TaxTMI 
TaxTMI 
2021 (4) TMI 708
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....s of section 40A(2)(b) without appreciating the submission made by the appellant. 3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in upholding action of the AO in making disallowance of expenses out of Exhibition Expenses of Rs. 1,44,493/- u/s. 40(a)(ia) without appreciating the facts and details submitted by the appellant. 4. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in upholding action of the AO in making partial disallowance/addition of Rs. 1,00,000/- out of expenses of Rs. 5,53,517/- incurred/claimed under the head Foreign Tour Expenses. 5. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in upholding action of AO making partial disallowance/addition of Rs. 2,00,000/- out of expenses of Rs. 33,83,143/- incurred/claimed under the head Job Work Expenses. 6. For various reasons and on different grounds, the aggregate addition of Rs. 7,94,523/- made by the AO and upheld by the Learned CIT(A), deserves to be deleted. 7. The above Grounds of Appeal are without prejudice to and are independent of each oth....
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....e assessee was asked to produce skilled worker karigar register to quantify the job work. No such register was produced. The Assessing Officer made ad hoc disallowances of Rs. 2.00 lakhs out of total expenses of Rs. 33.83 lakhs. On appeal before the ld. CIT(A) all the additions/disallowance were upheld. Further aggrieved, the assessee has filed present appeal before this Tribunal. 3. We have heard the submissions of learned Authorised Representative (AR) of the assessee and the learned departmental representative (DR) for revenue and perused the order of lower authorities. Ground No. 1 is general and needs no adjudication. Ground No. 2 relates to additions under section 40A(2) of Rs. 3,50,030/-. The learned AR for the assessee submits that during the assessment, the assessing officer noted that assessee has paid interest to certain related parties @18% per annum. The assessing officer treated the interest rate @15% as reasonable based on rate of interest on other loans i.e. to non related parties and, accordingly worked out disallowance of Rs. 3.50 lakhs under section 40A(2) of the Act. The ld. CIT(A) confirmed the disallowance. The AR for the assessee submits that no disallowance....
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....s. 3.50 lakhs. Before us, the Ld. AR for the assessee vehemently argued that interest @18% per annum to related parties is reasonable as funds obtained from related parties are without any security; such funds are not to be repaid in the near future and since the loans are without any security and are not to be repaid short, the same falls within the high risk category thus on account of the above factors, loans obtained from related parties deserve some premium as compared to loans obtained from outsiders which are usually against any security, need to be repaid in the specified time and do not fall within the high risk category. We find convincing force in the above submissions of the Ld. AR for the assessee. The Hon'ble Gujarat High Court in CIT Vs Sarjan Realities Ltd. (supra) held that unless payment of interest was in excess of market rate, merely because the assessee has paid interest at the different rate to different companies, payments of interest could not be held to be excessive or unreasonable. In view of the above factual and legal discussions, ground No. 2 of the appeal is allowed. 7. Ground No. 3 relates to confirming the disallowance of exhibition expenses of ....
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.... 9. On the other hand, ld. Departmental Representative relied on the orders of Lower Authorities. The Ld. DR for the revenue further submits that the assessee has to established that the services rendered by Focus Trade Fair Ltd. was neither professional nor technical in nature. 10. We have considered the rival submissions of the parties and perused the order of lower authorities. There is no dispute that the assessee made payment to Focus Trade Fair Ltd. of Rs. 1,44,493/-. Before us the Ld. AR for the assessee claimed that assessee deducted tax at source of Rs. 2890/- under section 194C for the impugned payment and furnished the ledger account of the said party along with the copy of TDS certificate under Form-16A. It was argued before us, that at the most it can be a short deduction of tax, and any difference of opinion as to taxability of any item or nature of payments, then the assessee can, at the most, be declared to be an assessee in default under section 201 but that cannot be a ground for disallowance under section 40(a)(ia) of the Act. The Hon'ble Calcutta High Court in CIT Vs SK Tekriwal (supra) and Hon'ble Jurisdictional High Court in CIT Vs Prayas Engineering....
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....ose has not been doubted by assessing officer. However, assessing officer made lump sum disallowance. No specific defect has been pointed out by assessing officer. No specific expenses have been found to be personal in nature by assessing officer. Alternatively, it was argued that some token disallowance may be confirmed. 13. On the other hand, ld. Departmental Representative relied on the orders of Lower Authorities. The ld. Departmental Representative submits that no details of foreign travel is provided, no purpose of such foreign travel is explained. One of the persons, who visited was not the partner in the assessee firm. The Assessing Officer disallowed the very meagre and reasonable amount and that the assessee is not entitled for further relief. 14. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities. The assessing officer disallowed part of the expenses on ad hock basis by taking view that no details of the expenses and nature of expenses and purpose of visit, is verified in absence of evidence. The Ld. CIT(A) upheld the action of assessing officer for the want of evidence. It was also held that part of the ex....
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.... does not have control over such parties and so also contents of bills issued by them. In any case, basic details of job-work are duly mentioned. With regards karigar register, it was explained that the assessee gets job-work done from outsiders and not from in-house labourers. Hence, there is no requirement to maintain any such karigar register. On the objection of hefty expenses, it was submitted that the assessing officer cannot step into the shoes of a businessman and decide as to how much expenses can be paid to be reasonable. There is no concept of "reasonableness" under the Act. It is the sole prerogative of a businessman to decide the quantum of any expense. So long as such expense is wholly and exclusively for business, the same needs to be allowed. All necessary details of recipients of job-work charges (viz., name, address, PAN, etc) were made available to Assessing Officer. TDS provisions have been compiled with in accordance with the Act. In case Assessing Officer had any doubt, he could have very well cross verified such aspects by calling for details from the concerned parties u/s. 133(6) of the Act. However, Assessing Officer chose not to do anything of such sort. T....