these facts, it is clear that the assessee claimed excessive ren .....

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e wife of Director, therefore, the provisions of Section 40A (2) (b) are applicable in this case. The onus is on the assessee to prove that the expenditure is not excessive or unreasonable as compared to the fair market value of the services or facilities for which the payment has been made. In the instant case it is seen that no evidences regarding the fair market value of the above premises which were taken on rent was filed by the assessee before the AO. Moreover, no copy of lease agreement e .....

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stated that lease rent of ₹ 50,000/- be paid to Mrs. Ranjana Pandey w.e.f. 1.08.2005. There are two separate Agreements, one is for entire 2nd floor and the other for part of portion of first floor. Thus, there is no excessive payment made to her by the assessee company. 11. The DR submitted that rent is on higher side and no documents submitted by the assessee before the Assessing Officer. Thus the same cannot be taken into account as the AO has rightly invoked Section 40A(2)(b) of the Ac .....

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his deduction. Besides that Mrs. Ranjana Pandey is wife of Mr. M. H. Pandey, the director of the assessee company thus the Assessing Officer has correctly applied Section 40A(2)(b) which is confirmed by the CIT(A). In result ground No. 2 of the assessee s appeal is dismissed. 13. Coming to Ground No. 3, the Assessing Officer held that during the assessment proceedings the company under the head Administrative Expenses had debited ₹ 15.00 lacs in respect of Photo Films and Software expenses .....

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ounting to ₹ 15,00,000/- was disallowed in the absence of supporting evidences and justification and added to the income of the assessee. 14. The CIT(A) held that the assessee had claimed an expenditure of ₹ 15.00 lakhs on account of making 3 films on traffic education on behalf of M/s Hubert Ebnor Gambh, Austria. The assessee had claimed the above expenditure as revenue expenditure but the AO disallowed the above expenditure, in view of the facts that the assessee could not submit a .....

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n view of the fact that the above expenditure was not in the nature of revenue expenditure, the disallowance made by the AO is as per law and dismissed this ground of the appeal. 15. The AR submitted that details in respect of administrative expense are to be taken into consideration. The revenue themselves were allowing depreciation and these expenditure does not belong to assessee. 16. The DR relied upon the Assessment Order as well as the CIT(A) s order. 17. We have perused the records and he .....

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, it was noticed that the company declared income amounting to ₹ 33,46,469/- as Reimbursement of Expenditures for the first time. The Assessing Officer held that the assessee could not furnish any details about nomenclature of above mentioned income on account of reimbursement on the expenditure. The company also could not furnish any details thereof and any agreement whereby it can be proved as reimbursement of the expenses. Details of expenses which were reimbursed were also not filed. F .....

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