TMI Blog2020 (8) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... on rent by the assessee company which is clearly specified in the rent agreement. The said premises are used as the registered office of the assessee-company as the every company registered under the Company Act is statutorily required to have a registered office within the jurisdictional limit of the concerned Registrar of Companies where all statutory and other correspondence can be received on behalf of the company. Further, on perusal of the minute books of the assessee- company, it is noted the meetings of Board of Directors and also of the shareholders in terms of annual general meetings are regularly held at this place. Thus said office premises have been used for the purposes of assessee-company s business and it has establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsuant to rent agreement dated 01.04.2008 The enquiries were conducted through Inspector of ACIT, Cirecle-6, Jaipur and as per the inspector s report, the assessee company was using the said premises just for address purposes and no business activities were being carried out from the said premises. According, a show cause was issued to the assessee-company as to why the rent payment should not be disallowed. In response, the assessee company submitted that it is maintaining its registered office at the said premises as required under the Company Act where all necessary regulatory and other correspondence can be received. It was further submitted that the Director has reported the rent receipts as part of her taxable income wherein the tax h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the assessee carried the matter in appeal before the ld. CIT(A) which has since sustained the said addition. As per the ld. CIT(A), the rent paid to the Director of the assessee was unreasonable as there was no separate electric and water connection in the name of the assessee-company and as per provision of Section 40A(2)(b) of the Act, any unreasonable expenditure is disallowable. Against the said findings, the assessee-company is in appeal before us. 5. During the course of hearing, the ld. AR submitted that the assessee-company is an authorized dealer of Hyundai Cars and engaged in the sales and service of the cars. The directors of the assessee- company are required to spend time right from early morning to late evening in such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e heard the rival contentions and perused the material available on record. As per the rent agreement dated 01.04.2008 entered into between the assessee-company and Smt. Reshma Morani, one of the directors of the assessee-company and also the owner of the premises situated at 14, Bajaj Nagar Enclave, Bajaj Nagar, Jaipur, the assessee-company has taken the premises at the first floor consisting of an office along with attached toilet for the purpose of its business for the period of 3 years for monthly rent of ₹ 20,000/-. Therefore, it is not the entire premises which have been taken on rent by the assessee- company rather the premises situated at first floor only which have been taken on rent by the assessee-company for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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