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Pradip Baijal, M/s. ADC Legal Services Pvt. Ltd. Versus DCIT, Central Circle- 25, New Delhi

2016 (8) TMI 687 - ITAT DELHI

Allowance of professional expenses - Held that:- From relevant operative part 3.1 of the Assessing Officer, we observe that the Assessing Officer made this addition by the only alleging that travelling expenses claimed by the assessed which were not reimbursed to him by the said companies cannot be allowed and the AO treated the same of personal in nature and not linked to the assessee’s professional receipt. We are not in agreement with this conclusion because when the assessee is offering to t .....

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of telephone, car maintenance and car lease - Held that:- The assessee could not show us, the assessee was having any other telephone or car exclusively for his personal use. Therefore, the element of personal use cannot be ruled out and part disallowance in this regard is obvious. However, we made pointed out that the 1/3rd amount was disallowed is very high after careful consideration and entire facts and circumstances of the case, we are of the view that the 15% of the claimed expenditure wou .....

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r, his professional interest but in absence of details to link these expenses with the profession of the assessee this amount is disallowed. The CIT(A) has not doubted the quantum of amount incurred by assessed but on the possibility of personal use this claim has been dismissed which is not a proper and justified approach of a tax authority. In totality of facts and circumstances of the case, we satisfied that when on one hand the assessee offering ₹ 1.54 crore income from consultancy bus .....

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ssee : Sh. Deepak Kapoor, Adv. For The Revenue : Ms. Rakhi Bimal, Sr. DR ORDER PER C.M.Garg, J.M. This appeal by the assessee has been filed against the order of the CIT(A)-I, New Delhi dated 16.12.2013 was in first appeal no. 108/12-13 for AY 2010-11. Grounds raised by the assessed read as under :- 1. Because on facts and in law and on grounds taken and basis adopted, the addition to the total income of the assessed on account of disallowance to the extent of ₹ 3,48,186/- is totally wrong .....

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record. 2. Apropos Ground no. 1 : The brief facts are that the Assessing Officer made addition of ₹ 10,97,582/- by alleging that these expenses are incurred for personal purpose by the assessed for his family members and the said amounts includes various expenses of personal in nature. The first appellate authority after considering the explanation and submissions of the assessee gave part relief and sustained the disallowance to the extent of ₹ 3,48,186/-. 3. The ld. Counsel of the .....

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Noesis Strategic Consulting Services Pvt. Ltd. in the year 2007 and subsequently the assessee took independent consultancy work for ITU and World Bank and he was given advisory work by Vaishnavi Advisory Services (Pvt.) Ltd. and other consultancy firms. The ld. Counsel also explained that the assessee took work from MF Global Consultancy firm and made presentations in various countries regarding their investments in power sector in India and this work involved lot of preparation by the assessee .....

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use or use by the family members by the assessee. Therefore, this expense has to be allowed to the assessee. 4. Replying to the above the ld. Departmental Representative strongly supported action to the AO and contended that since the impugned amount was not reimbursed by the clients of the assessed, therefore, the same was not pertaining to his professional activity and in this situation, the AO was quite justified in treating the same as personal of in nature and not linked to the assessee s .....

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mbursement there was a balance of ₹ 93.728/- which could not be reimbursed and the same was claimed by the assessee as foreign travelling expenses linked with his consultancy profession. The authorities below have not brought out any fact to show that the impugned amount was incurred by the assessee for his personal use or for his family members or the amount claimed is bogus or incorrect. 6. From relevant operative part 3.1 of the Assessing Officer, we observe that the Assessing Officer m .....

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could not be reimbursed from the clients and which is not expressly linked with his personal use or used by the family members then the same deserves to be allowed as professional expenses. Thus, we inclined to demolish conclusion to the authority below and direct the AO to allow the same as professional expenses. 7. The ld. Counsel further pointed out that the assessing officer disallowed ₹ 20,000/- which were incurred by the assessee for charges for preparation and filing of Income Tax R .....

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vert this fact that the assessee submitted audited financial statement along with auditors report in form no. 3CB and also filed income tax return showing the huge professional consultancy income. Therefore, the element of the expenditure incurred in this regard is allowable. 8. In our considered opinion when the assessee is filing audited financial statements along with auditors report in form 3CB and had also filed Income Tax Return then the professional expenses on this account should be allo .....

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t of personal use cannot be ruled out. Therefore, the AO was quite correct in making disallowance of 1/3rd of claimed expenditure. 10. On careful consideration of above submissions, we are of the view that on specific query from the bench. The Ld. Counsel of the assessee could not show us, the assessee was having any other telephone or car exclusively for his personal use. Therefore, the element of personal use cannot be ruled out and part disallowance in this regard is obvious. However, we made .....

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ly, this issue is partly allowed in favour of the assessee. 11. Next issue for adjudication is the impugned addition is made by the AO on account of business promotion expenses by disallowing ₹ 1,60,194/- on the allegation that in absence of exact details as to link between these expenses and profession of the assessed. This expenditure cannot be allowed for tax purposes. 12. The ld. Counsel pointed out that the assessee has to meet various national and international clients on various loc .....

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ue allegations. 13. The ld. DR oppose the contentions of the ld. Counsel of the assessee and supported the first appellate order by drawing our attention to para 3.4 of the order of the CIT(A). 14. On careful consideration on above submissions, we are of the view that the consultancy business. The assessed is required to meet various clients at his office and also at the other locations as per convenience of his clients. For this purpose, the assessed has used India International Centre, Delhi G .....

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