TaxTMI 
TaxTMI 
TaxTMI 
2020 (5) TMI 648
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....nces of the case and in law, the learned Commissioner of Income Tax (Appeals) - 34, Mumbai ['CIT(A)1] erred in upholding the action of the Joint Commissioner of Income-Tax, Range - 19(2), Mumbai ("Assessing Officer") in disallowing of professional fees of Rs. 1,40,01,500/- paid to M/s. Sharan & Co. on the ground that the Appellant has not carried out the business of trading in paintings during the year and the said expenditure of professional fees are not wholly and exclusively incurred for the purpose of business. The appellant submits that the disallowance of Rs. 1,40,01,500/- is wrongly made and the same ought to be deleted. 2.On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the ....
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.... professional fees paid to M/s. Sharan & Co. at Rs. 40,36,980 and that too by treating the same as capital expenditure. The Appellant submits that the CIT(A) ought to have allow entire professional fees of Rs. 1,40,01,500/- as revenue expenditure and not restricted the allowability at Rs. 40,36,980/- as capital expenditure. As evident, the sole subject matter of appeal is disallowance of Rs. 140.01 Lacs. 2. We have carefully heard the arguments advanced by respective representatives and perused relevant material on record including documents placed in the paper-book. We have also deliberated on various judicial pronouncements as cited before us. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs.....
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....e claim was a fictious / sham claim. 3.5 Noting the background of the assessee, it was observed that the assessee had acquired 36 pieces of painting of renowned artists for aggregate sum of Rs. 3654.72 Lacs. During the period of 5 years, the assessee had sold only one painting during FY 2008-09 for a sum of Rs. 22.50 Lacs and therefore, the claim that the assessee carried out business of trading of paintings could not be accepted. 3.6 The assessee also submitted that the said paintings were kept at the premises of one of the partners and the assessee did not own any shop or gallery. The assessee did not participate in any exhibition. 3.7 In the above factual matrix, Ld. AO conclude that the assessee had not carried out on any activity wh....
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....enticity of painting/artworks. The AO has categorically mentioned in the assessment order that there was no purchase or sales of any painting/art work during the year under consideration. This fact has not been controverted by the appellant. When there was no purchase or sales of any painting/art work, there was no scope of M/s Sharan & Co. rendering services such as verification of originality of paintings/artworks, providing estimates, and investigating authenticity of painting/artworks. The AO had also observed that there is no trading activity in respect of paintings/art works. The professional fee paid to M/s. Sharan & Co. cannot, therefore, be said to be incurred wholly and exclusively for the purpose of business. In view of these fac....
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....the assessee has incurred expenditure towards maintenance of inventories. The payment is duly supported by the debit note issued by M/s Sharan & Co. It is also evident that said entity has made further payment to another entity i.e. M/s First Canvass towards rendering of services, which fact Ld. AO has also accepted in the alternative and proposed that the payment to that extent could be allowed to the assessee. 7. From perusal of Tribunal order for AY 2009-10, as placed on record, it is also noted that similar payment of Rs. 192.65 Lacs was paid by the assessee to avail similar services in that year. The Ld. AO termed the payment to be excessive and allowed partial claim to the extent of Rs. 37.97 Lacs. Upon further appeal, Ld. CIT(A) del....