TMI Blog2022 (9) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... pact on the expenditure and would affect the refund of assessee. Thus, the Bench is of considered opinion that, the very exercise of jurisdiction to examine the disputed expenses under limited scrutiny on ground of High ratio of refund to TDS , was vitiated and that made all the additions illegal. Ground deserves to be allowed. Disallowance of business promotion expenses and disallowance of professional expenses for seeking legal opinion - The Bench is of considered opinion that if that was so then the Ld. CIT(A) had wide powers u/s 250(4) of the Act to call for comments of the AO or make an enquiry himself, as assessee was pressing that it had filed all the document/evidences during assessment. The assessment order shows that AO had taken note of the fact that the payment was being made as a fee for assistance in connection with seeking clarification from RBI on applicability of CIC Guidelines and applicability of FEMA on subscription of RPS and evaluating tax implications of unwinding RPS held by the Assessee. Thus certainly relevant evidence was on record. The Bench is of considered opinion that Redeemable Preferences Shares (RPS) held by the assessee being long term i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e incorrect and rightly interfered by Ld CIT(A). Appeal of assessee is allowed and the appeal of Revenue is dismissed. - ITA No. 8196/Del/2019 And ITA No. 8505/Del/2019 - - - Dated:- 20-9-2022 - Sh. Shamim Yahya, Accountant Member And Sh. Anubhav Sharma, Judicial Member For the Assessee : Shri Alok Vasant, CA Ms. Poonam Ahuja, Adv. For the Revenue : Shri Anuj Garg, Sr. DR ORDER PER ANUBHAV SHARMA, JM: Both appeals have been filed by the Assessee Revenue respectively against order dated 30.08.2019 in appeal no. 173/2019-20/CIT(A)-44 passed u/s 250(6) of the Income Tax Act, 1961(hereinafter referred to as the Act ) by Commissioner of Income Tax (Appeals)-44, Delhi (hereinafter referred to as the First Appellate Authority in short Ld. F.A.A. ) in regard to the appeal before it arising out of assessment order dated 22.12.2018 u/s 143(3) of the Income Tax Act, 1961 passed by Dy. Commissioner of Income Tax, Circle 12(2), New Delhi (hereinafter referred to as the Ld. Assessing Officer or in short Ld. AO ). 2. The facts in brief are the assessee company is engaged in the business of sale, distribution and trading of various telecommunication pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the Principal Commissioner of Income Tax/ Commissioner of Income Tax as directed in the Board s Instruction No. 5/2016 in respect of CASS assessment, and the order passed in violation of Board s instructions is bad in law and void ab-initio. 2.1 The ld. AO has grossly erred on facts and in law in disallowing professional expenses of Rs. 18,07,142/- contending the same to be capital in nature, even though the same were incurred in the course of business and no asset of enduring nature came into existence. 2.2 The Ld. CIT/Ld. AO has grossly erred on facts and in law in not taking into account the invoice provided in the apepr books submitted before the Ld. CIT/ Ld. AO and summarily disallowing/sustaining the disallowance, merely on the basis that invoice was not furnished. 2. Revenue s appeal (ITA No. 8505/Del/2019, A.Y. 2015-16) (1) Whether the CIT(A) has erred in deleting the addition of Rs. 57,19,037/- which was made by the AO by disallowing Legal Professional expenses without recognizing that the assessee has not filed any supporting evidence to prove that the expenses claimed were pertaining to relevant A.Y. 2015-16 and wholly and exclusively for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal : 5. The Bench is of considered opinion that when the tax authorities are scrutinizing the claim of High ratio of refund to TDS, the substantial question involved should be the examination of those heads of receipts wherein TDS credit is sought to be adjusted against the income and refund claim. Here is a case where with tax liability of assessee was Rs. 59,48,694/- and advance tax of Rs. 56,00,000/- was paid and there was TDS of Rs. 26,06,769. If the arguments of Revenue is sustained that scrutiny for high ratio of refund to TDS entitles even examination of expenditures, which have no relationship with the TDS, then that will in a way give arbitrary powers to the Assessing Officer to do complete scrutiny of all the expenses in a limited scrutiny and thus circumvent the provision of Act which require mandatory approval of competent authority to convert limited scrutiny to complete scrutiny. Ld. CIT(A) has tried to justify the act of Ld. AO by observing that legal and professional expenses, business promotion expenses, professional expenses for seeking legal opinion would be included under the head of High ratio of refund to TDS. However, no reason was cited as to how t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Rs. 57,19,037/- which was made by the AO by disallowing Legal Professional expenses the assessee has placed on record in the form of copies on invoices at page no. 34-34A of paper book, copy of engagement agreement at page no. 46-56 in regard to professional services choosing Ernst Young LLP similarly with regard to advisory services from M/s. J. Sagar Associates invoices at page no. 35-36 and 37 of the paper book have been placed on record. In regard to services M/s. KPMG India Pvt. Ltd. invoice at page no. 38 -39 of paper book have been placed on record. 8. Ld. AO has not mentioned in his order specifically in para 4.3 that these invoices are not placed on record, however, he mentioned in para no. 4.2 replied dated 14.12.2018 was submitted by the assessee, this reply is on record on paper book at page no. 31 to 33 which not only mentions about the justification of expenses but also has certain annexure but the invoices from the service providers seems to be not part of this reply dated 14.12.2018. 9. It can be appreciated that Ld. AO has disallowed these expenses for lack of evidences and that no revenue was recognized. In regard to addition of Rs. 57,19,037/- whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing Business Promotion expenses. The details of expenses have been made available by the assessee at page no. 40 of the paper book with copy of audit finance statement at page no. 23. In regard to the expenditure of Rs. 51,68,560/- with Hannover Milano Fairs India Pvt. Ltd. copy of invoices is available at page no. 77. This amount has been paid towards participation charges for 140 square meters and Gaming Arena Partner, similar invoices have been filed of O2 Enterprises, Wizcraft International Entert. Pvt. Ltd., NODWIN Cyber Games Merchandising Pvt. Ltd. and in its reply to the show cause notice available at page no. 32 of the paper book. The assessee had explained that as it had set up business of online Gaming by providing Gaming Gears to Gamers and promoting E-Sports in India. Consequently, the assessee had incurred promotion expenses for the same. The AO has observed that no evidence has been tendered on the other hand, on the basis of submissions dated 20.12.2018 which referred to expenditures in support of submissions were mentioned by the ld. AO and Ld. CIT(A) has considered all this evidence. Accordingly, the ld. CIT(A) has distinguished the findings of Ld AO on same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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