TaxTMI 
TaxTMI 
2026 (2) TMI 767
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....460/-. Subsequently, the Return of Income was processed u/s 143(1)(a) of the Income Tax Act, 1961 (in short 'Act'). The case has been selected for complete scrutiny under CASS. Accordingly, notices u/s 143(2) and 142(1) were issued and served on the assessee, several opportunities were given to the assessee by issue of show cause notice u/s 142(1) and in response assessee has submitted partial informations. The assessee is engaged in carrying business as an agent in distribution of all types of liquor, spirits, alcohol, wines and beverages including non-alcoholic beverages. The Assessing Officer observed that during the impugned Assessment year assessee has received Commission and Interest income of Rs. 20,39,83,741/- and claimed business expenditure 19,41,35,511/- and declared net income of Rs. 98,48,230/-. 5. After considering the detailed submissions, in response to show cause notice, he observed that the assessee has claimed contract purchases paid to M/s S.P. Jindal Financial Services Limited for conducting time to time internal checks in the company and regular MIS. In support of the same assessee has furnished copy of ledger account along with copies of invoices raised by....
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....ee preferred an appeal before Ld. CIT(A) 24, New Delhi. After considering the detailed submissions Ld. CIT(A) sustained the above three additions made by the Assessing Officer. 10. Aggrieved with the above order assessee is in appeal before us raising following grounds of appeal:- 1. The Ld CIT(A) on the facts AMD in the circumstances of the case, has erred in upholding disallowance of Rs. 31,80,000/- paid for internal audit/MIS information to the entity namely S P Jindal Financial Services Limited without appreciating the fact that the payment had been made wholly AMD exclusively for the purpose of business AMD to a non-related entity. 2. The Ld CIT(A) on the facts AMD in the circumstances of the case, has erred in upholding disallowance of Rs. 3,00,000/- paid for MIS information to the entity namely Bigthink Media P.Ltd without appreciating the fact that the payment had been made wholly AMD exclusively for the purpose of business AMD to a non-related entity. 3. The Ld CIT(A) on the facts AMD in the circumstances of the case, has erred in upholding disallowance of Rs. 18,50,000/- paid to the entity namely S P Jindal Marketing Limited without appreciat....
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....nts made to them shows that there was no legislative intent to go into the question of reasonableness of the expenses paid to the unrelated domestic parties. In view of above and the legislative intent found highlighted from above introduction of domestic transfer pricing and also having regard to the decision of the Apex Court, the expenses paid to unrelated parties cannot be subjected to any disallowance on the ground of same being unreasonable or excessive. 13. It is further submitted that once it is established that there was nexus between the expenditure and purpose of business, the revenue cannot justifiably claim to put itself in the armchair of the businessman or in the position of Board of Directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case. No business man can be compelled to maximize his profits. The expediency, legitimacy and the business needs will have to be examined from the assessee's point of view and not from the department's view. To support the above proposition of law, reliance is placed in the following decisions: * S.A. Builders 288 ITR 1 (SC) * CIT v. Walchand ....
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....In view of above it is prayed that disallowances of expenses confirmed by the Ld CIT(A) are based on conjectures and surmises and besides above, the disallowances are not tenable when the books of account have not been found to be not unreliable warranting rejection of the same u/s 145(3) of the Act leading to the best judgement assessment. To support the above view, the reliance is placed on the following authorities: * CIT Vs Pashupati Nath Agro Food Products Pvt. Ltd. (Allahabad High Court) ITA No.165 of 2010 dated 04.05.2017 * Sargam Cinema vs CIT 328 ITR 513(SC); * PCIT vs R.G. Buildwell Engineers Ltd (2018) 259 Taxman 371 (Del) approved by Hon'ble Apex Court in (2018) 259 Taxman 370 (SC) 17. On the other hand Ld. DR submitted that assessee has not substantiated the above claim of expenditures before the Assessing Officer and Assessing Officer was not satisfied with the statements made by the assessee without bringing on record any MIS report submitted by the above said parties. Since the assessee has paid similar service charges to Zenith much less but for the same kinds of services assessee has incurred additional expenditures without there ....