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2019 (10) TMI 388

..... he assessee was present. AO observed that whether these expenditures are related to the business or not is not known, since the assessee could not explain before him. In this regard, assessee has submitted detailed payment vouchers and relevant invoices before us in the form of paper book. On verification of these vouchers and bills, we notice that assessee has incurred travel expenditure, which includes travel by train and domestic air fares. All these expenditures are incurred for the purpose of domestic travel and entertainment for the visitors. Legal and professional expenditure - assessee has incurred for legal purpose and fees to lawyers and also paid as retainer fees to the different professionals. These are relevant expenditure for the purpose of business and it is the assessee, who will determine what is the relevant legal assistance and it may incur depending upon the nature of legal advice they may require. Therefore, in our considered view, all these expenditures are relevant for the purpose of business. Therefore, we are in agreement with the findings of CIT(A) and accordingly, ground raised by the revenue on this count is dismissed. Maintenance expenditure - In this A .....

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..... oyees benefits, the AO noticed that the assessee company has claimed salaries for the amount of ₹ 3,02,73,760 and the schedule for Toll Operation Maintenance it was at ₹ 4,21,66,865/-. The total amount comes to ₹ 7,24,40,625/-. The AO observed that out of the above, an amount of ₹ 692430/- incurred on travelling by others abroad and for an amount of ₹ 13,90,198/- towards Legal and professional charges. Since the assessee failed to explain and no AR of the assessee has appeared at the time of verification of vouchers except an accountant of the assessee company, the AO was of the view that the above expenditures may not be related to the assessee s business and hence, he disallowed the amount of ₹ 20,82,628/-. 3.2 On verification of the statement of schedule for Routine Maintenance, the AO noticed that the assessee company has claimed an amount of ₹ 5,93,30,447/-. When the AO asked the same to explain, in response assessee explained that it is for overlay works and also stated that as per the agreement for every three years they have to lay road on already laid. AO observed that, hence the above expense are nothing but to meet the duty of th .....

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..... n any tangible Of specific evidences. The disallowance made on account of travelling expenses and professional charges by the Assessing Officer does not hold merit. Hence, Ground Nos.2 and 3 in appeal are allowed. 5.1 As regards the disallowance of maintenance expenditure, the CIT(A) deleted the same by observing as under: IX) …………..Facts of the case, grounds of appeal, assessment order and submissions of the appellant were perused. The appellant company was in the business of construction and maintenance of roads under the BOT scheme with the Madhya Pradesh Road Development Corporation Limited. As per the terms of the concession agreement, it was the responsibility of the appellant company M/s. Rewa Tollway Private Limited, to maintain the road project during the concession period. In this context, the appellant company, incurred operations and maintenance expenses for the purpose of business and for the contractual obligations entered with Madhya Pradesh Rajya Sethu Nirman Nigam Limited (which was a Government of Madhya Pradesh undertaking). It was the responsibility of the appellant company to maintain the roads in terms of the concession agreement. T .....

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..... CIT(A) in para IX and submitted that assessee has incurred huge maintenance expenditure and AO has treated the above expenditure as capital in nature. However, he submitted that whether such expenditure was actually incurred or not, is not brought on record by the assessee and finally he supported the order of AO. 9. The ld. AR, on the other hand, with regard to ground No. 2, brought to our notice various vouchers pertaining to the expenditure incurred on legal and travel by the assessee. Further, he submitted that all these expenditures were actually incurred by the assessee in order to secure bank guarantee and retainer fees for the lawyers, which are essential in this line of business. 9.1 With regard to travel expenditure, he submitted that all these expenses are domestic travel by air and train, which are relevant for the business and incurred for entertainment of visitors and travelling by the company staff. 9.3 With regard to ground No. 3, he brought to our notice the concession agreement entered by the assessee with MP Rajya Setu Nirvana Nigam Ltd. and brought to our notice Clause - 18 i.e. operation and maintenance clause, as per which, assessee has to incur with regard t .....

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