TaxTMI 
TaxTMI 
2019 (5) TMI 1310
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.... On the facts and circumstances of case and in law, the Ld.CIT(A) erred in giving relief of Rs. 52,30,000/- out of legal & professional fees. 2. On the facts and circumstances of case and in law, the Ld. CIT(A) erred in giving relief out of legal & professional fees based on mere surmises and conjectures without appreciating that assessee has to prove for each year that services have been rendered during the year for earning business income for which legal & professional fees have been allegedly paid. The Ld.CIT(A) allowed the deductions without any evidence to back the claim of the assessee or in alternative admitted fresh evidence in the course of appeal proceedings in violation of Rule 46A of the I.T. Rule and without giving rea....
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....uineness of the "credits" some of which were squared of during the course of previous year, in the books of accounts of the assessee. 7. On the facts and circumstances of case and in law, the Ld.CIT(A) erred in fresh evidence with regard to the genuineness of "credits" appearing in the books of account some of which were squared of during the course of previous year, in violation of Rule 46A without giving reasonable opportunity to the A.O. of rebutting this fresh evidence admitted during the course of appeal proceedings". 8. On the facts and circumstances of case and in law, the Ld. CIT(A) erred in giving relief of Rs. 3,14,66,127/- for non-genuine payments merely because A.O. in his assessment order has erroneously used ....
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....ng that the assessee has not earned any business income during the year and therefore, the question of allowing the same u/s 37(1) did not arise. Further, since none of the expenses could be directly attributable to the receipts shown under the head Income from other sources, the expenditure could not be allowed even u/s 57(iii). Therefore, the aforesaid expenditure aggregating to Rs. 52.30 Lacs was disallowed and added to the income of the assessee. 2.3 The root of second addition lies in the fact that upon perusal of financial statements, it transpired that the assessee reflected an amount of Rs. 165.15 Lacs as payable to Sundry Creditors, the details of which was called from the assessee. To verify the genuineness of the same, notices....
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.... that various management services were provided by Percept Ltd. for which professional fees of Rs. 19.45 Lacs was paid. In the above background, it was submitted that the professional fees were paid for services rendered against projects undertaken by the assessee and therefore, the same were allowable as business expenditure. The attention was drawn to the fact that similar payments made in AY 2009-10 was accepted by revenue in an assessment made u/s 143(3). The said arguments found favor with Ld. first appellate Authority who allowed assessee's claim by making following observations: - 7.5. I have considered the above submissions of the appellant as well as the observations of the AO made in the assessment order. I have also cons....
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....f liability within the meaning of Sec.41(1) and therefore the additions were not justified. It was submitted that entire outstanding liability was squared off by the assessee in the very next financial year. The party wise details of Sundry Creditors, outstanding balances and subsequent payment made to them was placed on record. The Ld. CIT(A) observed that although the assessee placed these details before Ld.AO, however, no inquiry whatsoever, was made by Ld.AO and the additions were made simply on the basis of The Limitation Act without demonstrating the fulfilment of primary conditions of Sec.41(1) i.e. that there was remission or cessation of a trading liability. An observation was also made that the assessee had already paid an amount ....
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....pletely disregarding the same, proceeded on wrong footing that the assessee had not carried out any business during the year and therefore, the expenditure was not allowable either u/s 37(1) or u/s 57(iii). The stated facts also controvert the argument of the revenue that the Ld. first appellate authority erred in admitting additional evidences. 5.3 Another undisputed fact is that the assessee has made similar payments to these payees in AY 2009-10 which has been allowed as business expenditure by revenue in an assessment u/s 143(3) and therefore, the additions, in our opinion, on similar facts, was not justified. 5.4 Keeping in view the totality of factors, we find no infirmity in the stand of Ld. first appellate authority, in this r....