TaxTMI 
TaxTMI 
2019 (3) TMI 71
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....nt of loss on sales of Fixed Assets is bad in law and; against the facts and circumstances of the case. 3. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs. 24,42,988/- on account of legal and professional charges debited in profit & loss account under the head Misc. expenses and that too by recording incorrect facts and findings and without giving adequate opportunity of hearing and without following the principles of natural justice. 4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs. 24,42,988/- on account of legal and professional charges debited in profit & loss account under the head Misc. expenses is bad in law and against the facts and circumstances of the case. 5. That having; regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AC) in making disallowance of Rs,5,331,000/- on account of fluctuation in foreign currency in respect of outstanding balances of customers and that too by recording inco....
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....ts return of income on 2/12/2003 declaring loss of INR 1 24892067/- assessment under section 143 (3) of the income tax act was passed on 24/3/2006 wherein the following additions were made. a. Loss on sale of fixed assets INR 1 082477/- b. out of miscellaneous balances written back INR 1 675480/- c. amortization of leasehold land INR 1 086094/- d. provision for leave encashment INR 1 633000/- e. legal and professional charges disallowed INR 2 442988/- f. deferred interest Rs. 3163000/- g. foreign exchange fluctuation INR 5 33000/- 4. Accordingly the loss of the assessee was computed at INR 1 13276728/-. The assessee-preferred appeal before the Commissioner of income tax appeals who partly allowed the appeal of the assessee. Against the disallowance confirmed by the learned CIT - A assessee is in appeal before us. 5. The learned authorised representative submitted that ground number 1 and 2 of the appeal are with respect to the disallowance of INR 1 08 to 477/- on account of loss on sale of fixed assets. He submitted that this is the double addition made by the learned AO. He referred to the computation of the total income placed at page number 1 of the paper book to....
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....nt proceedings the assessee could not explain with evidence and agreed for the addition of the same. Assessee contested the same before the learned CIT - A however the assessee could not substantiate the above claim and therefore the learned CIT - A sustain the above addition. 9. The learned authorised representative submitted before us that assessee has submitted the detail of the legal and professional fees, which is placed at page number 45 - 51 of the paper book. He submitted that all these are the pity expenditure incurred by the assessee company and are in the form of retainer ship charges. He submitted that the assessee has paid all the expenses by the account payee cheque and whenever possible and applicable assessee has deducted tax at source. He further referred to the various services rendered by the legal professional, which is with respect to the business of the assessee. He therefore submitted that the all the expenditure incurred by the assessee are allowable to the assessee under section 37 (1) of the income tax act as there wholly and exclusively incurred for the purposes of the business of the assessee stop is all these expenses are pity amount the assessee thou....
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....ssee did not explain the relevance of this expenditure with evidence and agreed for the addition of the same. The learned CIT - A also confirmed the above disallowance stating that appellant cannot claim that the amount of INR 5 33000 as forex loss on revenue account without indulging in any transaction in the relevant year and without any revenue element to the transaction. He therefore held that the foreign exchange loss claimed by the appellant is not allowable as a loss under section 37 of the income tax act. 13. The assessee submitted before us that the exchange fluctuation has resulted into the loss with respect to the Ledger of various vendors and customers. He referred to page number 52 - 54 of the claim of the assessee wherein the customer buys debit and credit amount are determined. He further stated that the above loss is with respect to the accounting standard issued by the Inst of chartered accountants of India on accounting for the effect of change in the foreign exchange rates. He therefore submitted that above claim is allowable to the assessee as the above losses arise and because of the conversion of the outstanding balance of the customers and vendors with respe....