TaxTMI 
TaxTMI 
2021 (7) TMI 269
X X X X Extracts X X X X
X X X X Extracts X X X X
....he assessee read as under:- Ground No. 1: Payment of Rent to OPC Assets Solutions Private Limited 1. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in disallowing an amount equal to INR 40,19,520 towards lease rent paid to OPC Asset Solutions Private Limited on the ground that the payment needs to be equally distributed over the entire duration of the agreement without appreciating the fact that the arrangement entered into by the Appellant was to achieve commercial expediency. 2. Without prejudice to the above, and on the facts and circumstances of the case and in law, the learned CIT(A) has erred in enhancing the disallowance made by the learned AO amounting to INR 49,26,033.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the assessee was paying higher rent for initial years whereas for 4th and 5th year, it was paying nominal rent of Rs. 4/- per quarter or Rs. 16/- per year. The rent paying pattern indicated that the assessee was postponing its Income tax liability. It was noted that the hired furniture mostly consisted of wooden furniture like chairs, table counters, electrical fittings and Air conditioners etc. The cost of all these items was Rs. 290.89 Lacs against which the assessee was paying rent of Rs. 120.19 Lacs for the first three years which was on the higher side considering bank borrowing rate of 15%, deprecation rate of 15% and profit on investment of 10%. The aggregate of all these i.e. 40% of cost of Rs. 290.89 Lacs would work out to Rs.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he case that the expenditure was not incurred wholly and exclusively for the purpose of assessee's business. This being so, in our considered opinion, it is not open for revenue authority to sit on the armchair of a businessman so as to ascertain the quantum of deduction allowable to the assessee as held by Hon'ble Apex Court in CIT Vs. Walchand & Co. Pvt. Ltd (1967; 65 ITR 381); J.K. Woollen Manufacturers Vs. CIT (1969; 72 ITR 612) and also in Hero Cycles (P) Ltd. Vs. CIT (2015; 63 Taxmann.com 308). Another pertinent fact is that while framing assessment for AY 2013-14 (which is the first year of payment of rent), the lease rent paid the assessee as per the agreements has not been disturbed by Ld. AO. Therefore, on the facts & c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id amount to the payees but it failed to establish that the expenditure was laid wholly and exclusively for the purpose of business. The assessee could not place on record any evidence that the services were rendered by these two parties. Another pertinent fact was that the Tribunal in AY 2011-12, ITA No. 1282/Mum/2016 dated 17/12/2018 had upheld the similar disallowance as confirmed by Ld. DRP. 5.3. The Ld. AR sought distinction in the fact of this year by submitting that in AY 2011-12, the disallowance was confirmed by Tribunal by observing that the assessee could not produce evidence to establish that the services of Smt. Namrata Goel and Smt. Nidhi Goel were availed by the assessee. Further, the assessee did not place on record any e....