TMI Blog2020 (12) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... of the expenditure. With respect to the legal expenditure as not known that what for the above legal expenditure were paid by the assessee. The narration of the bills speaks that it is professional fees for providing legal opinion and drafting of various legal documents for the clients of the assessee ₹ 10 lakhs are charged. With respect to ₹ 20,000/- the same were paid for the certification related to the companies law filing with MCA. Therefore out of professional fees ₹ 1020,000/- disallowance of ₹ 20,000/- requires to be deleted. But for the legal fees/professional charges, assessee needs to show that whether these expenditure are wholly and exclusively incurred for the purposes of business. Assessee also n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration was filed on 30.10.2018 declaring a loss of ₹ 21,39,712/. 3. The said return was taken up for assessment u/s. 143(3) of the Income Tax Act, 1961 ( Act ) and order dated 30.12.2019 passed by Asstt. CIT, Central Circle-5, New Delhi ( Ld. A.O. ), assessing the loss at ₹ 2,53,144/- after a total disallowance of ₹ 18,86,568/- being expenses on account of professional charges (₹ 10,20,000/-) and security services (₹ 8,66,568/-). 4. The Ld. A.O. disallowed the professional charges and security services on the ground that there was no business activity of the appellant during the year and that the appellant has not incurred any expenses on rent during the year. 5. During the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed as there is no business in that company. He further noted that as there is no rent paid why expenses can be claimed on security charges. The assessee submitted that during the year the business of the assessee continued, bank account were maintained and all statutory compliance were made. It was further stated that as no revenue could be collected, it does not mean that business has been discontinued. The ld AO was not impressed by the explanation as the assessee did not carry out any activity. Further as no rent was paid how the security expenditure were incurred was also doubted. Therefore, he disallowed the above sum of ₹ 1886568/- and determined the total loss of the assessee as per order dated 30.12.2019 at ₹ 253144/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssional fees. The assessee has not given any details about the nature of the services for which client these above fees was paid. He further referred to the nature of the business of the assessee and submitted that in absence of any work the above expenditure cannot be allowed as taxable expenditure. He further submitted that it is also not shown that where these expenditure has been incurred on behalf of a client or on its behalf. He further stated that the assessee did not explain that what documents were examined by the lawyer or consultant for which fees was paid for legal advisory. With respect to security services he submitted that there is no property owned or rented by assessee and therefore what for security services charges paid b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the certification related to the companies law filing with MCA. Therefore out of professional fees ₹ 1020,000/- disallowance of ₹ 20,000/- requires to be deleted. But for the legal fees/professional charges, assessee needs to show that whether these expenditure are wholly and exclusively incurred for the purposes of business. Assessee also needs to elaborate the facts about the fact business of the assessee has not ceased to exist. Further, with respect to the security charges a sum of ₹ 60450/- per month were paid to one agency for providing security charges, but assessee needs to establish that those premises are used for the purposes of the business of the assessee. Assessee must show that it operates from that pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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