TMI Blog2021 (12) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... ing computer and other equipments hire charges u/s.40A(2)(b) - Hence, we direct the Assessing Officer to delete additions made towards disallowance of system hire charges u/s.40A(2)(b). Ad-hoc disallowance of consultancy charges paid to Mr. V.C.Kartik, Director of the assessee company u/s.40A(2)(b) - . Admittedly, except board resolution passed by the company authorizing its Board of Directors to pay consultancy charges to Mr. V.C.Kartik, no other credible evidence has been placed on record before the AO or CIT(A), including before us to justify payment of consultancy charges to Mr.V.C.Kartik. The board resolution copy filed by the assessee may be an evidence which suggest availing need based services from consultant. But what is required to support case of the assessee is evidences which suggest actual rendering of services. In this case, the assessee has neither furnished necessary evidence to prove rendering of services by service provider nor placed on record any evidence to prove kind of service obtained from Mr. V.C.Kartik. CIT(A) after considering relevant facts and has also taken note of association of Mr. V.C.Kartik with the assessee company has allowed 50% relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l also and ought to have appreciated that the comparative rates provided was wrongly rejected, thereby vitiating the related findings. 5. The CIT (Appeals) failed to appreciate that there should not be any comparison between the written down value/book value of the computer systems and the market of value of rent for hiring such systems and ought to have appreciated that the sustenance of such illogical approach would vitiate the related findings. 6. The CIT (Appeals) failed to appreciate that the partial relief granted in any event leading to partial sustenance of the addition had no factual backing, thereby vitiating the related findings. 7. The CIT (Appeals) erred in sustaining the disallowance of hire charges of other 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 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 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 the total claim for both assessment years. Aggrieved by the order passed by the learned CIT(A), the assessee is in appeal before us. 5. The first issue that came up for our consideration from ground no.2 to 7 of assessee appeal is disallowance of computer and other equipments hire charges u/s.40A(2)(b) of the Act. The Assessing Officer on perusal of details filed by the assessee noticed that computer hire charges paid by the assessee is excessive and unreasonable, when compared to market rate of hire charges for similar nature of assets. The Assessing Officer had also noted that the assessee has paid huge amount of hire charges, which is more than amount of cost of asset owned by the lessor and therefore, opined that no prudent person would give hire charges over and above value of assets which are put on hire and thus, opined that hire charges paid by assessee to computer and other equipments is excessive and unreasonable and accordingly, disallowed 50% of total amount paid for hire charges at ₹ 20,28,814/- u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and thus, we are of the considered view that the Assessing Officer as well as learned CIT(A) were erred in disallowing computer and other equipments hire charges u/s.40A(2)(b) of the Income Tax Act, 1961. Hence, we direct the Assessing Officer to delete additions made towards disallowance of system hire charges u/s.40A(2)(b) 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 basis to the assessee in matters relating to corporate strategy and acquisitions. Therefore, it is incorrect on the part of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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