TaxTMI 
TaxTMI 
2016 (4) TMI 943
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....e expenses were incurred. It was also pleaded by the ld. counsel that there is no bar in section 37 of the Act if any indirect benefit is caused to third party. On the other hand, the ld. DR, Shri M. Murli, strongly defended the disallowance by contending that firstly, photos of banners/hoardings were ever produced before the Assessing Officer/Commissioner of Income Tax (Appeals) and even before this Tribunal and the income has been offered in the individual case of Shri Kailash Kher, so the expenses, if any, also has to be claimed in his individual case. 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee company declared income of Rs. 1,06,56,253/- in its return filed on 25/09/2008. The return was selected for scrutiny, therefore, notice u/s 143(2) was issued to the assessee. Another notice dated 28/01/2010 and notice u/s 142(1) dated 16/07/2010 was served upon the assessee asking for various details. The ld. Assessing Officer disallowed a sum of Rs. 11,95,250/- with respect to advertisement of CD of "Jhoomo re" on the plea that the receipts of the CD was offered for taxation in the individual han....
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....e Shri Kailash Kher in his individual capacity) got the benefit. We are reproducing hereunder the relevant provision of section 37of the Act for ready reference and analysis:- "37. (1) Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". 68[Explanation 1.]-For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure. 69[Explanation 2.-For the removal of doubts, it is hereby declared that for the purposes of sub-section (1), any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 (18 of 2013) shall not b....
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....esultant benefits/collections were deposited in the personal accounts of Shri Kailsah Kher, therefore, the expenditure cannot be allowed as a deduction in the case of the assessee company. Even otherwise, what was mentioned in the so called banners, the assessee at any stage, never produced the language/advertised material, therefore, mere claim is not enough and it has to be substantiated with evidence, therefore, this ground of the assessee is dismissed. 3. Grounds no.3 and 4 pertains to disallowance of consultancy expenses of Rs. 5,69,989/- to Munro Acoustics Ltd. and commission of Rs. 2,24,720/- paid to Praxis treating the same as capital expenditure by the Revenue. 3.1. The crux of argument on behalf of the assessee is that these expenses were incurred by the assessee by inviting our attention to para 5.1(page-3) of the impugned order, by claiming that the expenses are revenue in nature. On the other hand, the ld. DR, defended the conclusion arrived at in the impugned order by asserting that the claimed expenditure are of capital in nature. 3.2. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee ....
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....ous consideration then it cannot be allowed. However, deduction on account of interest on loan cannot be denied. The loan was taken for starting the new line of business i.e. Kailasa Studio and business is yet to commence, therefore, it cannot be allowed. As mentioned earlier, what type of arrangement was made for getting the loan from the bank, mere claim is not enough, thus, the stand taken in the impugned order is affirmed. 4. The next ground pertains to payment of Rs. 7,64,937/- to Shri Mahesh Kher, brother of Shri Kailash Kher, director of the assessee company and disallowance made u/s 40(A)(2) claiming to be excessive, the crux of argument on behalf of the assessee is that genuineness of expenses is not in doubt by inviting our attention to pages 149 and 150 of the paper book. The ld. DR defended the conclusion arrived at in the impugned order. 4.1. We have considered the rival submissions and perused the material available on record. At page 149 and 150 of the paper book, there are two bills dated 05/04/2007 and 30/07/2007, raised by Shri Mahesh Kher for handling legal matters, consultancy and drafting of legal documents. The PAN number of Mr. Mahesh Kher has also been men....
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....e to any person referred to in clause (b) of this sub-section, and the Assessing Officer is of opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction : Provided that no disallowance, on account of any expenditure being excessive or unreasonable having regard to the fair market value, shall be made in respect of a specified domestic transaction referred to in section 92BA, if such transaction is at arm's length price as defined in clause (ii) of section 92F. (b) The persons referred to in clause (a) are the following, namely :- (i) where the assessee is an individual; any relative of the assessee (ii) where the assessee is a company, firm, association of persons or Hindu undivided family director, partner or member (iii) any individual who has a substantial interest in the business or profession of the assessee, ....
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....assessee for any expenditure and subsequently during any previous year (hereinafter referred to as subsequent year) the assessee makes payment in respect thereof, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, the payment so made shall be deemed to be the profits and gains of business or profession and accordingly chargeable to income-tax as income of the subsequent year if the payment or aggregate of payments made to a person in a day, exceeds twenty thousand rupees: Provided that no disallowance shall be made and no payment shall be deemed to be the profits and gains of business or profession under subsection (3) and this sub-section where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, in such cases and under such circumstances as may be prescribed75, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors : Provided further that in the case of payment made for plying, hiring or leasing goods carriages, the provisions of sub-....
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....r as contribution to, any fund, trust, company, association of persons, body of individuals, society registered under the Societies Registration Act, 1860 (21 of 1860), or other institution for any purpose, except where such sum is so paid, for the purposes and to the extent provided by or under clause (iv) or clause (iva) or clause (v) of sub-section (1) of section 36, or as required by or under any other law for the time being in force. (10) Notwithstanding anything contained in sub-section (9), where the Assessing Officer is satisfied that the fund, trust, company, association of persons, body of individuals, society or other institution referred to in that sub-section has, before the 1st day of March, 1984, bona fide laid out or expended any expenditure (not being in the nature of capital expenditure) wholly and exclusively for the welfare of the employees of the assessee referred to in sub-section (9) out of the sum referred to in that sub-section, the amount of such expenditure shall, in case no deduction has been allowed to the assessee in respect of such sum and subject to the other provisions of this Act, be deducted in computing the income referred to in section 28 of ....