Genuine business expenditure and perversity review shaped the outcome, with salary claims remanded for fresh evidence.

Certified data purchase and referral fee were held to be genuine business expenditure because the assessee supported both claims with evidence and the Revenue showed no perversity in the Tribunal's factual findings; the disallowances on those counts were therefore not sustained. Salary and wages stood on a different footing because Form 16 alone was insufficient without salary registers, vouchers, employee particulars or confirmations, and the Tribunal's acceptance of the claim was found perverse on the existing record. That issue was remitted for fresh adjudication by the first appellate authority after giving the assessee an opportunity to produce additional evidence.

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Issues: (i) Whether the disallowance of expenditure towards certified data purchase was justified; (ii) whether the disallowance of 30% of salary and wages was sustainable; (iii) whether the restriction of disallowance in respect of referral fee to 5% was justified.

Issue (i): Whether the disallowance of expenditure towards certified data purchase was justified.

Analysis: The assessee had established that it was engaged in the business of collecting and supplying data, that the data had been purchased from another entity, that the purchase was supported by material on record, and that the same had been utilised for generating revenue. The Assessing Officer's objection as to the utility or contents of the data was held to be immaterial once the business activity and expenditure were otherwise established. The Tribunal's finding was based on appreciation of evidence and was not shown to be perverse.

Conclusion: The disallowance was not justified and the issue was decided in favour of the assessee.

Issue (ii): Whether the disallowance of 30% of salary and wages was sustainable.

Analysis: The existence of Form 16 was held to be insufficient by itself to prove genuineness of the salary expenditure. The assessee did not produce salary registers, vouchers, employee details, addresses, or confirmations, and the Tribunal's view that the deficiency of vouchers had not been pointed out was found to be unsupported by the record. The finding of the Tribunal on this issue was held to be perverse, and the matter was directed to be examined afresh by the Commissioner (Appeals) after giving the assessee an opportunity to produce additional evidence.

Conclusion: The disallowance issue was not finally upheld or rejected on merits and was remitted for fresh adjudication, which was adverse to the assessee on the existing record.

Issue (iii): Whether the restriction of disallowance in respect of referral fee to 5% was justified.

Analysis: The business activity of the assessee was accepted as genuine, the expenditure was supported by complete vouchers, Form 16A, PAN details and payment particulars, and no material was shown to discredit the Tribunal's factual finding that the referral fee was genuine. The Tribunal's conclusion was treated as a factual finding based on evidence and no error was found in it.

Conclusion: The restriction of disallowance was not justified and the issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded only on the salary expenditure issue, which was remanded for fresh consideration, while the assessee's claims regarding certified data purchase and referral fee were sustained.

Ratio Decidendi: In income-tax matters, a factual finding based on appreciation of evidence will not be interfered with unless shown to be perverse, and genuine business expenditure cannot be disallowed merely because the Assessing Officer questions the business prudence or utility of the expenditure once the underlying activity is established.

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