9911796707
TMI Blog2021 (12) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 20/03/2015 by the ld. Income Tax Officer, 12(3)(3), Mumbai (hereinafter referred to as ld. AO). 2. The only effective issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in sustaining the disallowance of Rs. 44,77,661/- on account of consultation fees on an adhoc basis in the facts and circumstances of the instant case. 3. We have heard the rival submissions and perused the materials available on record. We find that assessee company is engaged in the business of trading in computer hardware, software products and services. This is the second round of proceedings before this Tribunal. In the first round of proceedings, this Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered their services, the gross amount of consultancy charges, TDS component thereon, net amounts paid together with the details of bank accounts of the concerned consultants before the lower authorities. The assessee also parallelly gave the month wise details of receipts of sales maintenance / support services pursuant to rendering of services by the consultants hired by it. The assessee pointed out that it had earned sales maintenance / support charges income totalling to Rs. 3,45,86,694/- and had paid consultancy charges in total only to the tune of Rs. 89,55,320/-. It was also pointed out that the consultants engaged on contract basis depending upon their availability at the relevant point of requirement ranged from 62-102 in number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stricted the disallowance to 50% of the total consultancy charges as against 80% made by the ld. AO. Aggrieved by this, the assessee is in appeal before us. 3.1. We find from the undisputed facts stated by the assessee before the lower authorities that assessee is a small scale company dealing in computer software and allied services for information technology. To withstand the fierce competition in the IT industry, the assessee and other company M/s. Lauren Information Technologies Pvt. Ltd., were merged and the merged entity carried on the business in the name of M/s. Lauren Software Pvt. Ltd., (assessee herein). We find that assessee had furnished the following documents before the ld. AO:- a) List showing the names and addresses of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before him in the remand proceedings and they were all produced by the assessee along with their affidavits before the ld. AO. These parties are listed in page 3 of the ld. CIT(A)'s order. Apart from this, the assessee also furnished the chart showing the details of sales / service charges received, consultancy charges claimed, consultancy charges allowed and consultancy charges disallowed by the ld. AO from A.Yrs. 2003-04 to 2008-09. For the sake of convenience, the said chart is reproduced below:- As St. Year Sales / Service Charges received Consultancy Charges claimed Consultancy Charges allowed Consultancy Charges disallowed 2003 - 04 20,89,40,794 7,65,970 7,65,970 NIL 2004 - 05 22,53 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not pointed out any defect in the said details or had not found any defect in the books produced by it together with supporting evidences. Hence, there cannot be any justification on the part of the lower authorities to make any disallowance of expenses on an estimated basis. Hence, disallowance made by the ld. AO on estimated basis deserves to be deleted on this count also.
3.5. In view of the aforesaid observations, we have no hesitation in directing the ld. AO to delete the disallowance on account of consultancy charges. Accordingly, the grounds raised by the assessee are allowed.
4. In the result, appeal of the assessee is allowed.
Order pronounced on 30/11 /2021 by way of proper mentioning in the notice board. X X X X Extracts X X X X X X X X Extracts X X X X
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