TaxTMI 
TaxTMI 
2024 (12) TMI 109
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....icer (hereinafter referred as 'Ld. AO') u/s 143(3) read with sections 143(3A) & 143(3B) of the Income Tax Act, 1961 [hereinafter referred to as "the Act"] for the Assessment Year 2018-19. 2. Brief facts of case are that appellant/assessee on 22/09/2018 filed Income Tax Return declaring income of Rs. 3,00,74,890/-. On 27/03/2019 ITR was revised at income of Rs. 3,00,92,860/- which was processed on 04/06/2019. The case was selected for scrutiny through CASS to examine the issues of (i) Expenditure of Personal Nature and (ii) ICDS Compliance and Adjustment during the year. Notice u/s 143(2) of the Act issued on 22/09/2019. Subsequently, notice u/s 142(1) of the Act was issued on 09/12/2020 calling for certain information/documents. The assess....
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.... payment made to Sh Akhil Goyal on account of salary Rs. 12,00,000/- as the payment covered u/s 40A(2)(b) of the Act for making ad-hoc disallowance of 25% covered in Ground No.1 and 2 ignoring the fact that the above payee is not a person covered u/s 40A(2)(b) of the Act. The Learned CIT(A) has erred in confirming the disallowance of interest expenses of Rs. 11,99,499/- u/s 36(1)(iii) of IT Act on proportionate basis on the ground that there was investment in work in progress as per balance sheet as on 31/03/2018 amounting to Rs. 99,95,824/-. During appeal before Ld. CIT(A), it was contended and taken note of by Learned CIT(A) in para 7.4 (PB 256) that due to non-issue of show cause notice regarding the above disallowance, the appellant is ....
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....f the revenue that there is no deduction on account of ESI/EPF on salary paid to above employees with other two employees all related to the directors/shareholders, it is submitted that above objection is misplaced as under PF/ESI provision, the employees drawing salary exceeding Rs. 15,000/- have the option of not getting covered under the above welfare schemes. Accordingly, the above employees drawing higher salaries have exercised above available option. Therefore, no adverse view be kindly taken to support the disallowance in present case as exercise of above option is as per law. In case of Sh. Anoop Goyal (Rs.18,00,000/-), the salary drawn in preceding AY 2017-18 (PB 114-120) was Rs. 9,00,000/- from other employer i.e. M/s Ram Swarup ....
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....e disallowance is that the appellant has not filed any evidence of educational qualification of the above employees. The above objection of Learned CIT(A) is not relevant when the appellant is able to establish that these persons have been employed on the comparable salaries in the past and also in the future as the case may be. 5.7 Even otherwise, the Learned AO has not given any reason as to why he is making disallowance of 25% of salary paid and what yardstick he has applied to justify the disallowance of 25% of salary paid. In absence of any basis given in the assessment order, the adhoc disallowance is not justified. Reference to decision of Hon'ble Co-ordinate Bench in case of Indraprastha Logistics P Ltd vs ACIT ITA No.5708/Del/....
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.... Buildwell Engineers Ltd. (2018) 258 Taxman 371 (Del) approved by Hon'ble Apex Court in (2018) 259 Taxman 370 (SC) holding that no disallowances can be made without rejecting the books of account. 5.10 From the audited balance sheet (PB 7-35) available on record, the appellant had interest free resources in form of share capital Rs. 8,94,30,000/- and reserves Rs. 23,11,28,148/- aggregating Rs. 32,05,58,148/- as on 31.03.2017 (PB 14) against which the investment in work in progress amounting to Rs. 99,95,824/- can be attributed to be from the interest free funds in the absence of any nexus above investment with the interest bearing loans established by Learned AO. This is case of utilization of funds available in the common pool and there i....
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.... separate the theory of no loss making payment to the concerned employee. Reliance was placed on Board Circular No.6 No.6-P dated July, 1961 where it was communicated to field officers that no disallowance was to be made u/s 40A(2) in respect of payment made to the relatives and sister concern where there was no attempt to evade tax. As per ratio of judgment in Orange Associates Pvt. Ltd. vs. ACIT (supra), it is well settled law that the assessee company and its director were both in the same tax bracket, the highest and, therefore, there could be no question of any evasion of tax by paying remuneration to the directors relying on the above Circular. 9. The objection of Revenue regarding non-deduction of ESI/EPF on salary of persons is wit....