TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 1008
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....s paid to Satellite Mgt. Services Ltd, even when the assessee had not discharged the onus of establishing the business purpose of such expenditure. 2. The CIT(A) has erred in law and on facts by deleting the disallowance of Rs. 14.59 lacs towards management consultancy fees paid to CAs despite the fact that the assessee had not discharged the onus of establishing the business purpose of such expenditure. 3. The CIT(A) has erred in law and on facts by deleting the disallowance of Rs. 11.51 lacs towards commission payment to Jayesh Parikh even when the assessee had not discharged the onus of establishing the business purpose of such expenditure. 4. The CIT(A) has erred in law and on facts by deleting the disallowance of deduction of Rs. 2.73 Crores u/s 80HHE despite the fact that the conditions laid down u/s 8OHHE for claiming such deduction were not fulfilled. 3. The grievance of the assessee is dealt separately. 4. And the Cross Objection are as under:- 1. On the facts and in the circumstances of the case and in law, particularly in view of the ratio laid down by the Hon'ble Jurisdictional High Court of Gujarat and as reported in 320 ITR 126, Ground no. 3 of the departmen....
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....ore the A.O so as to enable him to confront these two parties. It will be a stage of reexamination. The revenue authorities should also exercise their powers to enforce the presence of these two persons and assessee is required to give full support by way of providing the addresses, mobile numbers and their other whereabouts so as to enable the A.O to serve the summons on them. It is in the interest of the assessee company to extent full support to the A.O to enable him to enforce the attendance of these two persons. Merely putting the burden on the A.O and to sit quietly will not be in its interest. If necessary the A.O can issue commission to the other officer of the department where the assessee can also go and confront the two persons. Accordingly, both the appeals are restored to the file of the A.O for deciding afresh. 6. Pursuant to the directions of the Tribunal fresh assessment proceedings were started, the assessee was given opportunity to justify various claims made by it. The A.O completed the assessment vide order dated 30.10.2011 made u/s. 143(3) r.w.s. 254 of the Act as follows. Regarding producing the two persons before the Assessing Officer:- Vide this office ....
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....not tenable and rejected. The addition was confirmed by the Ld.CIT (A). (Disallowance of Rs. 16,11,32,180/-) 2.Disallowance of expenses regarding foreign travelling : Contention of the assessee is considered. But the ld. CIT (A) has confirmed the addition made by the A.O. Therefore, follow the decision of the ld. CIT(A) contention of the assessee is not acceptable and rejected. (Disallowance of Rs. 16,57,920/-) 3.Disallowance of deferred expenditure u/35D ; Contention of the assessee is considered. But the ld. CIT (A) has confirmed the addition made by the A.O. Therefore, follow the decision of the Id. CIT (A) contention of the assessee is not acceptable and rejected. (Disallowance of Rs. 1,59,028/-) 4.Disallowance regarding consulting charges of Rs. 20,10,000/-- for satellite management service ltd. Contention of the assessee is considered. But, follow the original order passed by the A.O. Therefore, contention of the assessee is rejected. (Disallowance of Rs. 20,10,000/-) 5.Management consulting paid to M/s. Shah Mehta Majmudar, C.A. amounting Rs. 14,59,000/-. Contention of the assessee is considered. But, follow the original order passed by the A.O. There....
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....sessee is based on the same reasoning as were given at the time of first round of appeal and since the reasonings given by the assessee were not accepted by the ld. CIT(A) then, therefore, the same are also not accepted now. The impugned disallowance of depreciation was upheld. 10. In so far as the claim of interest expenses of Rs. 1,06,89,996/- is concerned, it was explained by the assessee that the loan was not used for the purchase of computer. It was further brought to the notice of the ld. CIT(A) that out of total claim of interest of Rs. 1,06,89,996/-, only Rs. 65,39,348/- was paid to the bank on term loan and remaining interest pertained to other parties. Necessary details were furnished. The ld. CIT(A) at Para 6.2 of his order simply followed the findings given by his predecessor in the first round of appeal and confirmed the disallowance of interest. 11. Regarding disallowance of foreign travel expenses of Rs. 16,56,920/- is concerned, it was explained that the company had incurred total foreign travel expenditure at Rs. 26,87,207/- which was incurred entirely for the business purposes and was verifiable from the books of accounts and other supporting evidence. Inadverte....
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.... since the revenue had not preferred any appeal against the said findings of the ld. CIT(A). The A.O should not have disallowed the claim in the second round of litigation. 15. The only other addition confirmed by the ld. CIT(A) relates to the octroi duty payment of Rs. 1,71,000/-. 16. The revenue is in appeal in respect of the additions deleted by the ld. CIT(A), the assessee is in appeal against the additions confirmed by the ld. CIT(A) and the assessee has also preferred Cross Objection against the appeal of the revenue stating that the Tribunal has only restored the matter relating to the claim of depreciation on purchases of computers, therefore, all other additions/disallowances made by the A.O are beyond the directions of the ITAT. 17. Rival contentions were heard at length. We have carefully perused the orders of the authorities below and have given a thoughtful consideration to the orders of the Tribunal setting aside the order of the ld. CIT(A) in the first round of litigation. 18. At the very outset, we would like to state that the cross objection raised by the assessee do not hold any water. We have extracted the relevant findings of the Tribunal in the first round ....
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....rst grievance relates to the claim of depreciation on the purchases of computers. 23. The facts relating to this grievance are that during the course of the assessment proceedings in the first round, the A.O found that the claim of purchase of computers by the assessee was bogus. Necessary enquires were made from Co-Op. Bank of Ahmedabad from where the assessee has taken loan of approximately 6 crores. The information received from the bank revealed that almost the entire purchase of computer hardware was made from only two companies by the name of Rahul Infotech Pvt. Ltd. and Vandna Computers Pvt. Ltd., the A.O found that the assessee has purchased approximately 500 computers from these two companies. The A.O observed that since the goods were purchased by the assessee from places located outside octroi Ltd., the assessee should have produced the receipts of octroi paid on the purchase of computer hardware. Although assessee stated that the octroi has been paid by the vendor and the same was reimbursed by the assessee. But the A.O was of the firm belief that in either situation the assessee must be having receipts of octroi payment. 24. For verifying the genuineness of the purch....
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....the statements of Parikh couple who were not allowed to be cross examined by the assessee; therefore, their statements are in complete violation of principles of natural justice. On the basis of circumstantial evidences mentioned elsewhere, we are of the opinion that the assessee had purchased computers and is eligible for the claim of depreciation. We accordingly set aside the findings of the ld. CIT(A) and direct the A.O to allow the claim of depreciation. This ground is accordingly allowed. 27. Next grievance of the assessee relates to the disallowance of interest expenses of Rs. 1,06,89,996/-. 28. During the course of the assessment proceedings, it was explained that the interest paid to Co. Op. Bank of Ahmedabad was on loan taken from this bank for the purposes of business and the amounts were used for the business purposes of the company. It was explained that out of the total loan of Rs. 5 crores, Rs. 1.75 crores only has been utilized for the purchases of Hardware etc. In the first round of litigation, the A.O did not accept the contention of the assessee because the purchases of computers have been held to be bogus. Since no genuine purchases were made the amount of inte....
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....nce of Rs. 1,59,028/- as deffered revenue expenditure. 33. The disallowance has been made on the finding that the entire expenditure has been incurred for increase in share of capital. It was explained before the revenue authorities that the total expenditure incurred at Rs. 6,36,112/- comprises of payment of fees to Registrar of companies for various matters and does not entirely pertain to increase in share capital. This claim of the assessee did not find any favour with the A.O. Since the additions were confirmed by the ld. CIT(A) in the first round of litigation, in the present proceedings, before the First Appellate Authority, the additions have been confirmed by the ld. CIT(A) following the findings of his predecessor. 34. We have given a thoughtful consideration to the findings of the authorities below. We find that the assessee has strongly contended that it has not floated any public issue nor invited any share application from anybody, neither during the year under consideration nor in the subsequent years. Therefore, there is no question of incurring expenditure on increase of the share capital. We do not find any adverse inference/findings by the lower authorities in ....
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....appeal is partly allowed. ITA No. 804/Ahd/2011 Assessee's appeal for A.Y. 2004-05. 40. The grievance of the assessee read as under:- 1. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in dismissing the ground raised in appeal that disallowance of depreciation was based not on facts but only on conjectures and surmises and was not valid. 2. On the facts and in the circumstances of the case and without prejudice, the ld. CIT(A) has erred in confirming the disallowance of depreciation of Rs. 2,09,69,161/- simply following orders of his predecessors in earlier years when the same is set aside and restored back to the file of the Assessing Officer as per Hon'ble I.T.A.T's orders dated 15th October 2010 in ITA No. 1507 & 1681/Ahd/2005. 3. On the facts and in the circumstances of the case and without prejudice, the order of the learned Commissioner of Income-Tax (Appeals) cannot stand and deserves to be reversed. 4. On the facts and in the circumstances of the case and without prejudice, the CIT(A) has erred in confirming disallowance of interest expenses of Rs. 21,12,514 simply following his predecessors' orders when the same is set aside and rest....
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....sallowance of bad debts of Rs. 3,08,76,140/- in its Profit and Loss account. The A.O asked the assessee to furnish the following details:- (1) Name and address of the parties in respect of whom bad debts are written off. (2) Nature of transaction and data of transaction. (3) Copy of ledger of the party right from the beginning of the transaction (4) Reasons for non-payment and reasons for writing off the debts. 49. On receiving no plausible reply/documentary evidences in support of the write off, the A.O disallowed and made addition of Rs. 3,08,76,140/-. 50. Assessee carried the matter before the ld. CIT(A). It was strongly contended that the copies of ledger account as required were given which gave the details of the nature of transactions. It was explained that the transaction with M/s. Global Finance was on account of sale proceeds towards software development charges. After considering the facts and the submissions, the ld. CIT(A) observed that the assessee has not demonstrated that it has fulfilled the condition of Section 36(2)of the Act. Accordingly disallowances were confirmed. 51. Before us, the assessee strongly relied upon the decision of the Hon'ble Supreme ....