TaxTMI 
TaxTMI 
2017 (11) TMI 1366
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.... Assessee's grounds of appeal (ITA No. 698/JP/14) "1. That the ld. CIT(A) grossly erred in not allowing the Software expenses of Rs. 99031.00 treating them as Capital expenditure. The ld. AO disallowed Rs. 119429.00 out of this and the ld. CIT sustained the disallowance of Rs. 99031.00. 2. That the ld. CIT(A) grossly erred in not deleting the addition made by ld. AO on account of caution money of Rs. 5,00,000/-. The ld. AO made the addition of caution money Rs. 1668525/- out of that ld. CIT(A) sustained the addition of Rs. 5,00,000/-. 3. That the ld. CIT(A) grossly erred in sustained the addition u/s 40A(2)(b) on A/c of Smt. Arti Bansal Rs. 2,42,000/-. The Ld. AO made addition of Rs. 7,94,000/- out of this ld. CIT(A) sustained Rs. 2,42,000/-." Revenue's grounds of appeal (ITA No. 738/JP/14) "On the facts and in the circumstances of the case, the ld. CIT(A) has erred in:- (i) deleting the addition of Rs. 11,68,825/- out of total addition of Rs. 16,68,825/- made by AO on account of refund of caution money. (ii) deleting the addition of Rs. 19,65,348/- made by the AO on account of depreciation on PLD unit building on the basis ....
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.... renewal fee is paid by the assessee, it cannot be said that capital expenditure has been incurred by the assessee and which has any enduring benefit. The ld.CIT(A) has gone through the details and held that expenditure of Rs. 99,031/- relate to purchase of software whereas expenditure of Rs. 2,750/- and Rs. 17,648/- was related to use of software for one year and renewal of software respectively. Accordingly, the expenditure of Rs. 20,398/- was held as revenue in nature and addition of Rs. 99,031 was confirmed. Now the assessee is in appeal before us. 6. It was submitted by the ld AR that the Company has incurred software expenditure of Rs. 1,19,429/-. These are the expenditure for taking software licences for a year. The company is engaged in coaching business; it has to buy so many softwares and each of these softwares cannot be used for more than 1 year. Further, for renewal of the licence also, it is done every year. Hence these expenditure cannot be capitalized. It has no enduring benefits because it becomes obsolete in a year or rather before a year itself because in the changing environment upgraded applications come and the earlier one becomes obsolete. Out of the said ....
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....made a disallowance and an addition of Rs. 16,68,825/- towards caution money to the returned income by observing as under:- The assessee has shown caution money refund closing balance as on 31.03.2010 at Rs. 71,53,000/-. Details of the receipts and payment during the year under consideration in respect of caution money is stated as under:- Particulars Amount (Rs) Opening Balance as on 01.04.2009 55,24,500/- Add: Receipts during the year 1,27,54,000/- Total 1,82,78,500/- Less: Payment During the year 1,11,25,500/- Closing balance an on 31.03.2010 71,53,000/- Perusal of the details filed by the assessee reveals that sufficient amount of caution money has been refunded in cash, for which no proper receipt/evidence has been adduced. Details of caution money distribution for the year under consideration are available on sheets, examination of which reveals that neither the signature of the recipient nor the stamp (Paid) have been indicated against many places, examples of which are indicated as under:- S.No. Batch Roll No. Name of the student Amount (Rs) 1 AO1 16 Kumar Saur....
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....tion Money from the students, is paid to them properly. The Caution Money is been paid on "Pull Model" Basis that is when an student approaches for refund he is paid to ensure only right hand have been receiving the amount and so sometimes it happens that student may be coming even after 1-2 years for the refund. The learned A.O. has due to some very less unpaid refunds of the Caution Money i.e 10 out of Student strength in thousands, has disallowed 15% of caution money stating that there is no proper receipt or evidence. In this matter we submit that we have given details of refund and a copy of the page of the register and the system what we are following in case of refund of money. No particular incidence has been noticed by the learned A.O. that the same has not been refunded to the students. It could be checked anytime by calling the student anytime about receiving the money which we also apply practically to ensure proper disbursal but no such exercise has been done and straight away deducted 15%. He has made up his mind that due to non-legibility of signatures of the recipients, money refunded during the year, cannot be verified in entirety whereas we have ....
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....ade ad hoc addition of 15% based on certain missing signatures of the recipients and the learned CIT(A) has sustained the said addition of Rs. 5,00,000/- in place of Rs. 16,68,525/- added by the learned AO. We submit before your honour that on perusal of the payment sheet of Rs. 1,000/- each in signature columns, though payment has been made, unfortunately the signatures were not obtained and on the basis of report, given by the cashier or the person who was In-charge of refund of the caution money, the payment has been debited in the books although there is no doubt about the non-payment of the same. The amount entered in the register, has entirely been paid during the year itself and if something is not claimed in the year itself then it is kept credited in caution money till the student claims and the matter of written off comes in picture after 4-5 years but no such case has come in the case of Bansal classes and, there has never been a chance to written off. The learned CIT(A) observed that the learned AO made addition of Rs. 16,68,525/- on the basis of out of Rs. 10,000/- and held not justified, but again he also came on the estimation. Our submission is that out of the....
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....disallowance. During the course of hearing, the assessee has submitted that it has adequate internal controls for repayment of caution money to the students and books of accounts have been audited and no adverse finding has been given by the auditors. Further, details of repayments in terms of caution money ledger, vouchers and other details were submitted during the course of assessment proceedings which is also not disputed by the Revenue. Further, the question of disallowance comes where there is a claim of expenditure at first place which is not the case before us. In the entirety of facts and circumstances of case, we are of the considered view that there is no basis for adhoc disallowance of 15% of caution money which has been refunded to the students during the year. We accordingly set-aside the findings of the AO and the ld CIT(A) and the disallowance of caution money so refunded is deleted in entirety. In the result, ground of assessee's appeal is allowed and ground of revenue's appeal is dismissed. 16. In ground no. 3, the assessee has challenged the sustenance of addition u/s 40A(2)(b) on account of salary payment to Arti Bansal amounting of Rs. 2,42,000/-. The revenu....
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....nsal Daughter 34,00,000/- 6,50,000/- 19.11% 4,08,000/ - 2,42,000 /- 2. Smt. Mahi ma Bansal Wife of Director 16,50,000/- 7,50,000/- 45.45% 1,98,000/ - 5,52,000 /- Therefore, total excess salary of Rs. 7,94,000/-(2,42,000+5,52,000) paid to the above said relatives of the Directors is disallowed u/s 40A(2)(b) and added to the assessee's total income. " 18. During the course of appellate proceedings before the ld CIT(A), the assessee vide letter dated 24/06/2014 submitted as under:- "Salary : In course of assessment the details of salary paid to various persons were filed. In the details the learned AO took up the salary of two persons - Smt. Arti Bansal and Smt. Mahima Bansal. Smt. Arti Bansal is not only looking after the entire classes at Ajmer but also taking lectures at Kota Bansal Classes and, therefore, she has been made the General Manager for the Classes at Ajmer by the institute. Looking to work, her qualification degree certificate enclosed, experience and time devoted, the salary was increased from Rs. 34 lacs to 40.5 lacs and this increase is justified with the turnover of the Ajmer which has been increased from 134.32 lacs t....
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....lty should also be considered while considering increase in salary as more and more load of teachers leaving is falling on older ones. As such, looking to her qualification devotion and work done, the salary was increased and it can be compared with other teachers. As such, the salary payment is fully justified. It cannot be treated as a case U/s 40A(2)(b) because no comparative case has been given by the learned A.O. He has just given the calculation that this much of percentage of salary is increase; it should also increase accordingly. This cannot be the basis. There is separate basis for justifying every person in this line of business, hence should be allowed fully." 19. The relevant finding of the CIT(A) is reproduced as under:- "I have gone through assessee's submission and AO's findings. It was seen that Smt. Arti Bansal was looking after Ajmer Branch of the assessee company. The total receipts of Ajmer Branch was Rs. 1,56,99,720/-. Payment of Rs. 40,50,000/- to Smt. Arti Bansal appeared to be excessive, considering the fact that total turnover was only Rs. 1,56,99,720/- and there were other teachers also. Therefore, disallowance of Rs. 2,42,000/- related to ....
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....mpany as well as fair market value of such services. 24. It is noted that Arti Bansal holds the degree of MSC (Maths) and is a faculty member in the Mathematics Department in IIT-JEE Division for Ajmer and Kota Centers with over 10 years of experience. Her Job responsibilities include taking 4-5 lectures each day of Class XI/XII/XIII Target IIT-JEE, test paper setting and its solutions, DPP/Literature development, etc. During the year, she was made responsible for the upliftment of the Ajmer center and managing the academic and administrative activities of the center and sharing dual responsibility of Ajmer center incharge academically and administratively. As per her annual appraisal report, keeping in view her past performance and her current responsibilities, her salary was fixed at Rs. 40.5 lacs per annum. 25. Similarly, it is noted that Mahima Bansal holds the degree of BE and is a faculty member in the Mathematics Department in IIT-JEE Division for Kota Center with over 8 years of experience. Her Job responsibilities include taking 4-5 lectures each day of Class XI/XII/XIII Target IIT-JEE, test paper setting and its solutions, DPP/Literature development, etc. As per her....
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.... the salary paid to her is reasonable vis-a-vis legitimate needs of the assessee company and benefit derived or accruing to the assessee company. We do not see any justifiable reason to disturb the decision which has been taken by the management of the assessee company in terms of determining the appropriate remuneration payable to her. The only scenario where one can think of disturbing the said decision taken by the management of the assessee company is where people holding similar position and having similar experience and qualification have been drawing lesser remuneration compared to what has been paid to these persons by the assessee company. In other words, the test of reasonableness can be invoked where there is contemporary data in terms of identifiable third party transactions in similar field of competitive coaches classes being conducted by other companies. In the instant case, the revenue has not brought on record any such contemporary data in terms of other educational institutions of same scale-and size and having similar strength of student and infrastructure wherein faculty member holding the dual responsibility have been paid lesser salary. Further the Courts have....
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....y where she is only B.E and other faculty is B.Tech, IIT and having more than 3-4 years extra experience than her. The ld CIT(A) accordingly restricted the addition to Rs. 8,00,000/- and the remaining addition of Rs. 35,20,000/- was deleted. Following the same reasoning, in financial year 2012-13, the ld CIT(A) restricted the disallowance to Rs. 6,00,000 and balance disallowance was deleted. 31. Firstly, our reasoning as stated above in case of Arti Bansal shall apply with equal force to the present case. Further, we find that unlike the case of Arti Bansal, in case of Mahima Bansal, comparative data has been examined and analysed by the ld CIT(A) even though it is an internal data as provided by the assessee company. Based on the analysis of the said data, the ld CIT(A) has given a finding that the salary payment to Mahima Bansal is excessive by Rs. 8 lacs in financial year 2011-12 relevant to assessment year 2012-13 and by Rs. 6 lacs in financial year 2012-13 relevant to assessment year 2013-14. The said findings of the ld CIT(A) is therefore in consonance with our reasoning given above in case of Arti Bansal. However, there is no comparative data that is available and analyse....
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....he Motherboard of Bansal Classes considering it be a Computer as this is specifically the place where the Study Material, Question Papers and other related literature is being developed in strict vigil of Shri V.K.Bansal the patriarch himself. This PLD Unit building is responsible for quality control of Material of Bansal Classes and without this unit the classes would be handicapped. This is specifically designed as adjoining but separate to main building to ensure proper segregation and no disturbance of any kind. In case of assessment proceedings the details of constructions were submitted. The construction work began in March 2008 and continued upto December, 2009. The major work was completed by end of September and thereafter the said building was taken in use. However, certain furniture & fixtures were carried on and that too was finished by December, 2009. As such the Company claimed depreciation @ 5% treating it to be in use below 6 months. The learned A.O. has called upon some information such as electricity bill, completion certificate etc. However, we have submitted the copy of the electricity bill since the bills are common for the entire premises. As....
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....nt of the building evidencing the nature and period of expenditure was submitted which has subsequently been verified by the registered valuer. Further, usage of the building was corroborated by usage of electricity through common meter and increase in electricity load which was sanctioned in August 2009. Further, the assessee has requested for a physical verification of its building to establish the completion and usage of the building. All these facts have been duly considered by the ld CIT(A) and we have gone through his following findings and the same are hereby confirmed: "The AO disallowed the depreciation mainly on two counts. No electricity bill was produced and no completion certificate was produced. The assessee submitted that the new building was adjacent to the existing building and both the buildings have common connection and the electricity bills are common for both the premises. The assessee submitted that after completion of new building, the electricity load was got increased. The assessee further submitted that in Kota, there is no system of obtaining a completion certificate. I have gone through the construction account of the building and it was seen that....
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....- 18 40 17.03.2010 Rs. 1,00,00,000/- 19 41 17.03.2010 Rs. 1,00,00,000/- 20 46 19.03.2010 Rs. 1,00,00,000/- 21 47 19.03.2010 Rs. 1,00,00,000/- The above noted donations aggregating Rs. 9,80,00,200/ - have been disallowed by the assessee in the computation of income; but deduction of Rs. 4,90,07,505/- has been claimed u/s 80G against the gross total income computed at Rs. 98,01,50,108/-. During the course of assessment proceedings, the assessee was asked vide this office letter dated 29.10.2012 to produce register u/s 301 of the Company Law, maintained by it for the year under consideration so as to verify the veracity of the provisions of donation factor. But no such register u/s 301 has been produced. The assessee company has, however, filed a copy of an extract dated 12.05.2009 from the minutes of meeting of the Board of Directors held at Kota on 01.05.2009, which reads as under:- "Certified copy of an extract from the minutes of meeting, of the Board of Directors of Bansal Classes Private Limited, duly convened and at which a proper quorum was present, held at Kota on 1st May, 2009. We hereby certify that the followin....
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....st at a meeting of the Board of directors. The words "in any way", "whether directly or indirectly, proposed contract or arrangement" "entered into or to be entered into" would indicate that scope of the section is wider and covers all possible transactions with relatives, firms, companies in which the director is associated by virtue of his office or otherwise." In the case of assessee company, no such disclosure has been made in the so called resolution dated 12.05.2009. The Directors of the Company are also either trustees of the Bansal Public Education Society, Registered Office, 5-A-13, Vigyan Nagar, Kota or close relatives of the trustees, as detailed below:- 1. Sh. V.K. Bansal (Director) Chairman 2. P.K. Bansal (Director) Secretary 3. Mahima Bansal (Director's wife) Treasurer 4. Sameer Bansal (Director) Vice Chairman 5. Richa Bansal (Director) Joint Secretary There is no mention in the so called copy of extract of the resolution that donations would be made to the said society only. There is no nexus of the huge donations made to the said society with the business purposes of the assessee company. Moreover; there is no co....
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....s 80G. The AO is therefore directed to delete addition of Rs. 4,90,07,505/-" 39. During the course of hearing, the ld AR reiterated his submissions made before the ld CIT(A). Further, he submitted that the donations have been made after due approval from the Board of Director's of the assessee's company. He further submitted that there is no violation of any of the provisions of the Companies Act. He further submitted that the Bansal Public School Education Society has been duly registered under section 12AA as well as section 80G of the Act and the assessee company has rightly claimed the deduction to the extent of 50% of donations made during the year. 40. The ld DR has vehemently argued the matter and relied upon the order of the Assessing Officer. 41. We have heard the rival contentions and purused the material available on record. During the year under consideration, the assessee company has contributed by way of donation of Rs. 9,80,00,000 to Bansal Public School Education Society having registered office at 5-A-13, Vigyan Nagar, Kota, Rajasthan and a deduction to an extent of 50% of the said donation amounting to Rs. 4,90,00,000 has been claimed in the return of inc....
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....t as claimed by the assessee company in its return of income. The ground of the revenue is disposed off accordingly. ITA No. 699/JP/14 & 739/JP/14 44. We now come to cross appeals filed for AY 2011-12 wherein the respective grounds of appeal are as under: Assessee's grounds of appeal (ITA No. 699/JP/14) "(1) That the ld. CIT(A) grossly erred in not deleting the addition made by ld. AO on account of caution money Rs. 5,00,000/-. The ld. AO made the addition of caution money Rs. 1650450/- out of that Ld. CIT(A) sustained the addition of Rs. 5,00,000/-. (2) That the ld. AO as well as Ld. CIT(A) grossly erred in disallowing the Advertisement expenses Rs. 57200/- (3) That the Ld. AO as well as Ld. CIT(A) grossly erred in making the disallowance of Rs. 2,00,000/- the expenses incurred on Public welfare i.e. contribution to Police welfare fund." Revenue's grounds of appeal (ITA No. 739/JP/14) "On the facts and in the circumstances of the case, the ld. CIT(A) has erred in:- (i) deleting the addition of Rs. 11,50,450/- out of total addition of Rs. 16,50,450/- made by the AO on account of unpaid caution money; (ii) deleting th....
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....ure under the head "advertisement":- Secretary RA.MA Vidyalaya Civil Lines : Rs. 5,100/- Kota District Cricket Association : Rs. 50,000/- Kota Zila Body Building : Rs. 2,100/- Total : Rs. 57,200/- Vide order sheet entry dated 04.03.2014, the assessee was asked to explain as to why the above said payments may not be disallowed, as there is no nexus of these expense with the business purposes. The assessee vide its written submissions filed on 13.03.2014 stated as under:- "The company is also liable to do social work and in this relation & to promote the social cause help to poor, environment health it has contributed amount in souvenir with the different organization. As such the amount was contributed to Rotary Clubs, Lions Clubs, Poor Lady Fatima Sultana, Jim Khana etc. This is purely the business expenditure. ' The submissions made by the assessee have duly been considered and not found acceptable. There is no commercial expediency in making the above said expenditure, as no nexus of these expenses with the business purposes of the assessee is proved. Hence; the above noted expenses aggregating Rs. 57,200/- are disallowed, being not incidental to the....
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....sively for the business purposes u/s 37(1). In view of these facts, this amount of Rs. 2,00,000/- is disallowed and added to the assessee's total income." 51. The relevant findings of the ld CIT(A) are as under: "I have gone through assessee's submission and AO's findings. This expenses were not wholly and exclusively for the purposes of business. The expenditure was in the nature of donation. Donations etc. can be claimed under the provisions of the Act after fulfilling certain conditions, e.g. donations can be claimed u/s 80G etc. As assessee has failed to fulfill any of the condition for claiming deduction, the disallowance by AO was justified. The addition of Rs. 2,00,000/- is confirmed. This ground of appeal is therefore dismissed." 52. In ITA No. 435JP/16, in context of contribution to police welfare fund, we have held as under: "71. In our view, the contention of the assessee that the contribution towards police welfare fund has a necessary nexus with the safety of the students in and around Kota and hence, with the business of the assessee cannot be rejected. It is an expenditure which has been laid down to develop and strengthen the coordination and....
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....that the donation should have nexus with the business purposes of donee. Section 80G does not require that the donation should be for commercial expediency. Most of these things are required for allowing deduction of business expenditure u/s 37 of the I.T. Act. Considering the facts, it is held that assessee has fulfilled all the conditions necessary for claiming deduction u/s 80G. The AO is therefore directed to delete addition of Rs. 4,53,00,000/-. This ground of appeal is allowed." 55. We have already examined this issue at length and our findings and directions contained in ITA No. 698/JP/14 & 738/JP/14 shall apply mutatis mutandis to this year as well. In the result, revenue's ground of appeal is allowed for statistical purposes. 56. Regarding ground No. 4 of revenue's appeal relating to deletion of disallowance of Rs. 43,088/- made by the AO out of depreciation on xerox machine, the relevant facts of the case are that the AO made an addition of Rs. 54,763/- observing as under:- "In the details of fixed assets filed by the assessee, the assessee has purchased the following items, which are debited in the Computer account:- S. No. Name of Date of Amou....
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....ate and copy of the valuation report, vide questionnaire dated 13.09.2013, in support of its contention regarding completion of the said building. It is also pertinent to mention here that copy of the valuation report from the Registered Valuer as well as the copy of completion certificate from the Competent Authority with regard to Building of PLD Unit were also called for during the assessment proceedings for the A.Y. 2010-11. However; the assessee had failed to produce the above noted information/ documents in support of completion and subsequent occupation of the said PLD Unit. Vide its reply filed on 05.12.2013, the assessee filed copy of two page valuation report of the PLD Unit building, which is signed by one-Mr. V. Padma Nabhan on 20.04.2013, indicating therein the cost of construction of the said unit building at Rs. 3,89,43,952/- and date of completion as on 21.12.2009. The valuation report is a two page document and is dated is 20.04.2013 and does not contain the complete details of various relevant aspects, as are required of the legally valid valuation report. It was vividly held at the time of framing assessment for the A.Y. 2010-11 that the building remained incompl....
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....uilding was completed and put to use during the second half of current financial year. The AO is therefore directed to delete addition of Rs. 19,65,348/-.This ground of appeal is allowed. " The only difference during the year was two payments made to M/s Man Projects & Construction Pvt. Ltd. The assessee submitted that payments to M/s Man Projects 8s Construction Pvt. Ltd. was not related to "PLD Unit". The assessee submitted copy of depreciation schedule to show that there was no addition under the head of "PLD Unit". Secondly, the AO did not confront this issue with the assessee. Therefore, no adverse inference, on the basis of payments to M/s Man Projects 8s Construction Pvt. Ltd., can be drawn. I have already held in A.Y. 2010-11 that the building was completed in the second half of Financial Year 2009-10. Considering the above, the AO is directed to delete addition of Rs. 38,23,006/- This ground of appeal is allowed." 62. We have already examined this issue at length and our findings and directions contained in ITA No. 698/JP/14 & 738/JP/14 shall apply mutatis mutandis to this year as well. In the result, revenue's ground of appeal is dismissed. ITA No. 435/J....
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....and AO's findings. The assessee claimed that it has not claimed any expenditure against repayment of caution money. The AO added a sum of Rs. 16, 50,450/- on the basis of example of Rs. 10,000/-paid in cash without obtaining any signature. In my opinion, caution money is received during the course of business and if the same is not refunded, the same can be treated as income as and when the liability to pay such amount is written off in the books of accounts. During the year, assessee had shown to have paid Rs. 1, 10, 03,000/-. If any of the repayment was not actually made, the same would form the income of assessee. Considering the above, I am of the opinion that some addition was justified. However, making addition of Rs. 16, 50,450/- on the basis of defects of Rs. 10,000/- was not justified. Considering the facts of the case, in my opinion, an addition of Rs. 5, 00,000/- would meet the end of justice. The AO is directed to delete balance addition of Rs. 11, 50,450/-. Respectfully following the same basis, I consider that on the available facts, an addition of Rs. 4,00,000/- will serve the ends of justice and is confirmed. The remaining part of the addi....
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....t. Further, the assessee has failed to establish the necessary nexus of incurrence of such expenditure for business purposes. In light of the same, the above findings of the ld CIT(A) remain uncontroverted before us and the same are hereby confirmed. In the result, ground of appeal is dismissed. 69. Regarding ground No. 4 of the assessee's appeal, the relevant facts and submissions of the assessee are as under:- "That Bansal Classes is running a coaching institution which is having 20,000 to 30,000 students, all they are spread over in New Kota, they are residing in hostels, houses etc and they used to attend classes in 3-4 intervals, hence looking to the safety of students & teachers, we used to take assistance of Police department, and the security provided by police 56 department give trust to parents of students in the entire country to send their children at Kota and it increases its business. That on calling upon by the Police department to contribute in welfare fund the management took decision to contribute and it was purely on business investment, hence claimed as expenses, it is wholly & exclusively for business purpose and covered U/s 37(1). ....
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....ly, it is held that assessee has fulfilled all the conditions necessary for claiming deduction u/s 80G. The AO is therefore directed to delete addition of Rs. 1,03,00,000/-. This ground of appeal is allowed." 73. We have already examined this issue at length and our findings and directions contained in ITA No. 698/JP/14 & 738/JP/14 shall apply mutatis mutandis to this year as well. In the result, revenue's ground of appeal is allowed for statistical purposes. 74. Regarding ground no. 4 of the revenue's appeal, the relevant finding of the CIT(A) is reproduced as under:- "I have gone through the assessment order as well as submissions of the assessee. On similar facts, the Hon'ble ITAT in the case of Shri Ram Kishan Verma (ITA No. 589/JP/2011, A.Y. 2006 - 07) has allowed depreciation @ 60% on printers and deleted the addition. The same was followed by my predecessor CIT(A) in the earlier year's order referred at other places in this order. Following the decision of Hon'ble ITAT, the AO is directed to delete addition of Rs. 1, 06,277/-. The ground of appeal is allowed." 75. We have heard the rival contentions and purused the material available on record. Not....
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....- "I have gone through assessee's submission and AO's findings. I have dealt with this issue in assessee's own case for A.Y 2012-13 Vide order I appeal no 658/14-15 dated 19/01/2016 where I have held that caution money is received during the course of business and if the same is not refunded, the same can be treated as income as and when the liability to pay such amount is written off in the books of accounts. In line with the stand taken while deciding appeals on this issue in earlier years, addition is restricted to Rs. 50,000/-. The balance disallowance of Rs. 1,28,650/- is directed to be deleted. This ground of appeal is partly allowed." 78. We have already examined this issue at length and our findings and directions contained in ITA No. 698/JP/14 & 738/JP/14 shall apply mutatis mutandis to this year as well. In the result, assessee's ground of appeal is allowed and revenue's ground of appeal is dismissed. 79. Regarding common ground of appeal relating to disallowance of salary payment to Mahima Bansal u/s 40A(2)(b), we have already examined this issue at length in ITA No. 698/JP/14 & 738/JP/14 and as discussed therein, the order of the ld CIT(A) is con....
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....nt findings of the ld CIT(A) are as under: "The above expenses appear to be in the nature of advertising and sales promotion in loose connotation. The coaching Institutes being run commercially do have to go after eligible student population to maximise their feasibility. The A.O's argument that the turnover has reduced though these expenses have gone up can be seen the other way round that if these expenses were also not incurred or aggressive marketing not done the revenues could have fallen further. However, it is also justifiable on the part of the A.O that there are several shortcomings in the maintenance of supporting evidences attached to these expenses. Under the circumstances and considering the totality of facts involved, a reasonable disallowance out of these expenses is justified. A disallowance of Rs. 5,00,000/- out of the total claim would serve the ends of justice in my opinion. This amount of disallowance is confirmed. The balance disallowance of Rs. 9,92,788/- is directed to be deleted. This ground of appeal is partly allowed." 82. We have heard the rival contentions and pursued the material available on record. An adhoc disallowance of 15% of student w....
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....ents made on cash basis. The assessee has also made payments through hand made vouchers/ incomplete vouchers etc. Proper bills & vouchers in support of its claim have not been produced for verification. The case law submitted by the assessee is not applicable in this case because the facts of this and submitted by the assessee are different. Therefore in absence proper bills/vouchers these expenses are not subject on verification hence 10% of these expenses i.e. Rs. 3,02,888/- are disallowed and added to the total income of the assessee. 84. The relevant findings of the ld CIT(A) are as under: "Looking to the facts involved, the disallowance made to some extent is justifiable. The same is being restricted to 5% as being reasonable disallowance on account of the discrepancies involved. Disallowance of Rs. l,51,444/-(5%) is confirmed. The balance disallowance of Rs. 1,51,444/- is directed to be deleted. This ground of appeal is partly allowed." 85. As we have held above in the context of student welfare expenses, there is no basis for adhocism in the eyes of law. In the instant case, disallowance of 10% of the travel expenses have been made by the AO which has been red....