TaxTMI 
TaxTMI 
2020 (3) TMI 210
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....he addition made by A.O. that rent paid was excessive to the extent of Rs. 6,17,580/- and disallowable u/s 40A(2)(b) of the Income Tax Act. 2. THAT in the facts and circumstances of the case, the Learned CIT(A) erred in confirming the order of A.O. , and in confirming disallowance of expenditure on gifts to the extent of Rs. 5,47,622/-. 3. THAT in the facts and circumstances of the case, the Learned CIT(A) erred in confirming the order of A.O. , and confirming the disallowance made by A.O. of outstanding balance of sundry creditors - Phone. in Baroda of Rs. 3,53,626/-. 4. THAT in the facts and circumstances of the case, the Learned CIT(A) erred in confirming the order of A.O. , and confirming the disallowance made by A.O. of outstanding balance of sundry creditors - Indoor & Exteriors of Rs. 4,88,497/-. 5. THAT in the facts and circumstances of the case, the Learned CIT(A) erred in confirming the order of A.O. who erred in correctly computing the 'Carried Forward loss and Unabsorbed Depreciation. 6. THAT in the facts and circumstances of the case, the Learned CIT(A) erred in confirming the order of A.O. who erred in not allowing MAT ....
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...., in not upholding the decision of AO rejecting the books results u/s 145(3) of the Income Tact Act inspite of the fact that various expenses have been debited which are not genuine or excessive. 4. On the facts and circumstances of the case, the Ld. C!T(A) has erred on facts and in law, in holding that the expenditure of Rs. 2,26,14,880/- on project Edexcel, UK is revenue in nature and that no new asset has come into existence ignoring the facts that the assessee itself has treated the same as fixed asset being expenditure incurred for expansion of business in its original return and in schedule 'C' of Balance Sheet. 5. On the facts and circumstances of the case, the Ld. C!T(A) has erred on facts and in law, in deleting the addition of Rs. 2,26,14,880/- by treating it as revenue expenditure, In doing so, Ld. CIT(A) has ignored the fact that the expenditure was incurred for rendering services to project Edexcel, UK. The assessee must have charged for such services from them but the assessee has not furnished any details/evidences to prove that any such amount was charged from Edexcel, UK. 6. On the facts and circumstances of the case, the Ld. CIT(....
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....fts, outstanding balance of sundry creditor viz. Phone.in Baroda and outstanding balance of sundry creditor viz. Indoor & Exteriors respectively. AO has also reportedly not computed the carried forward losses and unabsorbed depreciation correctly. 6. In AY 2009-10, AO disallowed the expenditure to the tune of Rs. 2,26,14,880/- incurred by the assessee on house, rental, travel, business promotion, advertisement, printing & stationery, professional charges, etc. claimed by the assessee as capital in balance sheet and then treated the same as revenue in computation, resulting in loss to the revenue. 6. In AY 2010-11, AO made addition by way of disallowance on depreciation of car to the tune of Rs. 10,04,258/-. AO also made disallowance of Rs. 3,97,817/- on account of interest paid to NBFC, M/s. Kotak Mahindra Primus Ltd. AO also reportedly not adjusted brought forward losses/unabsorbed depreciation from earlier years nor has he correctly computed the carried forward losses and unabsorbed depreciation. 7. Assessee carried the matter before the ld. CIT (A) by way of filing the appeals who has partly allowed the appeals for AYs 2009-10 & 2010-11. Feeling aggrieved by the orders ....
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.... me the payment details for the month of April 2008. Further at such venue invigilators etc have to be engaged who are essential to oversee the tests. The test, it was explained, also has a verbal part, wherein knowledge through announcements etc in English are also examined. Some expenditure has been incurred at such venues on local conveyance, hiring of coolies refreshments etc. examination of vouchers of July 2008 and December 2008, produced for my verification, revealed that where the expenditure was in cash it was vouched and is not significant in comparison to the total expenditure. After verifying expenses on account of venue and professional expenses, I hold that the AO, without pointing out a specific deficiency in certain bills/vouchers, should not have rejected the books of account of the appellant on this basis. Furthermore, no opportunity was provided to the appellant to rebut the materials so gathered. The Division Bench in the case of ADDL ITO V Ponkunnam Traders (1976) 102 ITR 366 (Ker), confirmed the order of the Single Judge, who had quashed such additions ,where opportunity not been provided to the appellant. ........ 4.5 In the present....
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....ls have not been brought on record. 14. Hon'ble Delhi High Court in case of CIT vs. Paradise Holidays (2010) 325 ITR 13 (Del.) decided the identical issue on rejection of books of account u/s 145 (3) by returning following findings :- "The accounts which are regularly maintained in the course of business and are duly audited, free from any qualification by the auditors, should normally be taken as correct unless there are adequate reasons to indicate that they are incorrect or unreliable. The onus is upon the Revenue to show that either the books of account maintained by the assessee were incorrect or incomplete or that the method of accounting adopted by him was such that true profits of the assessee cannot be deduced therefrom." 15. One glaring aspect has come on record in this case is that AO by recklessly rejecting the books of account proceeded to estimate the income by applying profit @ 5% of the gross receipt at Rs. 76,94,395/- whereas assessee company has already assessed its income from business at Rs. 1,03,37,625/- (before depreciation). So, AO for the reason best known to him has assessed the income of the assessee substantially less than the returned inco....
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....h amounts to double disallowance. Ld. DR for the Revenue, however, relied upon the order passed by the AO. 22. AO has primarily disallowed these expenses on the ground that the assessee has failed to prove incurring of such expenses wholly and exclusively for the purpose of business u/s 37(1) of the Act and also observed that it is not admissible to the assessee as it has claimed such expenditure as capital expenditure for its new project. 23. When it is an undisputed fact that assessee is into providing logistic services for testing establishments holding tests in India and its major client is IELTS Australia rendering services to Project EDEXCEL for holding tests on their behalf in India by spreading its infrastructure at different rented locations and by having extra staff, it is certainly a business expenditure. Moreover, assessee has brought on record the fact that :- "EDEXCEL is a organization based in the UK and has been accredited to award 'O' and 'A' level certificates of Cambridge University. Several schools in India have a system to test their students in the aforesaid 'O' and 'A' level in addition to regular exams of Indian Boards. This is a growing busin....
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....n profit or loss to the assessee." 28. So, in view of the matter, we are of the considered view that when identical issue has already been decided by the Revenue in favour of the assessee in 2008-09 and such expenses have been accepted as revenue expenses in AY 2010-11 also, the rule of consistency has to be followed by the Revenue particularly when there is no change in the business model and facts and circumstances of the case. So, aforesaid expenditure incurred on salary, hiring premises on rent, business promotion expenses, etc. have been rightly treated as revenue in nature by the ld. CIT (A) with which no new assets have came into existence, hence no ground is made out to interfere in the findings returned by the ld. CIT (A), consequently Grounds No.4, 5 & 6 of Revenue's appeal for AY 2009-10 are determined against the Revenue. GROUND NO.1 OF ASSESSEE'S APPEAL FOR AYs 2009-10 & 2010-11 29. AO made addition of Rs. 55,58,220/- EACH for AYs 2009- 10 & 2010-11 qua rental paid by the assessee regarding premises No.304, 3rd Floor, Park Centre, Sector 30, Gurgaon having covered area of 10293 sq.ft. by assessing its rent @ Rs. 5 per sq.ft. as against Rs. 90 per sq.ft. sta....
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..... When the disallowance has already been made by the assessee company in FBT return which has been accepted by the AO no separate addition can be made which would amount to double disallowance. So, we hereby delete this addition of Rs. 5,47,622/- sustained by the ld. CIT (A) for AY 2009-10, however subject to verification by the AO qua the facts brought on record by the assessee. Hence, ground no.2 in assessee's appeal for AY 2009-10 is determined in favour of the assessee. GROUNDS NO.3 & 4 OF ASSESSEE'S APPEAL FOR AY 2009-10 34. Ld. CIT (A) confirmed the disallowance of Rs. 3,53,626/- and Rs. 4,88,497/- made by the AO on account of outstanding balance of sundry creditors, namely, Indoor & Exteriors and Phone.in Baroda respectively. Ld. AR for the assessee contended that both these creditors relate to capital expenditure qua which depreciation has been duly claimed. It is also contended by the ld. AR for the assessee that in case of addition of Rs. 3,53,626/- qua Phone.in Baroda dispute arisen and ultimately outstanding balance has been added back in the accounts of AY 2013-14 which has been offered to tax. Assessee has brought on record the accounts in this regard. So, wh....