TaxTMI 
TaxTMI 
2022 (12) TMI 160
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....ons of law and facts, hence kindly be deleted in full. 3. Rs.7,236/-: The ld. CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of Rs.7,236/- out of interest payment on account of alleged notional interest on interest free advances. The disallowance so made and confirmed by the ld. CIT(A), is contrary to the provision of law and hence, kindly be deleted in full. 4. Rs.76,60,166/-: The ld. CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of Rs.76,60,166/- made out of interest expenses u/s 36(1)(iii) alleging that the borrowed funds were used on capital expenditure. The disallowance so made and confirmed by the ld. CIT(A) is contrary to the provision of law and hence, kindly be deleted in full. 5. Rs.15,60,000/-: The ld. CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of Rs.15,60,000/- being the amount of outstaying liability on account of scholarship expenses alleging that the same was a contingent/unascertainable liability not arising in the subjected year. The disallowance so made and confirmed by the ld. CIT(A) is contrary to the provision o....
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....ing tax efficient income similar to bank interest. The income from mutual fund is not tax free as explained earlier also. The firm accumulated profit for its expansion plan and not taking any loan for the expansion plan. Further the annual account shows that the assessee had declared profit of Rs.50.76 Crores and the investment in the mutual funds a/c was merely of Rs. 1.5 Crores hence, such investment was out of assessee's own fund and was not out of borrowings. In support, some decisions were cited. The AO however, felt dissatisfied. He relied upon the decision in CIT v/s Abhishek Industries Ltd. (2006) 286 ITR Industries Ltd. (2006) 286 ITR 1 (P&H) and distinguished the decisions cited by the assessee. Finally, the AO computed interest paid at the rate of 6.25% in relation to the investment made in the mutual funds which was disallowed. 3.3 In the first appeal, the ld. CIT (A) also confirmed the addition of Rs.10,83,901/- by observing as under:- ''I have gone through Assessee's submissions and AO's findings. The assessee also claimed that the income from mutual fund was not tax free. Therefore, the disallowance of corresponding interest was not justi....
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....an there will a presumption that the interest free advances were given out of the interest free funds (but not out of interest bearing fund/OD) and hence, no interest can be disallowed (as was not claimed). 2.2 It is submitted that the cited decisions strongly support the contentions raised by the assessee. These decisions relate to disallowance of the interest expenditure incurred on the loan amount used for payment of income tax/investment in the securities/capital expenditure etc. or for giving interest free advances to its sister concerns etc. sourced out of the loan/OD a/c. The Hon'ble Courts in similar factual matrix (as available in this case) has taken a view in favour of the assessee. 2.3 However, the lower authorities proceeded on misconception & misreading of the judicial guidelines provided through various decisions which were in the context that where there are borrowed funds and also interest free funds both, discretion lies with the assessee for the utilization of the funds in whatever manner it wants. What has been held is that where there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that i....
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....ss of the amount of investments which has been made in the Mutual Funds units amounting to Rs. 3 Cr. Accordingly, on appreciation of the said facts and in absence of anything to the contrary, as per the settled legal proposition, a presumption can be drawn that the investments in the mutual fund units have been made out of interest- free funds and not out of interest bearing funds......" 26. Lastly, coming to the contention of the learned CIT(A) that provisions of s. 14A are applicable as income from the Mutual Funds are exempt, we find that the said finding is contrary to the facts on record. The appellant has invested in the fixed maturity plans of the various Mutual Funds which are basically fixed-term debt funds schemes. Where the amount is invested in such funds for less than a year, the maturity proceeds are taxable as short-term capital gain @ 30 per cent and where the amount is invested in such funds for the period exceeding one year, the maturity proceeds are taxable @ 10 per cent with the indexation benefit and @ 20 per cent without indexation benefits. In other words, the investments in Mutual Funds schemes are not tax-free investments. In support of its content....
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.... are in advances while expenses are spread out throughout the year. Since interest-free advances are less than the capital and the AO has not brought on record any nexus of interest-bearing loans used the AO could not have disallowed the interest. There is no onus on the assessee to establish that interest-free advances are out of interest-bearing advances if non-interest-bearing funds are more. Reliance is placed on the decision of the Hon'ble Bombay High Court in the case of CIT vs. Reliance Utilities & Power Ltd. (2009) 221 CTR (Bom) 435 : (2009) 18 DTR (Bom) 1 : (2009) 313 ITR 340 (Bom) and Hon'ble Delhi High Court in the case of CIT vs. Bharti Televenture Ltd. (2011) 51 DTR (Del) 98 : 2010- TIOL-51-HC-Del. There is no provision in the Act which may compel an assessee to earn income. 11.1 x--------------x--------------x--------------x--------------x-------------- x--------------x 11.2 After considering the facts as above, we feel that the AO was not justified in making any disallowance. Hence, disallowance is deleted." 3.3 The Hon`ble Rajasthan High Court has also affirmed the above orders vide para 12 & 14 in the case of CIT v/s Ram Kishan Verma (201....
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....s Ltd. (2006) 280 ITR 525; and (f) CIT v/s Motors Sales Ltd. (2008) 304 ITR 123 (Allahabad), held as under:- x---------------x----------------x----------------x-------------------x---------x 14. Therefore, the finding reached by the Tribunal is essentially a finding of fact based on the appreciation of the evidence, and we find no perversity or infirmity in the order impugned, and no question of law arises out of the order of ITAT." 3.4 For various other case laws, kindly refer Annexure 1 to Revised w/s to ITAT dated 1st February 2021 (The assessee in Annexure 1 has relied upon the cases of CIT v/s Radico Khaitan Ltd. (2005) 194 CTR 451/274 ITR 354 (All) (HC), Godrej & Boyce Manufacturing Co. Ltd. v/s DCIT & Anr. (2017) 151 DTR 0089 (SC), East India Pharmaceutical Works Ltd. v/s CIT (1997) 139 CTR 0372 (SC), Munjal Sales Corporation v/s CIT (2008) 298 ITR 298 (SC), CIT vs. HDFC Bank LTD. (2016) 284 CTR 0409 (Bom) (DPB 64-70), Hero Cycle P. Ltd vs. CIT (2015) 128 DTR 1/379 ITR 347 (SC), SEL Manufacturing Co. Ltd. vs. DCIT 206 TTJ 937 (Chd.), Alkali & Chemical Corporation of India Ltd. vs. CIT (1986) 50 CTR 139 (Kol HC) and CIT v/s M/s. Vijay Solvex Ltd. (2....
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.... be applicable to the facts of the present case......." 6.1 No Interest paid on Partners' Capital on current year profits: Its factually wrong that appellant paid interest on their capital. Factually there was no interest paid w.r.t. huge net-profits of Rs.53.02 Cr. before depreciation and Rs. 50.76 Cr. after depreciation, of this year in as much as such interest was credited at the end of the year. In other words, no interest at all was paid on the partners' capital at least to the extent of the current year`s profit because profit was distributed at the end of the year and such interest, of course, was paid in the subsequent year. The current year profit is otherwise much bigger than the investment made in mutual fund this year of Rs.1.50 Cr. or the total investment at the close of the year. 6.2.1 Interest on capital of partners: Even assuming some interest has been paid by the assessee to the partners to their respective capital yet however such interest is not a charge on the profit and not being an expenditure, it is nothing but an appropriation of profits and such payment of interest cannot be kept at par as any interest paid / claimed u/s 36(1)(iii....
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....n 4 of the Indian Partnership Act 1932 also support this contention. Thus, the 'partnership firm' and partners have been collectively seen and the distinction between the two was removed in the judicial precedents even for taxation purposes. 6.2.3 On the other hand, interest paid on borrowed capital u/s 36(1)(iii) presupposes a transaction between two independent entities, which is not the case here. Capital of a partner is not a borrowing and therefore, the Act does not cover interest on capital of partner u/s 36(1)(iii) but it's limit of allowability has been prescribed u/s 40(b) only as appropriation out of profits. 6.2.4 Sec 13 of the Indian Partnership Act, 1932 contains the mutual rights and liabilities of the partners. Sec 13(c) of the Indian Partnership Act, 1932 reads as under: "13. Subject to contract between the partners - (c) where a partner is entitled to interest on the capital subscribed by him, such interest shall be payable only out of profits;" From above it is clear that interest on capital can be paid only out of profits, which implies that interest on capital is an appropriation and not an expense. It means i....
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....the shape of partner's capital of Rs. 70.65 Cr., was accepted and disallowance made u/s 36(1)(iii) was completely deleted vide para 24 of the ITAT order dated 27.09.2017 in ITA No. 10/JP/2013 (DPB-III 149-180). In the later years also similar facts prevailed but contention of the assessee was accepted by the Settlement Commission also. There being no change in the facts and circumstances, the decision taken by this Hon'ble Bench & Commission in the earlier/other year/s, is binding upon it and as a rule of consistency a similar view has to be adapted these years also. 7. The ld.AO completely failed to deny and disprove the facts as argued although vide last para at pg 6, he alleged that the assessee had used a part of the borrowed funds available in the OD a/c and worked out the disallowable amount of the interest yet however, he completely failed to prove/ to bring contrary material to disprove that the assessee was having sufficient interest free funds, as aforesaid. He wrongly confused the OD a/c with an interest bearing loan/borrowings. Admittedly the assessee neither took any such loan in the past nor in this year, as evident from the Audited Balance Sheet as on 31.03.....
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....est free/interest bearing funds both, but the interest free funds are larger than the interest free advances than there will be a presumption that the interest free advances were given out of the interest free funds (but not out of interest bearing fund/OD) and hence, no interest can be disallowed. It is noticed that this year also the assesse continued maintaining account with the Canara Bank having Overdraft Account facility on the strength of the FDRs. A careful perusal of bank Overdraft account summary, bank FDR summary submitted along with the written submission as also perusal of the other materials placed in the Assessee's Paper Book (APB) shows that all types of business receipts and all types of payments are routed through the bank Overdraft Account. This proves the fact that the assessee was having mixed funds both in form of business receipts and borrowings in the form of overdraft from the bank from time to time. It is also an admitted fact that apart from the overdraft account based on the FDR of the assesse, the assesse did not make any other borrowing or taken loan from any source as no such account appear in the balance sheet and annual statement of accounts of the ....
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....interest paid. The payment of interest (on the capital), salary, bonus etc., are nothing but distribution (or appropriation) of the profits. We derive support from the decisions in the cases of CIT v/s R.N.Chidambaram 106 ITR 292 (SC), CIT v. Ramniklal Kothari (1969) 74 ITR 57 (SC), Quality Industries vs. JCIT, (2016) 73 taxmann.com 363 (Pune Trib.), M/s Syntholab Chemicals & Research vs. ACIT in ITA No. 4156/Mum/2015 dated 19.04.2017 (copies of which are placed on record). We find that the controversy involved in the present case is directly covered by the case of ACIT v/s Ram Kishan Verma (2012) 143 TTJ 1 (Jp), wherein the factual matrix is also the same. In fact, the cited case also of a coaching institute of Kota itself and there also the assessee used to receive the entire fees at the beginning of the year/session whereas it had to incur recurring expenditure on monthly basis. As a part of financial management/planning and to maximize its income, that assessee also used to deposit the entire fees in the FDRs and got OD A/c from which funds were utilized as per need. This way, it was claimed that it was assessee's own money only who did not borrow any fresh money. The disallowa....
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....Corporation v/s CIT (2008) 298 ITR 298 (SC) ; (c) CIT V/s Radico Khaitan Ltd. (2005) 274 ITR 354; (d) CIT v/s Dalmia Cement (Pvt.) Ltd. (2002) 254 ITR 377; (e) CIT v/s Britannia Industries Ltd. (2006) 280 ITR 525; and (f) CIT v/s Motors Sales Ltd. (2008) 304 ITR 123 (Allahabad), held as under:- 14. Therefore, the finding reached by the Tribunal is essentially a finding of fact based on the appreciation of the evidence, and we find no perversity or infirmity in the order impugned, and no question of law arises out of the order of ITAT." On the aspect of the availability of current year profit before depreciation we also find support from the decision in the case of CIT vs Reliance Industries Ltd. (2018) 161 DTR 420 (Bom. HC) wherein it was held as under: "Appeal (High Court)-Substantial question of law-Interest on borrowed capital-Net profit after tax and before depreciation exceeded not only the differential/incremental loan given to subsidiaries during the year but also exceeds the total interest-free loans given to the subsidiaries as on 31st March, 2003-A presumption would arise that the investment would be out of the interest-free funds generated or availab....
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.... and withdrawal of Rs. 120.85 Cr. The said numbers therefore supports the contention advanced by the ld. AR during the course of the assessment proceedings that all types of business receipts and all type of payments are routed through the bank overdraft account. It also proves the fact that the assessee was having mixed funds both in form of business receipts and borrowings in the form of overdraft from the bank from time to time. However, there is nothing which has been brought on record to prove that the investments have been made at the relevant point in time out of the borrowed funds. In absence of establishing the necessary nexus being between the borrowings and the investments in the mutual funds, it can safely be concluded that the investments in the mutual fund units have been made out of mixed funds. 25. Now coming to the third issue as to where assessee is having mixed funds and interest free funds are larger than the amount of investments made during the year, can a presumption be drawn that the investments in the mutual fund units have been made out of interest- free funds and not out of interest bearing funds. In this regard, we find that the assessee is havi....
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....09 (Bom), Hero Cycle P. Ltd vs. CIT (2015) 128 DTR 1/379 ITR 347 (SC). However, we find the decision cited by the ld. DR in the case of CIT v/s Abhishek Industries Ltd. (2006) 286 ITR 1 (P&H) has already being distinguished in this context by the above decisions. In light of above discussions and in the entirety of facts and circumstances of the case, we are of the view that the lower authorities were not justified in disallowing interest expense of Rs. 10,83,901/- in the hands of the assessee. Hence Ground No. 2 of the assessee is allowed. 4.1 In Ground of Appeal No. 3, the relevant facts in brief are that the AO noticed from Annexure E of Balance Sheet that the assessee has given advance of Rs.1.00 lakh to Akhil Bhatiya Maheshwari Educational Charitable Trust on 01.07.2009 and shown debit balance of Rs. 41,000/- in the a/c of Swanand Sewanyas in the earlier years, but no interest was charged on these advances hence, he disallowed interest @ 6.25% on this advance as was paid out of the borrowed funds. 4.2 In the first appeal, the ld. CIT(A) also confirmed the same, following his finding in AY 2009-10 that the assessee failed to submit any evidence to show that amount were ad....
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....rest on account of purchase of plots of Rs.3,34,868/- on Plot. No.1, Rajiv Gandhi Nagar, Kota, Rs.13,38,412/- on Plot No.6, Rajiv Gandhi Nagar, Kota, Rs.54,20,422/- on Plot No. CP-7, Indra Vihar, Kota and Rs.5,66,465/- on account of construction of building on C.P., Rajiv Gandhi Nagar, Kota, which totalling to Rs.76,60,166/-, was disallowed. 4.5 Before us the ld. AR made the following submissions for deletion of disallowance confirmed by the ld. CIT(A) ''1. Firstly, we strongly rely upon the written submissions filed before the ld. CIT(A), which are reproduced at pg 2-6 & 15-17 of the order (PB 156- 158, 162). 2. When asked by the AO (vide para VII of order sheet at the date 15.01.2013), the assessee filed a detail explanation vide letter dated 23.01.2013 (PB 47-52) reproduced at pages 10 & 14 of the AO wherein the above facts were clearly mentioned. Amongst other things it was stated that the current year's profit was of Rs.50.76 crores whereas the amount of construction WIP and the plot was only Rs.19.37 crores which was nothing but out of the interest free funds available in the shape of capital and reserves (including the current year is profits). And there....
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....of its own funds were to the tune of Rs.398.19 crores. In view thereof, it was submitted that from the analysis of the balance-sheet, the Assessee had enough interest free funds at its disposal for making the investments. The CIT (Appeals) on examining the said material, agreed with the contention of the Assessee and accordingly deleted the addition made by the Assessing Officer and directed him to allow the same under the provisions of the Income Tax Act, 1961. The Revenue being aggrieved by the order preferred an Appeal before the ITAT who upheld the order of the CIT (Appeals) and dismissed the Appeal of the Revenue. From the order of the ITAT, the Revenue approached this Court by way of an Appeal." On the above factual matrix, the Hon'ble court held as under: "10. If there be interest-free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In our opinion the Supreme Court in East India Pharmaceutical Works Ltd. (supra) had the occasion to consider the decision of the Calcutta High Court in Woolcombers of India L....
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....owance u/s 36(1)(iii) of the Act. 4.1 it is submitted that the issue is directly covered by the decision of CIT vs Reliance Industries Ltd. (2018) 161 DTR 420 (Bom. HC) (DPB V 199- 2019) wherein it was held as under: "Appeal (High Court)-Substantial question of law-Interest on borrowed capital-Net profit after tax and before depreciation exceeded not only the differential/incremental loan given to subsidiaries during the year but also exceeds the total interest-free loans given to the subsidiaries as on 31st March, 2003-A presumption would arise that the investment would be out of the interest-free funds generated or available with the company-If the Tribunal had allowed deduction and followed the earlier view and on facts, then, there is no perversity when nothing contrary to the factual material was brought on record by the Revenue-No substantial question of law arises from such a view of the Tribunal" Vide Para-31 "31. The facts were that, the assesse had given interest free loans to its subsidiaries aggregating to the sum specified in Para 7.2 as on 31st March, 2003 and the corresponding figures of such interest free loans as on 31st March, 2....
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....g sufficient interest free funds and did not borrow hence there was no question of paying any interest nor making any claim thereof. Thus, when in the view of the facts and submissions made above, there was no claim made by the assessee u/s 36(i)(iii), there was no question of allowing or disallowing the same and consequently even the discussion made by the AO in the light of the proviso to Sec.36(i)(iii) is also irrelevant. 8.2 However, alternatively and without prejudice to the above basic contention, even considering the claim on merits, the AO has wrongly considered the facts and alleged that the asset was not put to use in this year. With regard to the user of the plot no 1 at Rajeev Gandhi Nagar as a cycle stand, w.r.t. "observation" and allegation of the AO contained in para 2.3.2, 2.3.3 and 2.3.5, it is submitted that our submissions made vide para no. 1 of letter dated 04.03.2013 (PB 58) reproduced in para 2.3.4 of the AO pg 12, are strongly relied upon which has adequately answered the allegations made. Despite these submissions, the AO and ld. CIT(A) both continued repeating the same factual allegation with blind eyes. They did not appreciate that the m....
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....n the ground that it was a contingent and unascertained liability, which was based on condition of completion of 4 year course and moreover, it was a mere provision which was not allowable under the provisions of the Act. Hence, as against the claimed deduction of Rs 19,20,000/-, only Rs 3,60,000/- was allowed and the balance of Rs 15,60,000/- shown as payable at the year-end was disallowed. 5.2 Before us the ld. AR made the following submissions with prayer to delete the addition confirmed by the ld. CIT(A). 1. Firstly, we strongly rely upon the detailed written submissions filed before the ld. CIT(A), which are reproduced at pg. 28 to 29 of the order of CIT(A). 2. It is submitted that the assessee is one of the most popular coaching institute of the Country, imparting coaching to the students preparing for entrance examinations. With a view to encourage the successful & intelligent students and to provide them with a financial support (which is otherwise, a part of its Advertisement - Promotional Schemes), the assessee has been floating scholarship schemes in the past. As per the scholarship scheme, for selection of the eligible candidates (who got coaching f....
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....larship scheme. Whether all or part of the students continue or not (for whatsoever reason), the liability which has already accrued, could not have been stopped or could not be termed as contingent. The assessee could not have assumed that some of the students may not be willing or may not be able to complete the full term of four years, which otherwise was not a condition of granting scholarship. 5.1 The authorities below therefore, proceeded on a misconception by considering the subjected expenditure as a provision only whereas, it was a liability in praesenti, as stated above, out of which Rs.3.60 Lacs could be got en-cashed this year however, balance of Rs.15,60,000/- remained outstanding in its Balance Sheet. Thus, it was nothing but an outstanding liability which has been wrongly named as a provision or a contingent liability by the authorities below. Notably, in A.Y.2011-12 to 2014-15, the cheques of entire balance of Rs.15,60,000/- got en-cashed and thus, stood paid. Such liability was certain as did not depend on happening of any event. There was no uncertain future event. 5.2 For better appreciation the meaning of the relevant terms are: Outsta....
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....ards) yet however, no similar disallowance had been made in the past. It is, for the first time, the AO has made this disallowance despite there being no change in the fact & circumstances of the case. There were no special reason as to why the AO should have taken a departure from the settled position of law & facts between the parties. Although the doctrine of res judicata do not apply in the income tax proceedings yet however, in absence of any change in the facts & circumstances of the case, the doctrine has been applied by the Courts. 8.2 In the case of CIT v/s Excel Industries Ltd. (2013) 358 ITR 295 (SC), it was held that "Secondly, as noted by the Tribunal, a consistent view had been taken in favour of the assessee, starting with the AY 1992-93, that the benefits under the advance licences or under the duty entitlement pass book do not represent the real income of the assessee. Consequently, there was no reason to take a different view unless there are very convincing reasons, none of which had been pointed out by the Revenue. In Radhasoami Satsang Saomi Bagh v. Commissioner of Income Tax, [1992] 193 ITR 321 (SC) Court did not think it appropriate to allow....
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....rival contentions raised by both the parties as also the material placed on record and have also gone through the judicial pronouncements cited by the parties. It is evidently clear that the authorities below have not properly appreciated the undisputed facts of the scholarship scheme and the legal position. We find that the scheme has been designed, with a view to encouraging and providing financial assistance to the meritorious students. The assessee as a part of its advertisement and promotional scheme had been floating scholarship schemes in the past and also in the later years, as was also done in the current year. As per the scholarship scheme for selection of the eligible candidates (who got coaching from the assessee's institute), selection is made of those students, who are amongst the first 100 Ranks in AIPMT/IIT or the students who got selected in AIIMS, and total amount of Rs. 48,000/- per student p.a. is given. The assessee used to organize a big level function in the honour of the successful students, during the course of which they are awarded by giving them the certificates along with the cheques. Accordingly, the entire amount of Rs.19,20,000/- [Rs. 48,000/-*43 (27....
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....g expressing satisfaction of this factual aspect based on their sample test checking, has been recorded. Even assuming for a moment such liability has been wrongly claimed this year but in the later years, remains outstanding for a long period, S. 41(1) takes care of the revenue's interest. Further it not disputed that even in the past also similar scheme were floated and the remaining outstanding amount was claimed as a liability and some of the years were completed under scrutiny u/s 143(3) yet however, no similar disallowance had been made in the past. We find that in A.Y. 2019-20 also similar claim was made but no disallowance was made of similar nature although some other disallowances were made and reached to the stage of ITAT. Although the doctrine of res judicata do not apply in the income tax proceedings yet however, in absence of any change in the facts & circumstances of the case, the doctrine has been applied by the Courts. In the case of CIT v/s Excel Industries Ltd. (2013) 358 ITR 295 (SC), it was held that "Secondly, as noted by the Tribunal, a consistent view had been taken in favour of the assessee, starting with the AY 1992-93, that the benefits under the....
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....id were for connection charges, electricity lines, supervision charges, CTPT set cost and meter cost but did not create any property. The AO however, feeling dissatisfied, disallowed Rs.2,01,515 after allowing depreciation @ 15% vide para 2.5.3 pg 22 mainly on the ground that it is clearly a capital expenditure, which resulted into benefit of enduring nature. He placed reliance on Assam Bengal Cement Co. Ltd. v/s CIT (1955) 27 ITR 0034 (SC). However, the CIT(A) also confirmed the same. 6.3 Before us the ld. AR made the following submissions with prayers to delete the disallowance confirmed by the ld. CIT(A) 1. Firstly, we strongly rely upon the detailed written submissions filed before the ld. CIT(A), which are reproduced at pg 32-33 & 37 of the order of CIT(A). 2. The AO has not established that such expenditure resulted into creation of a new property or the assessee got an advantage of an enduring nature and hence, such a disallowance was wrongly made. The impugned disallowance may kindly be deleted in full. 6.4 On the other hand, the ld. DR strongly relied upon the findings recorded by the authorities below and justified the additions made and confirmed ....
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....ablish as to how such expenditure has resulted into the creation of a new asset therefore, the authorities below were not correct in making the disallowance and hence the same is also deleted. Hence, this ground is allowed. 6.10 Disallowance of Rs. 21,000/- on account of Name Transfer Fee:- In this ground the assessee challenged the Disallowance of Rs. 21,000/- claimed on account of Name Transfer Fee. The AO noted that the assessee had claimed expenditure of Rs. 21,000/- for Name transfer fee. When asked, the assessee stated that the charges were paid to Nagar Nigam, Kota for getting the name changed. The AO however feeling dissatisfied, disallowed the same vide para 2.7.3 pg. 24 mainly on the ground that it is clearly a one-time expenditure and linked to acquisition of fixed asset. However, the ld. CIT(A) also confirmed the same. 6.11 Before us the ld. AR made the following submissions with prayer to delete the addition confirmed by the ld. CIT(A) 1. Firstly, we strongly rely upon the detailed written submissions filed before the ld. CIT(A), which are reproduced at pg. 33 & 37 of the order of CIT(A). 2. The AO has not established that such expenditure resul....
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....owance was wrongly made. The impugned disallowance may kindly be deleted in full. (Bill PB 146) 6.16 On the other hand, the ld. DR strongly relied upon the findings recorded by the authorities below and justified the additions made and confirmed by the ld. CIT(A) and prayed to upheld the addition/disallowance. 6.17 We have carefully considered the rival contention and the material placed on record. A reference has been made by the Ld. AR to the copy of invoice however it is a fact on the record that the height of the building was raised from the existing level. In that view of the matter, therefore we find the authorities below were justified in considering the expenditure of Rs. 7,80,642/- as capital expenditure and in allowing depreciation therefrom to assessee hence no interference is called for. This ground of appeal is therefore dismissed. 6.18 Disallowance of Rs. 1,27,275/- claimed on account of Regularisation of the construction of Old Building:- During the course of assessment proceedings, the AO noted that the assessee had claimed expenditure of Rs. 79,664/- for Internet networking expenses. When asked, the assessee stated that the charges so paid for increase eff....