AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (12) TMI 226
X X X X Extracts X X X X
X X X X Extracts X X X X
....observing as under: 5. On a perusal of the records, vouchers/documents impounded u/s 133A and the vouchers furnished by the assessee's Deputy Manager (Accts.), it is seen that the expenses as per the vouchers have actually been incurred by the employees of Shriram Group of Companies which is claimed by the assessee company. 6. A letter dt. 20.12.2010 was issued to the assessee requiring to show cause as to why the claim of the assessee under various heads should not be disallowed as the same were incurred by Shriram Group of Companies but were paid by the assessee company viz., RSIB. The assessee vide letter dt. 29.12.2010 furnished the reply as follows: 1. Our company is engaged in the business of general insurance broking having been granted a licence for the same by IRDA in April 2004. The company started doing the business in a small way in the first two years. It expanded the business considerably in the subsequent years. The company had therefore to incur lot of expenditure to increase the volume and take the business to a higher level and to consolidate. 2. The company is a direct broker. Regulations of IRDA (Insurance Broking Regulations) lays ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 5. There may be cases where expenses have to be incurred at a location where we do not have office and staff, but get help for a Shriram Group company office at that location whose staff do the chores. In the process, often they get the bills or invoices in the name of their company. Sometimes it helps to do things in the name of a Shriram Group company as they are regular customers. But payments are ultimately borne by us, even though the invoices may be in another name. 6. We have enclosed details of brokerage income & expenditure details for the financial years 2007-2008, 2008-2009 & 2009-2010. It may be seen from the enclosed statement that even though the Brokerage Income has increased, there is no corresponding increase in the expenditure. Without prejudice to the generality of our submissions as aforesaid, we furnish the specific details called for: (a) Entertainment Expenses The sum of Rs. 1,89,983/- has been debited under the head of account 'Business Promotion Expenses' in the ledger and not 'Entertainment Expenses' As explained above the expenses where incurred only for the purpose of business of the company. (b) Advertisement....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es: This sum of Rs. l,85,606/- does not pertain to us. It may be also seen from the general ledger available with you that this sum has not been debited under the head of account Rent in our books. (m) Books and Periodicals: As explained above, the expenses were incurred only for the purpose of business of the company. 7. The argument put forth by the AR is not acceptable in as much as most of the vouchers bear the name of only Shriram Group of Companies and expenses shown are not related to the assessee company. As also there is no written agreement entered into between the assessee company and Shriram Group of Companies for sharing of expenses other than Business Processing Outsourcing Expenses. Moreover, all the vouchers/bills are raised only in the name of Shriram Group of companies, Shriram Transport finance Corporation Ltd., Shriram City Union Finance Ltd., Shriram Fortune Solutions who are the sister concerns. Consolidated extracts of expenses have been prepared on the basis of vouchers impounded and vouchers furnished by the assessee's Deputy Manager during the course of assessment. (copy of consolidated extract enclosed Annexure I comprising of....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../- have been incurred in western region for which no supporting vouchers are in the name of the assessee company. Hence, I disallow the claim of expenditure Rs. 9,99,134/-. Pertaining to western region under this head. Disallowance under this head : Rs. 9,99,134/- (iv) Printing and Stationery: Total amount debited in Profit and loss account under this head is Rs. 12,17,649/- The expenses incurred for Shriram Group of companies to the tune of Rs. 3,26,416/- is disallowed. Disallowance under this head: Rs. 3,26,416/- (v) Repairs and maintenance: Total amount debited in P&L is Rs. 26,18,166/- in which Rs. 6,45,225/- have been incurred in the western region and all the bills and vouchers are raised in the name of Shriram group of companies and its sister concerns. I therefore disallow the above claim. Disallowance under this head: Rs. 6,45,225/- (vi) Staff Welfare: The assessee's claim of Rs. l0,86,667/- under this head. Out of the above total claim, Rs. 2,87,855/- has been incurred for the employees of Shriram Group of Companies in Jaipur. I therefore disallow that expenses incurred for the employees of Shriram Group of Companies. Disallowance under this he....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns which have been furnished in the earlier part of this order. 9. The main point to be considered is whether the expenses are genuine and incurred for the business of the appellant company. From the details furnished and accepted by the assessing officer it is seen that all the expenses are genuine. It is seen from the evidence adduced that the appellant has done business thro' Shriram Group companies and Agencies and independently by itself also. As the appellant has earned income from business thro' these sources also it could not have earned the same without incurring expenses separately. Further all these payments are by cheques and the assessing officer has nowhere doubted the genuineness of the payments. From the assessment order it is seen that the assessing officer has not made independent enquires to bring out the any evidence that the expenses claimed by the Appellant company are relating to any other company. In these circumstances there is no material to conclude that the payments have not been incurred for the appellant's business or that they are not genuine. On similar set of facts the additions made in the Appellant's case for the assessment year 2007-08 have been....
X X X X Extracts X X X X
X X X X Extracts X X X X
....i) As the assessee has earned income from these services also, it could not have earned the same without incurring the expenses separately and (iii) further, all the payments are made by cheques and the genuineness of the expenditure is nowhere doubted by the Assessing Officer. In the above facts and circumstances of the case, we do not find any good and justifiable reason to interfere with the order of the ld. CIT(A), which is confirmed and the grounds of the appeal of the Revenue are dismissed. 9. The third ground of appeal of the Revenue is directed against the order of the ld. CIT(A) deleting the disallowance under section 40(a)(ia) holding that the payments do not warrant deduction of tax since they were covered only by the provision of section 194J and not by the provision of section 194H of the Act. 10. The Assessing Officer has disallowed the expenses under the head 'Consultancy charges' as under: "(iv) Consultancy charges: The assessee company has claimed an amount of Rs. l,83,46,222/- as consultancy charges viz., brokerage/commission paid to various people most of them belonging to the Western region i.e., Jaipur. On a verification of the ledger under the head Consul....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing detailed information of the client's business and risk management philosophy; ii. Familiarising himself with the client's business and underwriting information so that this can be explained to an insurer and others; iii. Rendering advice on appropriate insurance cover and terms; iv. Maintaining detailed knowledge of available insurance markets, as may be applicable; v. Submitting quotation received from insurer is for consideration of a client; vi. Providing requisite underwriting information as required by an insurer in assessing the risk to decide pricing terms and conditions for cover; vii. Acting promptly on instructions from a client and providing him written acknowledgements and progress reports; viii. Assisting clients in paying premium under section 64VB of Insurance Act 1938 (4 of 1938). ix. Providing services-related to insurance consultancy and risk management; x. Assisting in the negotiation of the claims; and xi. Maintaining proper records of claims. When so many services have to be rendered, especially items iii, v, vi, and ix can be construed ....