TaxTMI 
TaxTMI 
2020 (12) TMI 17
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....peal : i. The CIT(A) erred in allowing the appeal of the assessee ii. The CIT(A) erred in allowing exemption u/s when the assessee did not furnish full details of bills and vouchers called by the Assessing Officer. - Rs. 1,05,10,893/- iii. The Ld.CIT(A) erred in allowing 50% of the expenditure incurred on boarding and lodging when bills and vouchers were not produced. - Rs. 2,63,394/- iv. The Ld.CIT(A) erred in allowing interest paid to interested persons at 18% without considering the market rate of interest. - Rs. 6,19,626/- v. The Ld.CIT(A) erred in allowing the rent for building by relying on the copy of the rental agreement produced by the assessee before the CIT(A) which was not sent to the AO for verification - Rs. 3,60,000/- vi. The Ld.CIT(A) erred in allowing the expenses on rent of vehicles when the assessee had failed to produce the documents called for by the Assessing Officer during the assessment proceedings as well as in remand report proceedings - Rs. 2,16,000/- vii. Any other ground that may be taken up at the time of hearing. 3. Ground No.(i) and (vii) are general in nature which do not require spec....
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....xemption claimed by the assesse. For the sake of clarity and convenience, we extract relevant part of the order of the Ld.CIT(A) which reads as under: "I have considered the findings given by the AO in the remand report the objections given by AR of the appellant from time to time on the proposed disallowance. The AO made detailed enquiries with respect to the claim of expenses incurred towards addition to the assets of Rs. 3,42,78,050/- and also other expanses claimed in the Income & Expenditure Account The AO, after making detailed enquiry, accepted the claim of appellant that most of the expenses claimed are genuine. The AO also accepted the claim of fees received towards hostel receipts and under the head fee collection account, after detailed verification. The AO did not make any adverse observation against the Manager or Trustees of the Society in the remand report, on the issue of misappropriation of the funds of the Society, as alleged by the AO in the course of assessment proceedings. The appellant is a society, managing educational institution. The income & expenditure claimed were found to be spent for aims and objectives of the Society. Therefore, the denial of....
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.... the AO had examined in the remand proceedings. However, it was stated that the assessee could not furnish some of the details, such as names of persons, their identity and purpose of visit etc., which created suspicion to hold that the expenditure was not completely verifiable. Since the assesse has furnished the information merely because of the failure of the assessee to furnish some of the details such as names of persons, purpose of visit etc.., disallowance of the entire expenditure unjustified. The assessee is engaged in running the educational institutions and it is needless to say that it has to engage the faculty from outside for which the expenditure required to be incurred. The AO did not doubt the genuineness of expenditure. Therefore, we hold that restricting the expenditure to the extent of 50% is reasonable and no interference is called for in the order of the Ld.CIT(A). Therefore, appeal of the revenue on this ground is dismissed. 6. Ground No.(iv) is related to the interest payment to interested persons @18%. The AO disallowed the entire interest because of non response from the assesse to the notices issued. As discussed earlier, during the remand proceedings,....
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....yment of interest @18 % reasonable or not? The assessee has paid the interest @18% to the interested persons and explained that interest payment was on par with the market rate and there was no pressure from the lenders for immediate payment of the principle. The Ld.CIT(A) viewed that there is no bar on payment of interest @18% and the same is on par with the market rate. The department did not bring any material to show that the funds are available in the market for interest lesser than 18%. Since the CIT(A) has given a finding that the interest payment @18%, is on par with the market rate and the department failed to bring any material to controvert the finding given by the Ld.CIT(A) we do not find any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the Revenue on this ground is dismissed. 7. Ground No.(v) is related to the building rent. The AO found that the assessee has paid the rent of Rs. 30,00,000/- for buildings and out of above sum of Rs. 30,00,000/- an amount of Rs. 12,00,000/- was paid to Smt. M.Sucharitha towards Hostel Building. During the remand proceedings, the assesse failed to produce the lease deed, hence, the AO submi....
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.... with regard to the sustaining the addition of Rs. 3,60,000/ for vehicle rents. During the assessment proceedings, the AO found that the assessee has paid the rent of Rs. 10,80,000/- to Smt. M.Sucharita for car and tractor. Though the assessee had produced the rent agreement for car, the assessee did not furnish the rent agreement in respect of tractor. Therefore, the AO submitted the remand report stating that authenticity in respect of tractor rent could not be verified. The AO neither recommended for disallowance of rent nor accepted the assessee's claim. During the appeal hearing, the Ld.CIT(A) deleted the addition of Rs. 7,20,000/- towards the car rent and confirmed the addition of Rs. 3,60,000/- towards tractor. On deletion of the addition of Rs. 7,20,000/-, the department is in appeal before us. 8.1. We have heard both the parties and gone through the orders of the lower authorities. Before the AO, the assessee has furnished the ledger account for payment rent for car and tractor and rent agreement for both the cars. The AO simply submitted report stating that the authenticity of expenditure of Rs. 10,80,000/- could not be verified without even calling for the necessary d....