TaxTMI 
TaxTMI 
2020 (12) TMI 974
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....ities of trade finance, like Letter of Credit and Bill discounting besides consultancy, advisory, structuring and management services relating to trade finance transactions. 2. The return of income for the year under consideration was filed on 30.10.2018 declaring a loss of Rs. 21,39,712/. 3. The said return was taken up for assessment u/s. 143(3) of the Income Tax Act, 1961 ("Act") and order dated 30.12.2019 passed by Asstt. CIT, Central Circle-5, New Delhi ("Ld. A.O."), assessing the loss at Rs. 2,53,144/- after a total disallowance of Rs. 18,86,568/- being expenses on account of professional charges (Rs. 10,20,000/-) and security services (Rs. 8,66,568/-). 4. The Ld. A.O. disallowed the professional charges and security services on....
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....20,000/- and Rs. 866568/- respectively. The ld AO noted that there was no business during the year therefore, he asked that why the above sum should not be disallowed as there is no business in that company. He further noted that as there is no rent paid why expenses can be claimed on security charges. The assessee submitted that during the year the business of the assessee continued, bank account were maintained and all statutory compliance were made. It was further stated that as no revenue could be collected, it does not mean that business has been discontinued. The ld AO was not impressed by the explanation as the assessee did not carry out any activity. Further as no rent was paid how the security expenditure were incurred was also dou....
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.... the orders of the lower authorities. He submitted that the assessee has paid a sum of Rs. 10 lakhs to one person for legal advisory as a professional fees. The assessee has not given any details about the nature of the services for which client these above fees was paid. He further referred to the nature of the business of the assessee and submitted that in absence of any work the above expenditure cannot be allowed as taxable expenditure. He further submitted that it is also not shown that where these expenditure has been incurred on behalf of a client or on its behalf. He further stated that the assessee did not explain that what documents were examined by the lawyer or consultant for which fees was paid for legal advisory. With respect ....
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....legal documents for the clients of the assessee Rs. 10 lakhs are charged. With respect to Rs. 20,000/- the same were paid for the certification related to the companies law filing with MCA. Therefore out of professional fees Rs. 1020,000/- disallowance of Rs. 20,000/- requires to be deleted. But for the legal fees/professional charges, assessee needs to show that whether these expenditure are wholly and exclusively incurred for the purposes of business. Assessee also needs to elaborate the facts about the fact business of the assessee has not ceased to exist. Further, with respect to the security charges a sum of Rs. 60450/- per month were paid to one agency for providing security charges, but assessee needs to establish that those premises....