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TMI Blog2021 (12) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... er and are being disposed off, by this consolidated order. 2. The assessee has more or less filed common grounds of appeal for both assessment years, therefore, for the sake of brevity, grounds of appeal filed for the assessment year 2014- 15 are reproduced as under:- "1. 1. The common order of The Commissioner of Income Tax (Appeals) 1, Chennai - 600 034 dated 22.08.2018 in l.T.A.Nos.565, 299 & 33/CIT(A)- 1/2016-17 & 2017-18 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in partly sustaining the disallowance the claim of the computer systems hire charges from the related party on the application of section 40A(2)(b) of the Act and consequently erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er items (other than desktops and laptops) on the application of section 40A(2)(b) of the Act and consequently erred in sustaining the addition of such sum in the computation of taxable total income without assigning proper reasons and justification. 8. The CIT (Appeals) went wrong in recording the findings in this regard in para 15 of the impugned order without assigning proper reasons and justification. 9. The CIT (Appeals) erred in partly sustaining the disallowance of the consultancy charges paid on the application of section 40A(2)(b) of the Act and consequently erred in sustaining the addition of such sum in the computation of taxable total income without assigning proper reasons and justification. 10. The CIT (Appeals) faile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to related party. The assessee carried the matter in appeal before first appellate authority. The learned CIT(A) vide her order dated 22.08.2018 had allowed partial relief in respect of disallowance of computer and other equipments hire charges by restricting disallowance to 40% in respect of desktop computers as against 50% disallowances made by the Assessing Officer and further, in respect of Laptops, directed the Assessing Officer to restrict disallowance to 30% of the claim. As regards other equipments, additions made by the Assessing Officer is upheld. Similarly, the learned CIT(A) has allowed partial relief in respect of consultancy charges paid to Mr. V.C.Kartik and directed the Assessing Officer to restrict disallowance to 50% of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer to make ad-hoc disallowances without appreciating fact that the assessee has filed comparable cases of similar nature for hiring desktop, laptop and other equipments, as per which third party service provider are charging more than the amount of hire charges paid by the assessee. Therefore, in absence of any comparison with third party service provider, making ad-hoc disallowance u/s.40A(2)(b) of the Act on the ground that it is unreasonable and excessive is incorrect. 7. The learned DR, on the other hand, strongly supporting order of the learned CIT(A) submitted that although the assessee has paid less charges when compared with other service providers, but when compared to number of units given by third party to number of units provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Income Tax Act, 1961. 9. The next issue that came up for our consideration from ground no.8 &9 of assessee appeal is ad-hoc disallowance of consultancy charges paid to Mr. V.C.Kartik, Director of the assessee company u/s.40A(2)(b) of the Income Tax Act, 1961. The Assessing Officer has disallowed consultancy charges paid to Mr .V.C.Kartik on the ground that except board resolution specifying nature of work to be provided by Mr. V.C.Kartik, no other evidence has been filed to justify payment of huge consultancy charges to Mr. V.C. Kartik. It was claim of the assessee before the Assessing Officer that Mr.V.C. Kartik was an active angel investor and has interest in multiple businesses. He had offered various services on part time basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, hence, we are inclined to uphold findings of the learned CIT(A) and reject grounds taken by the assessee. 11. In the result, appeal filed by the assessee for assessment year 2014-15 is partly allowed. ITA No.2851/Chny/2018 (A.Y 2015-16): 12. The first issue that came up for our consideration from ground No.2 to 6 of the assessee appeal is disallowance of system hire charges u/s.40A(2)(b) of the Income Tax Act, 1961. A similar issue has been considered by us in preceding paragraph in ITA No.2850/Chny/2018 for assessment year 2014-15 . The reasons given by us in preceding paragraph shall mutatis mutandis apply to this appeal, as well. Therefore, for similar reasons, we direct the Assessing Officer to delete additions made towards syst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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