TMI Blog2021 (3) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... filed supportive relevant details of the advertisement spots as well as photographs thereof in the paper book. It can be sufficiently presumed that this assessee has carried out some advertisements in regular course of business but it could not be proved since the recipients have been treated as accommodation entry providers. Faced with this situation, we deem it appropriate in larger interest of justice that the impugned disallowance deserves to be confirmed @40% only. More so to avoid abnormally high rate of profits in publication business. The remaining 60% of the impugned disallowance thereof stands deleted. - Decided partly in favour of assessee. - I.T.A. No. 561/HYD/2018 - - - Dated:- 17-3-2021 - SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER For the Assessee : Shri Pawan Chakrapani, AR For the Revenue : Shri Rohit Mujumdar, DR ORDER PER S. S. GODARA, J. M. This assessee s appeal for AY.2014-15 arises from the CIT(A)-4, Hyderabad s order dated 29-01-2018 passed in appeal No.0385/2016-17/ITO, Ward-16(4)/CIT(A)-4/Hyd/ 17-18 in proceedings u/s.143(3) of the Income Tax Act, 1961 [in short, the Act ]. 2. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest of justice and equity . 3. We advert to the CIT(A) s detailed discussion regarding the impugned advertisement expenditure disallowance reading as under: 4. During the course of assessment proceedings, with regard to above grounds, the Assessing Officer observed as under: As seen from Profit and Loss account of the assessee company, an amount of ₹ 1,33,18,410/- was debited by the company under the head Advertisement Expenses . The assessee was asked to submit the details of the advertisement expenses with invoices. Assessee submitted the details of advertisement expenses and copies of invoices. On verification of the copies of invoices, it is noticed that out of total advertisement expenditure of ₹ 1,33,18,410/-, bills of ₹ 58,35,500/- raised by M/s Funidea Housing Put. Ltd., and ₹ 53,35,000/- raised by M/ s Overtop Conclave Put. Ltd., Total bill of ₹ 1,11,70,500/- raised by two different companies i.e., M/s Funidea Housing Put. Ltd., and M/s Overtop Conclave Pvt. Ltd. As seen from the invoices of both the companies, it is observed that both the companies are from Kolkata and both the companies addresses are same i.e., 151 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Conclave Put. Ltd., ₹ 53,35,000/-. At the time of hearing before your Honours, the appellant had submitted the ledger copy of the advertisement expenditure and also the invoices raised by the parties on the appellant. The appellant had also produced the bank account statement evidencing payment, TDS certification evidencing TDS deducted and remitted in the treasury. As desired by your Honours the appellant had also submitted the photographs of the advertisements given as supporting evidence for which payment is made. Your Honours have stated that the name of the vendors (i.e.,) M/s Funidea Housing Put. Ltd., and M/s Overtop Conclave Put. Ltd, with whom the appellant has entered into agreement for promoting and advertising the services rendered by the appellant and to whom the appellant has made payments towards the services rendered for the appellant company, is found in the list of shell companies. Your Honours have called for explanation from the appellant about the companies whose names are reflecting in the list of shell companies. The appellant submits that, the appellant was in its first year of commercial operation and wanted to promote the ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he vendors, it is submitted that the transaction of the appellant with the vendors are genuine transaction and the appellant cannot be held responsible for the act of the vendors in subsequent years. Without prejudice to the above, it is humbly submitted that the appellant had taken the services of the vendors during the F.Y. 2013- 14, the appellant had no idea what so ever about the other operations of the company. During the F.Y.2013-14, these companies had rendered advertisement services for which payments have been made and the expenditure incurred by the appellant cannot be denied only on the basis that the names of the vendors are reflecting in the list of shell companies issued by the Government on 18-08-2017. The appellant cannot be denied the claim of genuine expenditure incurred during the impugned A.Y. 20 14-15, only on the basis that the names of the vendors who had provided advertisement services to the appellant are reflecting in the list of shell companies. It is once again submitted that the appellant has genuinely incurred the expenditure and the expenditure incurred towards advertisement satisfies the conditions laid down u/s 37 of the Act, and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges the assessee s onus that the impugned advertisement expenditure had been incurred wholly and exclusively for the purpose of its business only. The Revenue has chosen to draw support from the CIT(A) s detailed discussion in the preceding paragraphs. 5. We have given our thoughtful consideration to rival pleadings. It is not in dispute that the assessee has prima-facie discharged its onus of filing on record all the documentary evidence regarding the impugned advertisement expenditure in the regular course of business. The fact also remains that the two of its payees (supra) have been found to be included in the list of shell entities thereby providing mere accommodation entries. Hon'ble apex courts landmark decisions Sumati Dayal Vs. CIT (1995) [214 ITR 801] (SC) and CIT Vs. Durga Prasad More (1972) [82 ITR 540] (SC) hold that the relevant explanation in income tax proceedings has to be examined in the light of human probabilities by removing all blinkers. We adopt the very methodology herein as well and find that the assessee s recipients status as shell companies has indeed cost doubts on its advertisements claim. The fact also remains that the role of day-to-d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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