TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 44
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....eration to the facts and submissions at assessment stage disallowed Rs. 2,69,784/-. Every assessment is independent. The said disallowance of expenses is bad in law and deserves to be quashed. 2 Disallowance of payment of Rent to specified persons 2,88,000/- Based on the finding of Ld. CIT(A) in the preceding year Ld. A.O. without giving due consideration to the facts and submission at assessment stage disallowed Rs. 2,88,000/-. Every assessment is independent. The said disallowance of expenses is bad in law and deserves to be quashed. Total Rs. 5,57,784/- 4. Looking to the opportunity for representing the defense your appellant preferred an appeal." 3. The fact in brief is that return of income declaring income of Rs. 65,370/- was filed on 11th October, 2013. The case was subject to scrutiny assessment and notice u/s. 143(2) of the Act was issued on 2nd Sep, 2014. The assessment u/s. 143(3) of the act was finalized on 4th Jan, 2016 determining the total income at Rs. 7,10,744/-. The facts pertaining to the issues contested in the grounds of appeal of the assessee are discussed while adjudicating these grounds of appeal as follows:- Ground No. 1 (D....
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.... Sister in Law Rent 132000 72000 Rasilaben Gandhi Wife Rent 132000 72000 Gandhi Consultancy Sister concern Rent on furniture & fixture 2,22,000 120000 Total 654000 366000 6. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 7. During the course of appellate proceedings before us at the outset the ld. counsel contended that identical issue on similar fact in the case of the assessee itself has been adjudicated by the ITAT Ahmedabad for assessment year 2011-12 and assessment year 2012-13 vide ITA Nos. 2872 & 2873/Ahd/2015 vide order dated 01-01-2019. 8. Without reiterating the facts as cited above, with the assistance of the ld. representatives, we have gone through the decision of ITAT in the case of assessee itself as referred above vide ITA Nos. 2872 & 2873/Ahd/2015 in the case of Shrenik kumar Kantilal Gandhi vs. ITO supra. The relevant operative part of the para on the issue of the ITAT order is reproduced as under:- "8. We have heard the rival contentions and perused the materials available on record. The issue in the instant case relates to the disallowance made by the AO fo....
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.... high court in the case of Commissioner of Income-tax Vs. Modi Revlon (P.) Ltd. reported in 26 taxmann.com 133 deleted the addition made by the AO under section 40A(2) of the Act without making any comparison to the fair market value. The relevant extract of the order is reproduced below: "25. This Court notices that in order to determine whether the payment is not sustainable, the AO has to first return a finding that the payment made is excessive, under Section 40- A (2) of the Income Tax Act. If it is found to be so, then the AO has to determine what constitutes the fair market value of the services rendered and disallow the difference between what is claimed and what is such value determined (as fair market value)." 8.6 The allegation of the AO that the assessee has not recruited the employee from the outside is the baseless observation. It is because the AO cannot enter into the shoe of the assessee and direct him for the recruitment of the staff of his business. The assessee is the best person to understand and decide his affairs of the business. Thus no disallowance can be made under section 40A(2) of the Act on the basis that the assessee has not recruited the person ....
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....ers &infrastructure facilities available at such premises. The AO was of the view that the rent has been paid to the specified persons as provided under section 40(A)(2)(b) of the Act. As such there was no requirement in the business of the assessee for taking so many premises and computers &infrastructure facilities on rent. Thus the AO disallowed the sum of Rs. 2,10,000/- out of total rent expenses claimed by the assessee of Rs. 6,60,000/-. 14. The view taken by the AO was subsequently confirmed by the learned CIT (A). 14.1 Now the controversy before us arises whether the assessee has claimed bogus expenses under the garb of rent paid to the persons as specified under section 40A(2)(b) of the Act. At the outset we note that the AO has made the disallowance of the rent expenses partly, meaning thereby, the AO has accepted part of the rent expenses as genuine. There was no basis provided by the AO for accepting part of the rent expenses as genuine and part of the rent expenses as excessive. 14.2 The provisions of section 40(A)(2) of the Act requires the AO to establish that the rent paid by the assessee is excessive and unreasonable keeping in view the prevailing market ra....
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.... facts and issue involved in ground nos. 1 & 2 of appeal vide ITA No. 1759/Ahd/2018 Assessment Year 2014-15 are similar as in ITA No. 1758/Ahd/2018 Assessment Year 2013-14, therefore, after applying the decision adjudicated vide ITA No. 1758/Ahd/2018 as supra in this order, both the grounds of this appeal of the assessee are allowed. Ground No. 3 (Long term capital gain of Rs. 2,10,161) 10. During the course of assessment, the Assessing Officer noticed that assessee has claimed long term gain of Rs. 2,01,261/-. On query, the assessee explained that shares were purchased for the investment purposes, therefore, long term capital gain was claimed on the sale of those shares. The Assessing Officer has not accepted the submission of the assessee stating that that assessee has not shown the sold share in the balance sheet as investment and treated the same as business income. 11. The assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee reiterating the same fact as reported by the Assessing Officer. 12. During the course of appellate proceedings before us, the ld. counsel has submitted that Assessing Officer has not verified the det....
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....tted that as per the agreement between the principal Motilal Oswal and the agent (assessee) in case of non-recovery of outstanding from 25 clients, the same will be recovered from the sub-broker. The ld. counsel has also placed the copy of accounts of all the parties whose debt have been adjusted by the principal from the brokerage amount. On the other hand, the ld. Departmental Representative has supported the order of lower authorities. 17. Heard both the sides and perused the material on record. Without reiterating the fact as cited above during the course of assessment, the Assessing Officer observed that Motilal Oswal has debited the bad debt in assessee's account. He was of the view that bad debt of the impugned broker should not be borne by the assessee. Therefore, the same was disallowed. During the course of appellate proceedings before us, the ld. counsel explained that actually it was a trading loss because of non-payment of contract amount by the parties in respect of share transaction entered into by sub-broker. As per the agreement in case of non-recovery from such parties, the same will be recovered from the sub-broker. In this regard, the assessee has placed copy o....