9911796707
TMI Blog2017 (11) TMI 1366X X X X Extracts X X X X X X X X Extracts X X X X ..... P/14) "1. That the ld. CIT(A) grossly erred in not allowing the Software expenses of Rs. 99031.00 treating them as Capital expenditure. The ld. AO disallowed Rs. 119429.00 out of this and the ld. CIT sustained the disallowance of Rs. 99031.00. 2. That the ld. CIT(A) grossly erred in not deleting the addition made by ld. AO on account of caution money of Rs. 5,00,000/-. The ld. AO made the addition of caution money Rs. 1668525/- out of that ld. CIT(A) sustained the addition of Rs. 5,00,000/-. 3. That the ld. CIT(A) grossly erred in sustained the addition u/s 40A(2)(b) on A/c of Smt. Arti Bansal Rs. 2,42,000/-. The Ld. AO made addition of Rs. 7,94,000/- out of this ld. CIT(A) sustained Rs. 2,42,000/-." Revenue's grounds of appeal (ITA No. 738/JP/14) "On the facts and in the circumstances of the case, the ld. CIT(A) has erred in:- (i) deleting the addition of Rs. 11,68,825/- out of total addition of Rs. 16,68,825/- made by AO on account of refund of caution money. (ii) deleting the addition of Rs. 19,65,348/- made by the AO on account of depreciation on PLD unit building on the basis of additional evidence admitted in violation of Rule 46A. (iii) deleting the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee and which has any enduring benefit. The ld.CIT(A) has gone through the details and held that expenditure of Rs. 99,031/- relate to purchase of software whereas expenditure of Rs. 2,750/- and Rs. 17,648/- was related to use of software for one year and renewal of software respectively. Accordingly, the expenditure of Rs. 20,398/- was held as revenue in nature and addition of Rs. 99,031 was confirmed. Now the assessee is in appeal before us. 6. It was submitted by the ld AR that the Company has incurred software expenditure of Rs. 1,19,429/-. These are the expenditure for taking software licences for a year. The company is engaged in coaching business; it has to buy so many softwares and each of these softwares cannot be used for more than 1 year. Further, for renewal of the licence also, it is done every year. Hence these expenditure cannot be capitalized. It has no enduring benefits because it becomes obsolete in a year or rather before a year itself because in the changing environment upgraded applications come and the earlier one becomes obsolete. Out of the said expenditure of Rs. 1,19,429/- the learned CIT(A) allowed small expenditure of Rs. 20,398/- and in rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as under:- The assessee has shown caution money refund closing balance as on 31.03.2010 at Rs. 71,53,000/-. Details of the receipts and payment during the year under consideration in respect of caution money is stated as under:- Particulars Amount (Rs) Opening Balance as on 01.04.2009 55,24,500/- Add: Receipts during the year 1,27,54,000/- Total 1,82,78,500/- Less: Payment During the year 1,11,25,500/- Closing balance an on 31.03.2010 71,53,000/- Perusal of the details filed by the assessee reveals that sufficient amount of caution money has been refunded in cash, for which no proper receipt/evidence has been adduced. Details of caution money distribution for the year under consideration are available on sheets, examination of which reveals that neither the signature of the recipient nor the stamp (Paid) have been indicated against many places, examples of which are indicated as under:- S.No. Batch Roll No. Name of the student Amount (Rs) 1 AO1 16 Kumar Saurav 1000 2 AO1 12245 Hardik Agarwal 1000 3 AO1 12266 Srijan Mishra 1000 4 AO1 12469 Harvineet Singh 1000 5 BO1 523 Anup Kumar 1000 6 BO1 533 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven after 1-2 years for the refund. The learned A.O. has due to some very less unpaid refunds of the Caution Money i.e 10 out of Student strength in thousands, has disallowed 15% of caution money stating that there is no proper receipt or evidence. In this matter we submit that we have given details of refund and a copy of the page of the register and the system what we are following in case of refund of money. No particular incidence has been noticed by the learned A.O. that the same has not been refunded to the students. It could be checked anytime by calling the student anytime about receiving the money which we also apply practically to ensure proper disbursal but no such exercise has been done and straight away deducted 15%. He has made up his mind that due to non-legibility of signatures of the recipients, money refunded during the year, cannot be verified in entirety whereas we have submitted that we have strong procedure for refund of Caution Money. We got the signatures of the students or the parents those who take back the Caution Money and all those sheets were filed along with our reply before the learned A.O. We are sorry to state that even in such a situation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... columns, though payment has been made, unfortunately the signatures were not obtained and on the basis of report, given by the cashier or the person who was In-charge of refund of the caution money, the payment has been debited in the books although there is no doubt about the non-payment of the same. The amount entered in the register, has entirely been paid during the year itself and if something is not claimed in the year itself then it is kept credited in caution money till the student claims and the matter of written off comes in picture after 4-5 years but no such case has come in the case of Bansal classes and, there has never been a chance to written off. The learned CIT(A) observed that the learned AO made addition of Rs. 16,68,525/- on the basis of out of Rs. 10,000/- and held not justified, but again he also came on the estimation. Our submission is that out of the total payment of Rs. 1,11,25,500/- there are instances of 10 students (Rs. 10,000/-) on which there were no signatures. In such a situation even if you do not believe the authenticity of the coaching institute who has paid such a huge amount, at the most Rs. 10,000/- can be disallowed since, except this one, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, vouchers and other details were submitted during the course of assessment proceedings which is also not disputed by the Revenue. Further, the question of disallowance comes where there is a claim of expenditure at first place which is not the case before us. In the entirety of facts and circumstances of case, we are of the considered view that there is no basis for adhoc disallowance of 15% of caution money which has been refunded to the students during the year. We accordingly set-aside the findings of the AO and the ld CIT(A) and the disallowance of caution money so refunded is deleted in entirety. In the result, ground of assessee's appeal is allowed and ground of revenue's appeal is dismissed. 16. In ground no. 3, the assessee has challenged the sustenance of addition u/s 40A(2)(b) on account of salary payment to Arti Bansal amounting of Rs. 2,42,000/-. The revenue is also in cross appeal in ground no. 3 relating to deletion of addition of Rs. 5,52,000/- out of total addition of Rs. 7,94,000/- made by the AO u/s 40A(2)(b) of the Act. 17. Briefly stated facts of the case are that the the AO made an addition of Rs. 7,94,000/- observing as under:- "As per detailed filed alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of appellate proceedings before the ld CIT(A), the assessee vide letter dated 24/06/2014 submitted as under:- "Salary : In course of assessment the details of salary paid to various persons were filed. In the details the learned AO took up the salary of two persons - Smt. Arti Bansal and Smt. Mahima Bansal. Smt. Arti Bansal is not only looking after the entire classes at Ajmer but also taking lectures at Kota Bansal Classes and, therefore, she has been made the General Manager for the Classes at Ajmer by the institute. Looking to work, her qualification degree certificate enclosed, experience and time devoted, the salary was increased from Rs. 34 lacs to 40.5 lacs and this increase is justified with the turnover of the Ajmer which has been increased from 134.32 lacs to 156.99 lacs. That growth as calculated by Ld. A.O. comes to around roughly 17% and increase in salary comes to roughly around 19% but he forget to consider the most important fact that she is not only managing Ajmer Branch but also contributing to Kota Head Office and in that scenario the increase is well deserved justified. Also the comparison between Profitability and Salary is not well justified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned A.O. He has just given the calculation that this much of percentage of salary is increase; it should also increase accordingly. This cannot be the basis. There is separate basis for justifying every person in this line of business, hence should be allowed fully." 19. The relevant finding of the CIT(A) is reproduced as under:- "I have gone through assessee's submission and AO's findings. It was seen that Smt. Arti Bansal was looking after Ajmer Branch of the assessee company. The total receipts of Ajmer Branch was Rs. 1,56,99,720/-. Payment of Rs. 40,50,000/- to Smt. Arti Bansal appeared to be excessive, considering the fact that total turnover was only Rs. 1,56,99,720/- and there were other teachers also. Therefore, disallowance of Rs. 2,42,000/- related to Smt. Arti Bansal is confirmed. The AO has not given any reason for disallowance of salary to Smt. Mahima Bansal. Therefore, AO is directed to delete addition of Rs. 5,52,000/-." 20. During the course of hearing, the ld. AR submitted that this is in relation to the payment made to Mrs. Arti Bansal treating it to be the payment u/s 40A(2). It is submitted that Mrs. Arti Bansal is the daughter of Mr. V.K. Bansal and aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, she was made responsible for the upliftment of the Ajmer center and managing the academic and administrative activities of the center and sharing dual responsibility of Ajmer center incharge academically and administratively. As per her annual appraisal report, keeping in view her past performance and her current responsibilities, her salary was fixed at Rs. 40.5 lacs per annum. 25. Similarly, it is noted that Mahima Bansal holds the degree of BE and is a faculty member in the Mathematics Department in IIT-JEE Division for Kota Center with over 8 years of experience. Her Job responsibilities include taking 4-5 lectures each day of Class XI/XII/XIII Target IIT-JEE, test paper setting and its solutions, DPP/Literature development, etc. As per her annual appraisal report, keeping in view her past performance and her current responsibilities, her salary was fixed at Rs. 24 lacs per annum for the financial year 2009-10 which was increased to Rs. 37.50 lacs for the subsequent financial year 2010-11, thereafter increased to Rs. 60 lacs for the financial year 2011-12 and thereafter, increased to Rs. 69 lacs for the financial year 2012-13. 26. As per AO, salary payments made to these t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company is where people holding similar position and having similar experience and qualification have been drawing lesser remuneration compared to what has been paid to these persons by the assessee company. In other words, the test of reasonableness can be invoked where there is contemporary data in terms of identifiable third party transactions in similar field of competitive coaches classes being conducted by other companies. In the instant case, the revenue has not brought on record any such contemporary data in terms of other educational institutions of same scale-and size and having similar strength of student and infrastructure wherein faculty member holding the dual responsibility have been paid lesser salary. Further the Courts have held from time to time that the reasonableness of the expenditure is to be adjudged from the point of view of a business man and not of the Revenue. In other words, the reasonableness has to be seen vis-a-vis legitimate needs of the assessee company and benefit derived or accruing to the assessee company and as determined by the assessee company. In the entirety of the facts and circumstances of the case, we are of the view that the salary pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bansal shall apply with equal force to the present case. Further, we find that unlike the case of Arti Bansal, in case of Mahima Bansal, comparative data has been examined and analysed by the ld CIT(A) even though it is an internal data as provided by the assessee company. Based on the analysis of the said data, the ld CIT(A) has given a finding that the salary payment to Mahima Bansal is excessive by Rs. 8 lacs in financial year 2011-12 relevant to assessment year 2012-13 and by Rs. 6 lacs in financial year 2012-13 relevant to assessment year 2013-14. The said findings of the ld CIT(A) is therefore in consonance with our reasoning given above in case of Arti Bansal. However, there is no comparative data that is available and analysed for the financial year 2009-10 and 2010-11. We accordingly confirm the deletion of addition of salary payments to Mahima Bansal for AY 2010-11 and AY 2011-12. For AY 2012-13 and AY 2013-14, we confirm the addition as sustained by the ld CIT(A) and balance addition is deleted. The respective grounds of appeal are disposed off accordingly. 32. Regarding ground no. 2 of revenue's appeal wherein the action of the ld CIT(A) has been challenged in deletin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper segregation and no disturbance of any kind. In case of assessment proceedings the details of constructions were submitted. The construction work began in March 2008 and continued upto December, 2009. The major work was completed by end of September and thereafter the said building was taken in use. However, certain furniture & fixtures were carried on and that too was finished by December, 2009. As such the Company claimed depreciation @ 5% treating it to be in use below 6 months. The learned A.O. has called upon some information such as electricity bill, completion certificate etc. However, we have submitted the copy of the electricity bill since the bills are common for the entire premises. As regards completion certificate, it was submitted that it is not a system in Kota to obtain any completion certificate. However, we got it valued from the valuer. He has also mentioned about completion of it, but by that time the certificate was given, the assessment was complete. We are now submitting a completion certificate of a registered valuer which contains therein the details of the expenditure incurred. The foremost thing is that the expenditure was last incurred in Dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld CIT(A) and we have gone through his following findings and the same are hereby confirmed: "The AO disallowed the depreciation mainly on two counts. No electricity bill was produced and no completion certificate was produced. The assessee submitted that the new building was adjacent to the existing building and both the buildings have common connection and the electricity bills are common for both the premises. The assessee submitted that after completion of new building, the electricity load was got increased. The assessee further submitted that in Kota, there is no system of obtaining a completion certificate. I have gone through the construction account of the building and it was seen that in the current financial year, last payment was made on 21.12.2009. It was also seen that assessee applied for increase in electric load from 350KW to 500 KW on 27.07.2009 and demand note was issued (by Jaipur Vidhyut Vitran Nigam Ltd.) on 21.08.2000, which was deposited on 28.08.2009. Considering the above, I am of the opinion that the building was completed and put to use during the second half of current financial year. The AO is therefore directed to delete addition of Rs. 19,65,348. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of donation factor. But no such register u/s 301 has been produced. The assessee company has, however, filed a copy of an extract dated 12.05.2009 from the minutes of meeting of the Board of Directors held at Kota on 01.05.2009, which reads as under:- "Certified copy of an extract from the minutes of meeting, of the Board of Directors of Bansal Classes Private Limited, duly convened and at which a proper quorum was present, held at Kota on 1st May, 2009. We hereby certify that the following resolution of the Board of Directors of Bansal Classes Private Limited, was passed at a meeting of the Board held on 1st May, 2009 and has been duly recorded in the minute book of the said company. Resolved that Bansal Classes Private Limited is authorized by its Board of Directors to give donation to any public/religious/charitable/any such kind of institution up to 10% of its gross profit. Resolved further that the said resolutions shall continue in force till rescinded by the Board. Signatures of On Behalf of Board of Directors BANSAL CLASSES PRIVATE LIMITED -Sd/- (Promod Kumar Bansal) Chairman Director. -Sd/- (Richa Bansal) Director. The so called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Secretary 3. Mahima Bansal (Director's wife) Treasurer 4. Sameer Bansal (Director) Vice Chairman 5. Richa Bansal (Director) Joint Secretary There is no mention in the so called copy of extract of the resolution that donations would be made to the said society only. There is no nexus of the huge donations made to the said society with the business purposes of the assessee company. Moreover; there is no commercial expediency in making donations worth Rs. 9,80,51,000/- to only one society i.e. Bansal Public Education Society, Registered Office, 5-A-13, Vigyan Nagar, Kota. Making such huge donations to this society is only a colorful design on the part of assessee company to divert its profits to the trust, having trustees which are either close relatives of the Directors or the Directors themselves. Diversion of its profits by way of donations is a clever strategy on the part of assessee company to transfer its profits under the garb of donations to the trust, having exempt income. Considering the totality of the facts and non production of the material documentary evidence in support of provision of donation, the amount of Rs. 9,80,51,000/- donated to the said trust is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntions and purused the material available on record. During the year under consideration, the assessee company has contributed by way of donation of Rs. 9,80,00,000 to Bansal Public School Education Society having registered office at 5-A-13, Vigyan Nagar, Kota, Rajasthan and a deduction to an extent of 50% of the said donation amounting to Rs. 4,90,00,000 has been claimed in the return of income in terms of section 80G of the Act. The said society has been claimed to be approved by the Commissioner of Income Tax and duly registered under section 80G(5)(vi) of the Act. 42. We agree with the findings of the ld CIT(A) where he says that "Section 80G does not prohibit donations to exempted entities controlled by related persons. Section 80G does not require that the donation should have nexus with the business purposes of donee. Section 80G does not require that the donation should be for commercial expediency. Most of these things are required for allowing deduction of business expenditure u/s 37 of the I.T. Act." 43. On pointed question raised by the Bench as to whether, at the point in time, when the said donations were made during the financial year, the said registration was gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic welfare i.e. contribution to Police welfare fund." Revenue's grounds of appeal (ITA No. 739/JP/14) "On the facts and in the circumstances of the case, the ld. CIT(A) has erred in:- (i) deleting the addition of Rs. 11,50,450/- out of total addition of Rs. 16,50,450/- made by the AO on account of unpaid caution money; (ii) deleting the addition of Rs. 10,62,000/- made by the AO u/s 40A(2)(b) out of salary paid; (iii) deleting the addition of Rs. 4,53,00,000/- made by the AO on account of disallowance of deduction claimed by assessee u/s 80G; (iv) deleting the disallowance of Rs. 43,088/- made by the AO out of depreciation on xerox machine; (v) deleting the addition of Rs. 38,23,006/- made by the AO on account of depreciation on PLD unit building by following his decision dated 21.08.2014 in the case of the assessee for AY 2010-11 which has not been accepted by the Department; 45. Regarding common ground No. 1 of assessee's as well as revenue's appeal relating to refund of the caution money, the relevant finding of the ld CIT(A) is reproduced as under:- "I have gone through assessee's submission and AO's findings. The assessee claimed that it has not claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly been considered and not found acceptable. There is no commercial expediency in making the above said expenditure, as no nexus of these expenses with the business purposes of the assessee is proved. Hence; the above noted expenses aggregating Rs. 57,200/- are disallowed, being not incidental to the business of the assessee company." 48. The relevant findings of the ld CIT(A) are as under: "I have gone through assessee's submission and AO's findings. Last year, I have allowed similar payments on the ground that the same were made for the purposes of advertisement. However, no evidence was submitted to show that the payments in current year were for the purposes of advertisement. Therefore, it cannot be held that these payments were for the purposes of business. Alternatively, these payments can be claimed as donation. Donations etc. can be claimed under the provisions of Act after fulfilling certain conditions, e.g. donations can be claimed u/s 80G etc. As assessee has failed to fulfill any of the condition for claiming deduction, the disallowance by AO was justified. The addition of Rs. 57,200/- is confirmed. This ground of appeal is therefore dismissed." 49. The ld CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontribution towards police welfare fund has a necessary nexus with the safety of the students in and around Kota and hence, with the business of the assessee cannot be rejected. It is an expenditure which has been laid down to develop and strengthen the coordination and working relationship with the local police department. Given the budgetary constraints which, at times, are faced by police department, where an assessee contributes certain amount for welfare of the police personnel to help improve their extreme work conditions where they are deployed in close proximity to assessee's area of operations, the necessary nexus is certainly established with the business of the assessee. In our view, such an expenditure will be eligible for allowance under section 37(1) as incurred for the purposes of its business. In the result, assessee's ground of appeal is allowed." In our view, the above reasoning will apply with full force to contribution towards building the conference hall for use of the police personnel. In the result, the ground of appeal is allowed. 53. Now coming to the revenue's appeal. Regarding ground No. 2 of revenue's appeal relating to deletion of the addition of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO made an addition of Rs. 54,763/- observing as under:- "In the details of fixed assets filed by the assessee, the assessee has purchased the following items, which are debited in the Computer account:- S. No. Name of Date of Amount Rate of Amount of the item purchase depreciation claimed depreciation claimed 1 Xerox Machine 17.08.2010 Rs. 95,750/- 60% Rs. 57, 450/- 2 Canon Printers 23.10.2010 Rs. 45,900/- 60% Rs. 13,770/- 03.12.2010 Rs. 5,990/- 60% Rs. 1,797/- Total Rs. 73,017/- However; depreciation on Xerox Machine and Printers is admissible @ 15% and not @ 60% claimed by the assessee. Hence; excess depreciation has been claimed by the assessee, as under:- Item Amount of depreciation admissible Excess depreciation claimed Xerox Machine Rs. 14,362/- Rs. 43,088/- Canon Printers Rs. 3,442/- Rs. 10,328/- HP Printer Rs. 450/- Rs. 1,347/- Total Rs. 54,763 Accordingly, excess depreciation of Rs. 54,763/- is disallowed and added to the assessee's income.'' 57. The relevant findings of the ld CIT(A) is as under: "I have gone through assessee's submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation report. It was vividly held at the time of framing assessment for the A.Y. 2010-11 that the building remained incomplete as on 31.03.2010, for the detailed reasons recorded in the relevant assessment order and accordingly, depreciation on this unit building was validly disallowed. Even during the proceedings of the A.Y. 2011-12, the assessee has not been able to produce the completion certificate, complete valuation report and occupation certificate from the competent authority. Furthermore; during the year under consideration too, the assessee has further advanced amounts of Rs. 5,00,000/- on 24.02.2011 and again Rs. 5,00,000/- on 28.03.2011 to M/s Maan Projects & Construction Pvt. Ltd. This fact clearly establish that the PLD Unit building is still incomplete as on 31.03.2011 and hence; the incomplete valuation report dated 20.04.2013 is absolutely incorrect, ingenuine and is unacceptable. In the absence of the relevant documentary evidence, regarding completion and occupation of the said building, it is not proved that the assessee has used this asset for its business purposes. Accordingly; depreciation claimed at Rs. 38,23,006/- on the PLD Building is disallowed and added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well. In the result, revenue's ground of appeal is dismissed. ITA No. 435/JP/16 & 298/JP/16 63. We now come to cross appeals for AY 2012-13 wherein the respective grounds of appeal are as under: Assessee's grounds of appeal (ITA No. 435/JP/16) "(1) That the ld. CIT(A) grossly erred in not deleting the addition made by the ld. AO on account of caution money Rs. 400,000/-. The ld. AO made the addition of caution money Rs. 1257450.00 out of that ld. CIT(A) sustained the addition of Rs. 400,000/- as such the ld. AO erred in making the addition & ld. CIT(A) grossly erred in sustaining Rs. 400,000/- (2) That the ld. AO grossly erred on law & facts in making the addition by disallowing the salary paid to Smt. Mahima Bansal by invoking sec. 40A(2)(b) of I.T. Act, 1961 and the ld. CIT grossly erred in sustaining the part of addition of Rs. 800,000/-. (3) That the ld. AO as well as ld. CIT(A) grossly erred in disallowing the Advertisement expenses Rs. 56000/- (4) That the ld. AO as well as ld. CIT(A) grossly erred in making the disallowance of Rs. 100,000/- the expenses incurred on Public welfare i.e. contribution to police welfare fund." Revenue's grounds of appeal (ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,57,450/- is accordingly deleted. This ground of appeal is therefore partly allowed." 65. We have already examined this issue at length and our findings and directions contained in ITA No. 698/JP/14 & 738/JP/14 shall apply mutatis mutandis to this year as well. In the result, assessee's ground of appeal is allowed and revenue's ground of appeal is dismissed. 66. Regarding common ground No. 2 of the assessee's as well as revenue's appeal relating to disallowance of salary payment to Mahima Bansal under section 40A(2)(b), we have already examined this issue at length in ITA No. 698/JP/14 & 738/JP/14 and as discussed therein, the order of the ld CIT(A) is confirmed. Accordingly, both the revenue's and assessee's appeal is dismissed. 67. Regarding ground No. 3 of the assessee's appeal, the relevant finding of the CIT(A) is reproduced as under:- "I have gone through the assessee's submission and AO's findings. My predecessor in the earlier Year had on part expenses of similar nature in the same head of expenditure had held that- Last year, I have allowed similar payments on the ground that the same were made for the purposes of advertisement. However, no evidence was submitted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason, whereas this expenses are must and necessary for the company. The expenses are genuine for the need of business, therefore, we request you to kindly allowed". 70. The relevant findings of the ld CIT(A) are as under: "I have gone through the assessee's submission and AO's findings. The expenses were not wholly and exclusively for the purpose of business. The expenditure was in the nature of donation. Donations etc. can be claimed under the provision of act after fulfilling certain conditions, e.g. donations can be claimed U/s 80G etc. As assessee has failed to fulfill any of the conditions for claiming deduction, the disallowance by AO was justified. Therefore, the addition of Rs. 1,00,000/- is confirmed. The ground of appeal, therefore, dismissed". 71. In our view, the contention of the assessee that the contribution towards police welfare fund has a necessary nexus with the safety of the students in and around Kota and hence, with the business of the assessee cannot be rejected. It is an expenditure which has been laid down to develop and strengthen the coordination and working relationship with the local police department. Given the budgetary constraints which, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r system unlike a printer whose functionality is interconnected with a computer system. In light of the same, we upheld the action of the AO in treating Xerox machine as eligible for depreciation @ 15% as a standalone machine. In the result, the appeal of revenue is allowed. ITA No. 296/JP/17 & 345/JP/17 76. We now come to cross appeals for AY 2013-14 wherein the respective grounds of appeal are as under: Assessee's grounds of appeal (ITA No. 296/JP/17) "1. That the Ld. AO grossly erred on Law & facts in making the addition to wards payment of caution money and the ld. CIT(A) also erred in sustaining the disallowance of Rs. 50,000/- out of Rs. 1,78,650/- the /- addition made by A.O. 2. That the Ld. AO grossly erred on Law & facts in disallowing the salary by invoking sec. 40A(2) (b) and the Ld. CIT(A) also erred in sustaining the addition of Rs. 600,000/-. 3. That the Ld. AO grossing erred on Law & Facts in disallowing the students promotion expenses Rs. 1492788/-. The ld. C(T(A) also erred in sustaining the addition of Rs. 500,000/- out of said amount of Rs. 14,92,788/-. 4. That the Ld. AO grossly erred on Law & Facts in disallowing the travelling expenses Rs. 3,02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant facts are as under: "On examination of Profit & Loss A/c of the company, it is seen that assessee has claimed Student Promotion Expenses of Rs. 99,51,921/- whereas assessee claimed this expenditure last year i.e. F.Y. 2011-12 of Rs. 45,45,545/-. Vide order sheet entry dated 24.02.2016, assessee asked to submit the justification of these huge expenses in comparison to last year. The assessee vide his reply dated 08.03.2016 has submitted as under : The source of an income in a coaching institute is student and any promotion that is been done to promote source is well justified expenses as it is directly relatable to the income therefore it is most sacrosanct expenses that is fully allowable therefore the student promotion expenses that has various subheads as enclosed ledger is paid majorly towards rankers and best performing student through performing Farewell function or giving scholarships to top rankers or all India Rankers prizes etc and to all students at large in form of medical tie-ups and student walfares it in classrooms. Therefore all these expenses are directly relatable. Secondly there are down fall in revenues of the company and various new centres have been incr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O and ld CIT(A) has not highlighted specific expenditure which fail the test of business expediency as laid down by the Courts from time to time. Further, no specific instances of expenditure have been highlighted which could not be verified for want of proper supporting documentation. Merely generalization and holding that payments have been made in cash doesn't necessarily lead to disallowance of eligible expenditure. There is no basis for adhocism in the eyes of law. In the result, disallowance made by the AO is hereby deleted. The assessee's ground of appeal is allowed and revenue's ground of appeal is dismissed. 83. Regarding common ground no. 4 of assessee's appeal and ground no. 5 of the revenue's appeal, the relevant facts are as under:- "On examination of Profit & Loss A/c of the company it is seen that assessee has claimed Travelling Expenses of Rs. 30,28,885/-. Vide order sheet entry dated 05.02.2016, assessee asked to submit the justification of these expenses. The assessee vide his reply dated 08.03.2016 has submitted as under: During the year as the revenue from Kota Centre are on fall so Management is aggressively involved in setup of new centres as to reduce the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's ground of appeal is allowed and revenue's ground of appeal is dismissed. 86. Now, we come to revenue's appeal other than common grounds of appeal which relates to ground no. 3 of revenue's appeal, the relevant finding of the CIT(A) is reproduced as under:- " In my opinion, in this year also, the fact of donation was not doubted. Sec. 80G does not prohibit donations to exempted entities controlled by related persons. Sec. 80G does not require that the donation should have nexus with the business purposes of done. Considering that the facts involved in this year are exactly similar to the previous year, I am inclined to follow the order of my predecessor in the earlier year as mentioned above. Accordingly, it is held that assessee has fulfilled at the conditions necessary for claiming deduction u/s 80G. The AO is therefore directed to delete addition of Rs. 1,50,25,500/-. This ground of appeal is allowed." 87. We have already examined this issue at length and our findings and directions contained in ITA No. 698/JP/14 & 738/JP/14 shall apply mutatis mutandis to this year as well. In the result, revenue's ground of appeal is allowed for statistical purposes. In the result, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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