TaxTMI 
TaxTMI 
2022 (2) TMI 473
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....ssessee. However, Ld. AO was not satisfied with some information filed by the assessee and completed the assessment making various additions at Rs. 1,68,16,749/- and assessing the loss at Rs. 1,19,78,664/- in the following manner: Total Loss (-) Rs. 2,87,95,413/- Add: Addition u/s 68 on A/c of share application money Rs. 1,31,50,000/- Add: Disallowance out of Commission Expenses Rs. 19,70,099/- Add: Disallowance of legal and professional exp. Rs. 16,08,000/- Add: Interest proportionately disallowed Rs. 88,650/- Total Loss Assessed Rs. 1,19,78,664/- 3. Aggrieved assessee preferred an appeal before the Ld. CIT(A) and partly allowed. 4. Now revenue is in appeal before this Tribunal raising following grounds of appeal: "On the facts and in the circumstances of the case, the CIT(A) has erred in : 1. Whether on the facts and in the circumstances of the case the Ld. CIT(A) was justified in deleting addition of Rs. 1,3150,000/- u/s 68 of the Income Tax Act 1961 on account of share capital received by holding that identity, creditworthiness and genuineness of the transaction is established. 2. Whether on the facts and in t....
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....90 with ICICI Bank, M.P. Nagar, Bhopal. 8.5 Regarding, share application money of Rs. 40,00,000/- received from an Indian resident Mrs. Snehlata Rupramka, it is observed that confirmation along with PAN was produced before the AO. Copy of bank account was also produced before the A.O. During appeal, copy of return of this person has been filed. It is observed that Smt. Snehlata Rupramka has shown total income of over Rs. 15,00,000/- in A.Y. 2009-10. Further, it is also seen from her bank account that Smt. Snehlata was maintaining huge balance in the bank account from which the share application money has been given. Furthermore, there is no cash deposit in the bank account and there are frequent transactions other than the transaction in question during the period under consideration. Regarding the genuineness of transaction, it is observed that the money was routed through banking channel and the applicant has confirmed the transaction. In view of these facts, the identity and creditworthiness of this person and genuineness of the transaction stands proved. 8.6 In respect of share application money of Rs. 3,00,000/- received from received from Smt. Anjali Baijal,....
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....ide his order dated 20.03.2012 in Appeal No. CIT(A)-II/BPL/IT-121/2009-10. The order of the CIT(A) has been upheld by Hon'ble I TAT , Indore vide order dated 18.06.2013 in ITA No. 413/Ind/2012. A perusal of the orders of CIT(A) and ITAT shows that the same are based on the same evidences as submitted by the appellant in this case. 8.11 In totality of facts and circumstances, it is concluded that the appellant has established the identity and creditworthiness of the three persons and genuineness of the transaction. Therefore, the addition made by A.O. is not sustainable. Further, as in the identical circumstances, the A.O., after examination, has accepted the share capital received from Shri Jayvant N Patel and other persons in A.Y. 2007-08, the addition made in assessment year under consideration becomes unjustified and cannot be sustained. The addition of Rs. 1,31,50,000/- made u/s 68 IS, therefore, deleted. 7.2. From perusal of the above finding as well as documents placed on record in the paper book, we find that the share applicants namely Shri Jayvant N. Patel & Smt. Anjali Baijal are non-resident Indian having sufficient source of income. Share application mon....
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....ount expenses of Rs. 52,26,858/- and there was increase of more than 59% as compared to increase of 10% in sales from last year. The appellant explained that as per practice prevalent in the textile industry, they had to pay commission to various agents for procurement of raw materials. Likewise, they had to pay commission to agents for procuring sales. Details of these commissions were furnished which showed that details of only Rs. 26,18,864/ - was provided. On being confronted, the appellant submitted that expenditure on commission and discount paid during the year amounted to Rs. 52,26,858/-. Details of discount allowed on sales amounting of Rs. 26,07,995/- were furnished. The A.O. noted that the appellant had merely furnished the list giving name of parties and amount totaling Rs. 26,07,995/- of discount given and neither full address nor details of sales made in respect of discount was furnished. The A.O. noted the appellant had tried to disguise the payment of 26,70,994/- as discount. As TDS had been deducted on commission payment of Rs. 32,56,760/- only out of the total payment of Rs. 52,26,858/and no TDS was deducted on the balance amount of Rs. 19,79,098/-, disallowance s....
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....g the facts of the case and need to be deleted. For the above we have relied on the following pronouncements: 1.Dhakeshwari Cotton Mills vs. CIT( 1954)26 ITR 775, SC 2.Brijbhushan Lal Praddyuman Kumar vs. CIT (1978)115 ITR 524, SC 3. Banshidhar Onkarmal vs. CIT (1953) 23 ITR353, HC Orissa 4. Commissioner of Income Tax Vs. JDS ApperalsPvt. Limited Source (2015) 273 CTR (Del) 1 : (2015) 113 DTR (Del) 137 : (2015) 370 ITR 454 (Del) I HIGH COURT OF DELHI" 8.2 We further find that the ld. CIT(A) after considering submissions made by the assessee deleted the addition observing as follows: 9.3 It is observed from schedule 7 annexed to the audited Final Accounts that during the year under consideration the total manufacturing and other expenses included Rs. 52,26,858/ - on account of Commission and Discount. The details furnished to the A.O. showed that Commission and brokerage on sales was Rs. 26,18,864/- and Discount on sales was Rs. 25,99,994/-. The AO while disallowing the amount of Rs. 19,70,098/- drew an inference that the amount shown under the head "commission & Discount Expenses" amounting to Rs. 52,26,858/- did not include ....
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....0,099/- u/s 40(a)(ia) of the Act. Accordingly, sround no.2 raised by the revenue stands dismiss. 9. Apropos to ground no.3 relating to disallowance of legal and professional expenses of Rs. 16,08,000/- which have been deleted by the ld. CIT(A) and revenue has challenged this finding, we note that brief facts relating to this issue are discussed by the Ld. CIT(A) in para 10.1 of the impugned order which reads as follows:- 10.1 The A.O. observed that legal & professional expenses of Rs. 22,97,095/- were debited to P&L A/c as against Rs. 15,42,092/ - in the previous year. On being asked, the details were furnished by the appellant. In respect of 6 persons aggregating to Rs. 16,08,000/-, the AO found that the appellant had not furnished the purpose of payment to these persons. No copies of contracts with these parties were furnished. Neither PAN nor addresses are given. The A.a. concluded that the appellant could not substantiate the expenditure. Therefore, legal and professional expenses of Rs. 16,08,000/- were disallowed. 9.1 We further find before Ld. CIT(A) assessee made detailed submissions along with details of income Tax Return of the professionals who offered the....
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....s Limited vs. CIT: 288 ITR 1 (SC) * CIT vs. Malayalam Plantations Limited: 53 ITR 140 (SC) *CIT v. Birla Cotton Spg. And Wvg. Mills Ltd., 82 ITR 166 (SC) *Madhav Prasad Jatia v. CIT U'P: 1181TR 200 (SC). *CIT V. Bharti Televentures Ltd: 331 ITR 502 (Del HC) *CIT v. Rockman Cycle Industries Ltd., 331 ITR 401 (P&H HC) (FB) * Hero Cycles (P) Ltd vs Commissioner of Income-tax (Central) Ludhiana [(2015) 63 taxmann.com 308(SC)]" 9.2 We further find that ld. CIT(A) after appreciating the facts of the issue relating to legal and professional charges, commercial expediency and the settled legal principles deleted the disallowance of legal and professional charges of Rs. 16,08,000/- observing as follows: 10.3 It is observed that the details required by the AO were submitted during the assessment proceedings to the extent asked. From the order sheet maintained by the A.O. and produced by the appellant, it is observed that further details on which the addition is based were never asked by the AO. It is also observed that the appellant had produced books of accounts before the A.O. and no deficiencies have been found therein ....
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....o put itself in the arm-chair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No businessman can be compelled to maximize his profit. The income-tax authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman " 10.7 In the case of Hero Cycles (P) Ltd vs Commissioner of Income- tax (Central) Ludhiana [(2015) 63 taxmann.com 308(SC)], the Hon'ble Supreme Court has again upheld the primary right of any businessman/ organization to plan and conduct his/its business, thus negating any attempts on the part of the revenue to step into the shoes of an businessman and sit in judgment on business decisions, particularly with regard to judging the reasonableness of any expenditure and the commercial prudence or correctness of any decision. 10.8 In view of the totality of facts and circumstances as complete information of addresses of the said six professionals along with the copy of their IT return....