TaxTMI 
TaxTMI 
2014 (4) TMI 108
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.... amounting to Rs.79,095/-. 3. The assessee has filed the return of income declaring total income at "Rs. nil". The return was selected for scrutiny assessment and accordingly statutory notices u/s. 143(2) and 142(1) were issued and served upon the assessee along with a questionnaire. The Assessing Officer observed that the assessee's business activities were rental income received in respect of commercial assets i.e. office premises & godowns, and service charges received from sister concerns for providing services such as administration, EDP, computer services, management services etc. While scrutinizing the tax audit report, the Assessing Officer noticed that the assessee is in trading business however, on analyzing the profit & loss acc....
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....the receipts by showing it as service charges when the same should have been shown as rent. The Assessing Officer further observed that the assessee could not bring any agreement with its sister concerns to justify its claim. In the opinion of the Assessing Officer the assessee failed to explain the nature and extent of services rendered by it to its sister concerns. The Assessing Officer finally concluded that looking at the nature and quantum of receipts, the expenses claimed by the assessee are exorbitant and unjustified. The Assessing Officer allowed certain expenditure as mentioned at para 5.5 on page 4 of the assessment order i.e. expenses of Rs.19,16,441/- out of Rs.60,04,259/- and, accordingly, disallowed Rs.40,87,818/- being part o....
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....wer authorities. It is the say of the counsel that the assessee has 19 employees, who have been engaged by it since 1974 onwards. The assessee has engaged all these employees for providing services to its sister concerns, therefore all the expenses incurred on employees cost deserves to be allowed. The counsel further stated that the lower authorities have not doubted the genuineness of the expenses but have disallowed the expenses holding that the same has not been incurred for the purposes of earning income. Per contra, the DR strongly supported the findings of the lower authorities. 7. We have carefully perused the orders of the lower authorities and the relevant material evidences on record. It is interesting to note that as per the co....