TMI Blog2019 (7) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... gard shown by the revenue when the legislature in its wisdom, being fully aware of the fact that some of the assessees might make use of the transactions to their benefit and plan their affair, put some restriction by the prospective amendment by introduction of Section 94(7) w.e.f. 1st April, 2002 but when the case of the assessee do not fall/ suffers from those restrictions, it has to be inferred that the assessee could not have been denied that benefit as claimed. No merit in the disallowance of assessee s genuine claim of loss incurred on redemption of mutual funds. The A.O. is directed to delete the same and allow set off such loss against the long-term capital gains so earned. Disallowance on account of employee benefit expenses - HELD THAT:- As carefully gone through the orders of the authorities below and found from the record that as per material placed on record, it is wrong to say that the assessee was not engaged any business in as much as the assessee has already declared business income of ₹ 59.91 Lakh. This was the income generated in connection with various mutual funds (other than the mutual funds purchased through JM Financial Ltd.). There apart, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufficient and justifiable reasons behind such an increase. To achieve such a huge income the assessee has to incur such a meagre expense. Such expenses were mainly incurred on Travelling, Electric Expenses and Repair Maintenance. No specific instance of disallowable nature was pointed out by the A.O. Donation paid of ₹ 51,000/- has been reduced while computing the income under the head Business Profession. In other words, the entire donation of ₹ 51,000/- has been added back to the business income as evident from the computation of the total income. Hence there is no addition to this extent also. It is settled law that a businessman is the best judge to take care of its own interest to take decisions. Here, whatever decisions were taken by the assessee, has to be understood as taken out of commercial expediency. - ITA No. 567/JP/2019 - - - Dated:- 1-7-2019 - Shri Ramesh C Sharma, AM And Shri Vijay Pal Rao, JM For the Assessee : Shri Mahendra Gargieya And Shri F. Rehman (Advs.) For the Revenue : Shri Varinder Mehta (CIT-DR) ORDER PER: R.C. SHARMA, A.M. This is an appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd selling commodities, articles and merchandise. For the year under consideration, the assessee filed return declaring total income of ₹ 81,42,790/-, which was assessed by the A.O. at ₹ 25,15,58,240/-. During the course of assessment, the A.O. found that the assessee has earned long term capital gain of ₹ 26.79 crores on sale of immovable property, thereafter the assessee has taken loan of ₹ 50.00 crores from M/s India Infoline Finance Ltd. (IIFL) on 17/10/2014. The A.O. further observed that out of loan amount, the assessee has purchased units of mutual funds of JM Financial Mutual Fund amounting to ₹ 50.00 crores, on which the assessee has earned dividend of ₹ 10.33 crores and ₹ 17.62 crores. The A.O. further stated that soon after earning dividend, a redemption was taken place on 26/3/2015 wherein the assessee has suffered loss of ₹ 24.04 crores. This loss was set off against the capital gain of ₹ 26.79 crores earned by the assessee. The assessee has also claimed dividend income exempt U/s 10(33) of the Act. The A.O. has further observed that it appears that by all these ways, the assessee has concocted a stor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he capital gain earned on sale of immovable property and also by claiming exemption on the dividend earned just within the three to five months. For further clarification, it would be appropriate to go through the section 94(7) of the I.T. Act which reads as under: Where-(a) any person ..person is exempt., Then, the loss, if any, arising to him on account of such purchase and sale of securities or unit, to the extent such loss does not exceed the amount of dividend or income received or receivable on such securities or units, shall be ignored for the purposes of computing his income chargeable to tax. 3.1 Herein, the facts of the assessee's case indicate that there is attempt by the assessee in connivance with the Companies M/s J M Financial Mutual Funds and M/s India Infoline Finance to make such conditions happen so that provisions of section 94(7) cannot be applicable in its case and short term capital, loss so claimed to have occurred can be adjected against the capital gain earned on sale of immovable property. Therefore, vide show-cause letter dated 27.12.2017 the assessee was required to show-ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months. How the assessee get to know that it would be earning such huge amount of dividend just within three to five months from a company which has not declared any dividend in past years. (vii) Further, the assessee company which claims to have veteran Directors who in the possibilities of getting better make the company chose to make investment by purchasing of units of mutual funds by taking loan of ₹ 50 Cr from a company which has not declared any dividend in past years. (viii) The assessee company has got its bank accounts bearing account number-50200007646702 opened on 15.09.2014 in HDFC Bank, Mumbai and M/s India Infoline Financial Ltd., operating this account in the capacity of Power of Attorney holder. 3.6 All the above facts clearly show the modus-operandi as to how a colorable device has been prepared by the assessee company in connivance with M/s JM Financial and M/s India Infoline just by creating capital loss to set off the long term capital gain on sale of land. The AIR of the assessee has failed to explain satisfactorily the reasons why such huge amount was invested in purchasing the units of mutual funds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions infusion of black money through their NBFCs on the Exchange platform. The ld. CIT(A) further observed that the investment was made in the mutual fund which had not declared any dividend since 2010 and suddenly after investment was made by the assessee it started paying dividend which was abnormally high as compared to its past history and not commensurate with its financial position. The ld. CIT(A) also alleged that the assessee never made such a huge investment in any mutual fund earlier and it is only in the year of appeal when it had capital gains from sale of immovable property that the entire transaction of investment in mutual fund was carried out. The investment of ₹ 50.00 crores were made by borrowing the funds from llFL and no security except the equitable mortgage of the units purchased from such funds were pledged. A new bank account was also opened for this transaction. 7. The ld. CIT(A) also observed that the llFL was appointed as consultant tor making of investment of funds so borrowed form llFL itself. The assessee itself was unaware of the financial performance of the Fund in which investment was made which was done by I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- (PBI 31-32) through JM financial Mutual Fund (in JM Balanced Fund). In this regard, we found that the assessee filed repayment schedule of IIFL vide letter dated 11.10.2017, which have all entries including interest due along with repayment detail. The assessee has also filed bank statement of HDFC Bank Ltd. bearing account number 50200007646702 (PBI 31-32) in which the payment reflected. As regard purchase of mutual fund of ₹ 50 crores, the assessee filed vide letter dated 11.10.2017 (PBI 47-48) copy of statement dated 01.12.2014 issued by JM Financial Mutual Fund (PBI 30) in which purchase of JM Balanced Fund through JM financial mutual fund unit 1,98,75,657/884 @ 25.1564 on dated 17.10.2014 is clearly shown. In the same statement it is stated that the same unit has been lien marked by IIFL on 03.11.2014. 11. We had also gone through the replies received by the A.O. during the course of remand proceedings from various concerned parties to whom the A.O. has issued notices which clearly established the genuineness of transaction. However, the remand report sent by the A.O. did not rebut the reply of these agencies and the A.O. failed to bring any contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank Ltd. dated 15.01.2018: (PBIII 590-592) Further vide letter dated 15.01.2018, vide three confirmations given by HDFC to the AO, the bank has confirmed the debit credit transactions entered with the assessee company and shown in the bank statement with narration, meaning thereby what the assessee stated before the AO has been affirmed and has not been found fault with / wrong. (v) Letter by SEBI dated 27.02.2018 (PBIII 578-579) Further, vide letter dated 27.02.2018 from the Surveillance Department of the SEBI, Mumbai, the queries raised by the AO directly at the assessee`s back were duly replied to the satisfaction of the AO and in addition, the AO was also asked to contact directly to the concern Stock Exchange. 13. In view of above documentary evidence, we found that the lower authorities completely failed to rebut evidences and explanations so filed by these agencies so as to conclude that it was a colourable device or any connivance with the companies to evade tax by booking loss. 14. With regard to allegation of the A.O. that no proper security was furnished for taking a loan of ₹ 50.00 crores from M/s IIFL, we found that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laiming exemption on the dividend earned just within three to five months is baseless in so far as the IIFL has got nothing to do either with the present assessee or with the JM Financial or with the tax affairs of the present assessee i.e. neither for nor against the Income Tax Department. It was a commercial deal of getting a loan based on agreement between the parties i.e. the lender IIFL and the borrower assessee. Assuming it was so and IIFL knew the fact of declaration of high dividend, then why IIFL should have sanctioned a huge loan to the assessee and instead IIFL itself could have done so and earned substantially. 17. From the order of the A.O. we found that the AO alleged the connivance between all the three parties i.e. the assessee, JMF-MF and IIFL but at the same time however, the CIT(A) confined such alleged connivance between the assessee and the IIFL only, meaning thereby, as per CIT(A) there was nothing wrong was found between the assessee and the JMF-MF. Resultantly, the transactions carried out between the assessee and JMF-MF were thus beyond suspicion by own admission of the CIT(A). The finding of the CIT(A) to this extent is also not under challe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to explain the new material and even without confronting the assessee which was being used against the assessee. A blind use of such material was not sufficient in itself unless the contents of the material are tested and verified and found fit for the context for which, is being used and therefore, the same is not capable of being cited in a court of law. Moreover, the reliability of such material, which is admittedly a publicly editable site is highly under doubt. The Wikipedia aggregate the news/articles from various sources and the article referred by the CIT(A) has been taken from Hindu Business Line, Economic Times etc. The ld. CIT(A) relied upon the news of these websites without bringing on record any order of SEBI/SAT for such alleged misconduct. 21. With regard to authenticity of Wikipedia, the Hon ble Supreme Court in the case of Commr. of Customs, Bangalore vs. ACER India Pvt. (Citation 2007(12) SCALE 581) (DPB 20-27), has held that 17. We have referred to Wikipedia, as the learned counsel for the parties relied thereupon. It is an online encyclopedia and information can be entered therein by any person and as such it may no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strategic allocations to both i.e. debt and equities, were made by the Funds Managers of the JMF-MF. The balanced funds have moderate risks because the debt portfolio of the Scheme provides the stability and the Equity provides the growth. In our country the SEBI has very strict regulations for Mutual Funds for the investor s protection. In Indian context right from the inception i.e. from the floating of a Scheme till carrying out the operations, there are involved as many as five different constituents, who are quite separate, distinct and independent from each other. Before a scheme is launched, the Mutual Fund is formed by a Trust Body, the business is set up by the Sponsor, the money is invested by the Asset Management Company (AMC) and the operations are monitored by the Trustees. Apart from these four constituents in a Mutual Funds, three market intermediaries are also involved in the formation and functioning of the Mutual Fund. The function of all these constituents and the market intermediaries, are further elaborated as under with reference to the JM Financial Mutual Funds: 24. The sponsor is a company established under the Companies Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporated under Companies Act, 1956 on dated 09.06.1994 which is a completely distinct entity from J M Financial. 27. In respect of the trustee, we observe that the appointment of Trustees is compulsorily required as per Regulation 7(e) of SEBI (Mutual Fund) Regulation, 1996. The Trust is headed by Trustees. The trustees hold the property of the Mutual Fund in the trust for the benefit of the unit holders and looks into the legal requirements of operating and functioning of the Mutual Fund. The Trustees also have the duty to monitor the actions of the AMC to ensure compliance with the SEBI Regulations and to see that the decisions of the AMC are not against the interest of the unit holders. Here, the JM Financial Trustee Company Private Limited is the Trust for JM Financial Mutual Funds. The JM Financial Trustee Company has been promoted by JM Financial Investment Consultancy Services Pvt. Ltd and JM Financial Limited (The Sponsor). The Trustee Company is registered under Companies Act, 1956 on dated 09.06.1994. The Sponsor JM Financial Limited executed a Trust Deed on 01.09.1994 appointing JM Financial Trustee Company Pvt. Ltd. as Trustee Company of JM Financial M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent company The Sponsor fulfilled all the stipulated conditions for registration and was granted registration. As per information available about JM Financial Mutual Fund (source: website of JM Financial Mutual Fund) the Fund has successfully completed 179 schemes and is having ₹ 16,161 Crores worth of assets under its management, having huge 4 decades experience of working in investment management. 29. In view of the above, we can conclude that the Investment Making, Declaration of Dividend and all other decisions relating to investments of fund proceeds are taken by AMC. To ensure independence of AMC and its Fund Managers the Regulation 16(3) of SEBI (Mutual Funds) Regulations provides that no Asset Management Company and no director (including independent director), officer or employee of an AMC shall be eligible to be appointed as a trustee of any mutual fund. Further Regulation 16(4) provides that No person, who is appointed as a trustee of a Mutual Fund shall be eligible to be appointed as a trustee of any other mutual fund. To ensure complete independence and demarcation of investing decisions and administrative decisions Regulation 16(5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual funds from this company. Further the assessee earned 52% dividend on the mutual funds. Similarly, the allegation of the ld. CIT(A) was that the investment was made in the mutual fund which had not declared any dividend since 2010 and suddenly after investment was made by the assessee it started paying dividend which was abnormally high as compared to its past history and not commensurate with its financial position. In this regard we observe that the dividend making decision can be taken by the fund only after duly considering all the regulatory requirements. The stringent provisions of Regulation 18(17) and 18(18) of SEBI (Mutual Fund) Regulation, 1996 requires that all the transactions carried out between the Mutual Funds, Asset Management Company and its associates are subject to quarterly review by the Trustees. The Trustees are also required to review the net worth of Asset Management Company and in case of any short fall, to ensure that the AMC makes up for short fall. Dividends are declared only after compliance with Regulation 52A. Had there been any mal practice by the Mutual Fund, the SEBI has full rights to carry out inspections and Audit as per Regulation 61. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see company also having a vast experience, decided to invest in JM Mutual Fund. 34. We also observe as per material available on record that at the relevant point of time the Modi Government was hoping to come in the center which has directly influence the market sentiments and it started going up and witnessed a tremendous increase thereafter. For this reason, the said mutual fund could perform better. In the annual report 2014-15 of JMF-MF it is stated as under: JM Balanced Fund is an open-ended balanced scheme with the investment objective to provide steady current income as well as long term growth of capital. The scheme invests 65-75% in equity while the balance is in debt. The normal plan of the scheme has outperformed its benchmark during FY 2014-15. The primary reason for outperformance has been low exposure to the expensive consumer and pharmaceutical sectors and higher exposure to quality blue chip stocks. The direct plan of the fund has outperformed its benchmark since inception. 35. In view of the above, the suspicion of the AO on this aspect is completely baseless. To prove his allegation that 52% divide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23.02.2001 0.1000 1% 23.01.2001 0.1000 1% 23.12.2000 0.1000 1% 23.11.2000 0.1000 1% 23.10.2000 0.1000 1% 23.09.2000 0.1000 1% 05.04.199 1.4000 14% 01.04.1998 0.9000 9% Thus, there was nothing abnormal if the same mutual fund after a long gap of more than ten years could declare a dividend of 52%. If the A.O. has any doubt with regard to rate of dividend so declared by JMF, he should make direct enquiry from JMF. Moreover, the repeated contention of the AO of the conspiracy between the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. This legislative intent is fully evident from CBDT Circular No.14/2001. The relevant extracts (Para 56.2 and 56.3 reproduce) are as under: 56.2 The existing provisions did not cover a case where a person buys securities (including units of a mutual fund) shortly before the record date fixed for declaration of dividends, and sells the same shortly after the record date. Since the cum-dividend price at which the securities are purchased would normally be higher than the ex- dividend price at which they are sold, such transactions would result in a loss which could be set off against other income of the year. At the same time, the dividends received would be exempt from tax under s. 10(33). The net result would be the creation of a tax loss, without any actual outgoings. 56.3 With a view to curb the creation of such short-term losses, the Act has inserted a new sub-s. (7) in the section to provide that where any person buys or acquires securities or units within a period of three months prior to the record date fixed for declaration of dividend or distribution of income in respect of the securities or units, and sells or transfers the same within a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividend; that at the same time it is claiming loss on the sale of the units; that the assessee had purposely and in a planned manner entered into a pre-meditated transaction of buying and selling units yielding exempted dividends with full knowledge about the fall in the NAV after the record date and the payment of tax-free dividend and, therefore, loss on sale was not genuine. After going through the orders of the lower authorities, we found that exactly similar objections were raised by the revenue authorities before the Hon ble Supreme Court and the Hon ble Supreme Court observed as under: We find no merit in the above argument of the Department. At the outset, we may state that we have two sets of cases before us. The lead matter covers assessment years before insertion of s.94(7) vide Finance Act, 2001 w.e.f. 1st April, 2002. With regard to such cases we may state that on facts it is established that there was a sale . The sale-price was received by the assessee. That, the assessee did receive dividend. The fact that the dividend received was tax-free is the position recognized under s. 10(33) of the Act. The assessee had made use of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who are not able to invest directly in the stock markets due lack of knowledge about the capital markets or due to lack of sufficient time to track market behaviour in order to take informed investment decisions. Mutual funds industry has emerged as one of the best investment channel for such people because they are very cost efficient and it is very easy to invest in them. A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund has a professional fund manager who is responsible for investing the pooled money into the securities market. These managers have been around the industry for a long time and have the academic credentials to back it up. The biggest advantage of mutual funds is diversification. Diversification is the idea of spreading out money across many different types of investments. When one investment is down another might be up. Diversification reduces risk tremendously. There are different kinds of mutual funds to cater to varied investment objectives such as - Growth Funds, Income Funds, Balanced Funds, and Liquid Assets Funds, also known ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the effect that the assessee never made such huge investment in any mutual funds earlier and it is only in this year when it had capital gains from sale of immovable property that the entire transaction of investment in mutual fund was carried out. In this regard we observe that the assessee was making investment in the Shares Mutual Funds in the past also. A huge amount was invested by Assessee Company in A.Y. 2014-15 as under: STATEMENT OF MUTUAL FUND FOR THE YEAR ENDED AS ON 31.03.2014 (A.Y. 2014-15) Scrip Opening Purchases Dividend Total Sale Closing IDFC Mutual Fund 3,53,10,251/- 8,00,000/- 6,07,226/- 3,67,17,477/- 3,66,38,319/- 0/- Birla Sunlife 2,19,273/- 0/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Rs.) Sales (Rs.) PBI IDFC Mutual Fund 5,23,67,972/- 1,75,00,000/- 200 Birla Sunlife 3,25,00,000/- 4,92,00,000/- 201-204 Birla Sunlife Savings Fund 2,00,00,000/- 2,00,12,066/- 205 Franklin Templeton 10,18,786/- - 206 Total 10,58,86,758/- 8,67,12,066/- STATEMENT OF SHARES FOR THE YEAR ENDED AS ON 31.03.2013 (A.Y. 2013-14) Scrip Opening Purchases Dividend Total Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t permeates in different AYs. It appears from the record that in several AYs, the Revenue accepted the order of the Tribunal in favour of the assessee and did not pursue the matter any further but in respect of some AYs the matter was taken up in appeal before the High Court but without any success. That being so, the Revenue could not be allowed to flip-flop on the issue further. (ii) Sardar Kehar Singh v/s CIT (1991) 92 CTR 88/195 ITR 769 (Raj). 50. It is also pertinent to bring on record that there is no loss to the revenue in so far as the Mutual Fund has already paid Dividend Distribution Tax on the declaration of such dividend. There apart, the assessee has also paid STT on these transactions as evident from the statement of JM Financial Mutual Fund on the subjected transaction hence there has been no loss to revenue. Interestingly DDT is paid twice for firstly by investee companies and secondly by JMF to investor. 51. We also observe that the assessee s investment in mutual fund was only 1.38% looking to the total size of fund of ₹ 3604.39 crores, therefore, to suspect that there was a connivance between the assesse compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been using the services of IIFL in one way or other. The ld. CIT(A) also alleged that the IIFL has already been proved as indulging in providing bogus capital gains/loss etc. On the basis of all these facts discussed above it is clear that the huge dividend which is exempt under section 10 was earned by the assessee within a very short period of time by investing in a mutual fund whose fundamentals, did not support such a huge dividend. In this regard we observe that this allegation of the ld. CIT(A) is factually incorrect. There is no iota of evidence brought by the AO or CIT(A) on record to prove IIFL as indulging in providing bogus capital gain/losses etc. In any case, at least in context of the assessee there is no such evidence referred to or whispered by the authorities below even remotely. Such an allegation is nothing more than a suspicion. We found that similar allegations were also raised by the revenue before the Hon ble Supreme Court in the case of Walfort Share (supra) but rejected by the Hon ble Supreme Court. 55. The ld. CIT(A) in the impugned order also alleged that the entire transaction was a sham it is as neither the result of a coincidence nor o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orst it could be a case of claim of STCL against the LTCG but not more than that. Otherwise also the CIT(A) has not proved anything except making suspicion. However, no where the A.O. has made any such allegation. The ld. CIT(A) also alleged that further loss incurred on such deals was claimed adjusted against the long-term capital gain from the sale of immovable property. The detailed Analysis discussed by us hereinabove firmly establish the events in the instant case. In this regard we observe that again such an allegation is a case of Walfort Shares (Supra) have already dealt with by the Hon ble Apex Court. 57. From the order of the ld. CIT(A), we observe that while concluding that these financial transactions were sham ones and this entire edifice was only a colourable device manufactured for evading due taxes. He relied on the following judicial pronouncements: i) ITAT Delhi in the case of Hersh Win Chadha Vs DCIT (l.T.A.Nos.3098 to 3098 3107/Del/2005). (ii) Sumati Dayal Vs CIT (214 ITR 801) (iii) Durga Prasad More Vs CIT (vi) McDowell Vs CTO 58. We had carefully gone through and delibe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y declared business income of ₹ 59.91 Lakh. This was the income generated in connection with various mutual funds (other than the mutual funds purchased through JM Financial Ltd.). There apart, the assessee company has declared huge interest income of ₹ 21.06 lac (PB 229) from several debtors to whom interest bearing loans were advanced and interest on FDR of ₹ 7.74 lac totaling to ₹ 28,80,856/- was also declared. To carry out the activities at such a large scale, one certainly needs some persons to manage the show. The observation of the paper formalities, accounting and banking transaction and receiving/delivery of the papers/documents, consultation with counsel and other government agencies/investment advisors, was not possible in absence of employees. Otherwise also, out of the salary paid of ₹ 10 lac, remuneration paid to the extent of ₹ 5.47 lac related to the directors only. Such expenditure thus having been incurred exclusively for business purposes was fully allowable. It is not the case of the A.O. that any personal element was involved in these expenses. We also found that the same A.O. was also assessing these incomes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturers 72 ITR 612 (SC), Hon ble Karnataka High Court decision in the case of T.T. Pvt. Ltd. v/s ITO (1980) 121 ITR 551 (Kar), Hon ble M.P. High Court decision in the case of CIT v/s Udhoji Shrikrishnadas (1983) 139 ITR 827 (MP) in support of the proposition that the decision taken by a business man out of commercial expediency, it was an expenditure incurred by the assessee solely and exclusively for the purpose of business. It was also contended by the ld AR that no disallowance for such expenses made in the A.Y. 2014-15 while finalizing the scrutiny assessment U/s 143(3) of the Act. Keeping in view the totality of the facts and circumstances of the case vis a vis observation of the A.O., we restrict the disallowance to the extent of 10% of the expenditure so incurred amounting to ₹ 15,42,282/-. Accordingly, the A.O. is directed to restrict this disallowance to ₹ 1,54,228/-. 66. The A.O. has also disallowed ₹ 8,13,000/- on account of other expenses. By the impugned order, the ld. CIT(A) allowed expenses up to ₹ 50,000/-. 67. We have considered the rival contentions and found that following expenditure was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantum is compared but there are sufficient and justifiable reasons behind such an increase. To achieve such a huge income the assessee has to incur such a meagre expense. Such expenses were mainly incurred on Travelling, Electric Expenses and Repair Maintenance. No specific instance of disallowable nature was pointed out by the A.O. 69. We also found that the donation paid of ₹ 51,000/- has been reduced while computing the income under the head Business Profession. In other words, the entire donation of ₹ 51,000/- has been added back to the business income as evident from the computation of the total income. Hence there is no addition to this extent also. It is settled law that a businessman is the best judge to take care of its own interest to take decisions. Here, whatever decisions were taken by the assessee, has to be understood as taken out of commercial expediency. Accordingly, we do not find any justification for the disallowance so made. 70. In the result, appeal of the assessee is allowed in part in terms indicated hereinabove. Order pronounced in the open court on 01st July, 2019. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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