TaxTMI 
TaxTMI 
2018 (5) TMI 125
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....011-2012. The assessee has raised the following grounds of appeal: Being aggrieved by the order passed by the Commissioner of Income Tax (Appeals) -10 (CIT(A), for short),), Mumbai, your appellant submits the following grounds of appeal for your sympathetic consideration: 1) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming disallowance of INR 39,88,000 being 20% of the Professional fees paid to Anand Automotive Systems Ltd of INR 1,99,40,000 by treating it as not incurred wholly and exclusively for business purpose. 2) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming disallowance of INR 95,67,000 being 20% of th....
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....e heard the Ld. Authorized Representative (AR) of the assessee and Ld. Departmental Representative (DR) for the Revenue and perused the material available on record. The Ld. AR of the assessee submits that the Assessing Officer disallowed the professional fees, advertisement expenses, share of common marketing expenses and commission & discount @ 20%. All disallowance was made on adhoc basis and without any specific reasons. The assessee has explained the nature of expenses and their justification. On the other hand, the Ld. DR for the Revenue supported the order of authorities below. The Ld. DR for the Revenue further submits that the assessee failed to provide the nature of services related with all the expenses. The lower authority has r....
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....the assessee was not accepted by the Assessing Officer. The Assessing Officer concluded that assessee failed to give exact nature and quantum of services rendered by Anand Automotive Systems Ltd. and disallowed 20% of the expenditure out of total paid amount debited under the head Legal & Professional Fee of Rs. 1,99,40,000/-. The Assessing Officer worked out the disallowance to Rs. 39,88,000/-. During the course of first appellate stage, the Ld. CIT(A) observed that Anand Automotive Systems Ltd. is sister concern of the assessee. The assessee has not justified the expenses incurred wholly and exclusively for the purpose of business. The assessee failed to give exact nature and type of services rendered by its group concern and concur that ....
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....ic reason is mentioned as to why the disallowances made @ 20% only. Availing of such services from the group concern is not un-common. The lower authorities have not identified, if the payments made to related party is unreasonable. No comparable on reason cum industry is referred by lower authorities. Moreover, we have seen that Legal & Professional Fees is only 2.02% of the sales. Thus, we do not find any justification in partial disallowance of Legal and Professional Expenses, which we delete. In the result the ground No.1 of the appeal is allowed. 5. Ground No.2 relates to 20% of disallowance of advertisement and publicity expenses. The Assessing Officer during the assessment proceeding disallowed the 20% of advertisement expenses ou....
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....ce made by Assessing Officer and confirmed by Ld. CIT(A) is deleted. 6. Ground No.3 relates to disallowance of 20% of share of common marketing expenses. The Assessing Officer disallowed 20% of marketing expenses out of Rs. 1,79,30,000/- holding that no proper justification and supporting documentary evidence was produced. The second reason for disallowance by Assessing Officer was that earlier year's addition was pending before the Ld. CIT(A). Before the Ld. CIT(A), the assesseecompany urged that the assessee entered in agreement with Victor Gasket India Ltd to share certain common resources for marketing and that amount were paid as per agreement. The Ld. CIT(A) concurred with the decision of Assessing Officer holding that the perusal ....
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.... payment incurred on common marketing expenses is in-genuine or unreasonable. Considering the fact that neither any adverse material was brought on record nor any specific reason was mentioned before disallowing 20% only of the common marketing expenses. We have seen that share of common marketing expenses is only 1.61% of the sales. Hence, we do not find any justification in making adhoc disallowance @ 20% of the common marketing expenses. In the result this ground of appeal is allowed. 7. Ground No.4 relates to disallowance of 20% of commission discount. The Assessing Officer disallowed the 20% of amount of commission and discount holding that no proper justification and supporting documentary evidence was filed. The Ld. CIT(A) confirm....