2019 (1) TMI 1585

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... only effective ground raised in the appeal of the assessee is that the ld. CIT(A) has erred in confirming the disallowance of guest house rent and related expenses. 2. Brief facts of the case are that the assessee filed its return of income on 29.11.2013 admitting a total income of Rs..1,60,50,200/-. The case was selected for scrutiny through CASS. On verification of the income returned and the details furnished by the assessee, the Assessing Officer completed the assessment under section 143(3) r.w.s. 92CA of the Income Tax Act, 1961 ["Act" in short] by assessing the total income of the assessee at Rs..2,19,30,080/- after making various additions. Against the addition of guest house rent and related expenses of Rs..47,97,932/-, the ass....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....al paper book. In this case, the Assessing Officer has observed that the assessee has paid a sum of Rs..18 lakhs to one Mr. P. Hariraj, who is also father-in-law of the MD of the company, as also the father of the other director of the company. The Assessing Officer observed that the residential address of the both the directors, as given in the income tax returns, were the same as the guest house for which the assessee has paid rent. The Assessing Officer deputed the Income Tax Inspector to verify whether the guest house was being used for the purposes of assessee's business. The Inspector, on verification of the premises, found that there were no records whatsoever available in the premises in which the arrival and stay details of any....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ered as an EOU with STPI and a number of foreign clients visited the assessee for the purpose of monitoring the work and also at the time of renewal of contracts. It was stated that the guest house was used for their boarding and lodging on account of the pleasant and salubrious location suitable for stay of foreign guests. The assessee further submitted that the use of the guest house resulted in saving of expenses on the boarding and lodging of foreign clients. The ld. CIT(A) observed that all the submissions of the assessee were merely in the form of oral statements not corroborated with any document or evidence. Moreover, in the light of the inspector's report on visit of the premises, the allowability of the expenditure was not establi....