TMI Blog2002 (2) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... ived Rs. 2 crores during the assessment year 1989-90 from the aforesaid T.V. serial "Ramayan". The appellant had claimed expenses in the sum of Rs. 18,31,055 on account of equipment hire charges paid to five different parties. As regards payments made to three parties they were allowed as the Assessing Officer was satisfied with the explanation furnished by the assessee. The Assessing Officer not being satisfied made a disallowance of Rs. 7,00,400, i.e., in respect of payments made to New Diamond, Mumbai, in the sum of Rs. 6,00,000 and to Video Flash amounting to Rs. 1,00,400. The Assessing Officer, on the facts and circumstances of the case, took a view that proper satisfactory proof in respect of the aforesaid two parties is not available and as such preferred to disallow the claim in respect of the expenditure of Rs. 7,00,400 out of total equipment hire charges worth Rs. 18,33,055. The appellant, being aggrieved by the above order of the Assessing Officer, unsuccessfully preferred appeals before the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal, Mumbai ("the Tribunal" for short). The appellant before both the authorities below had canvassed vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He, therefore, prayed for rejection of this appeal. The issue: The substantive issue in this appeal is: whether the assessee has proved the genuineness and reasonableness of the expenses incurred and discharged his burden so as to hold that the disallowance made by the authorities below was wrong, unsustainable and unwarranted? Consideration: It would be convenient before we consider the issue to refer to the relevant provisions of the Act and to analyse the same. Section 37 of the Act deals with the question relating to the allowability of the expenditure incurred for the purposes of business. The onus of proof is upon the assessee to prove each of the following ingredients before the expenditure can be allowed as deduction : (a) The item of expenditure not being of the nature described under sections 30 to 36 of the Act; (b) The item of expenditure must not be in the nature of capital or personal expenses of the assessee; (c) The expenditure must be laid out wholly and exclusively for the purposes of business or profession. If the assessee fails to satisfy any of these tests, the expenditure claimed is not allowable. The Assessing Officer is duty bound to cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -commercial consideration appears, the Assessing Officer should consider all the relevant evidence and decide to what extent it is to be attributed to bona fide business purposes. Where a person to whom the remuneration is paid is not a genuine entity or the recipient has not rendered any service then, in that event, the Assessing Officer shall be justified in disallowing the amount paid as not having been wholly or exclusively laid out for the purposes of business. At the same time it is also obligatory on the part of the assessee to prove the reasonableness of the amount spent. The proof is required so as to establish that the claim is bona fide. In a nutshell, each case has to be decided on its own merits taking into account the various factors, some of which, are enumerated hereinabove. Findings: Turning to the facts of the present case, the Assessing Officer, the first appellate authority and the Tribunal, the final fact-finding authority, have reached the conclusion that the expenses incurred in the name of equipment hire charges paid to New Diamond and Video Flash, in the sum of Rs. 7,00,400 have not been proved to be genuine and reasonable. In support of the said findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the documents and invited our attention to two certificates issued by the bankers of the assessee both dated August 14, 1999, certifying the payments made by cheques in favour of New Diamond Samir, Mumbai, and Video Flash, Mumbai, so as to establish the genuineness of the payments made to the said two parties by way of equipment hire charges. The bankers' certificate issued in favour of the assessee certifying the payments made in favour of New Diamond Samir, Mumbai, does not show that the payments were made by issuing account-payee cheques. The payments made from time to time in favour of the said party New Diamond is in the sum of Rs. 6 lakhs. The amount of payment is not small. It is really surprising that the payment worth more than Rs. 20,000 has been made without issuing crossed and/or account-payee cheques. The xerox copies of the bills and the vouchers with respect to these payments were produced before us so as to establish the genuineness and reasonableness of the total payments made in the sum of Rs. 6 lakhs. The xerox copies of the documents produced and the bills tendered for our consideration hardly inspire any confidence. The bills issued by New Diamond, Mumbai, d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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