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2016 (4) TMI 943 - ITAT MUMBAIAllowability of advertisement expenses - disallowance of claim holding that the same should have been claimed as expenses by Mr. Kailash Kher, director of the assessee company, and not the assessee - Held that:- Saswad Mali Sugar Factory Ltd. vs CIT (1999 (1) TMI 26 - BOMBAY High Court ) supports the case of the Revenue, thus, this ground of the assessee is having no merit as Shri Kailash Kher used the platform of the company to advertise his personal business or it can be said that the advertisement expenses were incurred by the assessee for the promotion of “Jhoomo re” CD and the resultant benefits/collections were deposited in the personal accounts of Shri Kailsah Kher, therefore, the expenditure cannot be allowed as a deduction in the case of the assessee company. Even otherwise, what was mentioned in the so called banners, the assessee at any stage, never produced the language/advertised material, therefore, mere claim is not enough and it has to be substantiated with evidence.- Decided against assessee Disallowance of consultancy expenses and commission paid - Held that:- If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, there is no dispute to the fact that the expenses were incurred for designing the studio which was under construction during the relevant time, therefore, the expenses are to be rightly held to be capital in nature as the business of the running the studio was yet to commence. - Decided against assessee So far as, commission paid to Praxis is concerned, this amount was paid for arranging loan from Union Bank of India for construction of Kailasa Studio. It is noted that the purpose and to whom the amount was paid is not clear. If the amount has been paid for extraneous consideration then it cannot be allowed. However, deduction on account of interest on loan cannot be denied. The loan was taken for starting the new line of business i.e. Kailasa Studio and business is yet to commence, therefore, it cannot be allowed. As mentioned earlier, what type of arrangement was made for getting the loan from the bank, mere claim is not enough, thus, the stand taken in the impugned order is affirmed. - Decided against revenue Disallowance made u/s 40(A)(2) - Held that:- The PAN number of Mr. Mahesh Kher has also been mentioned. The Department has no disputed that the payments were made to the legal consultant. It was disallowed merely on the ground that it is highly excessive. We are not agreeing with the proposition that the payments were excessive, because, it is between the party to decide the payment. There is no bar under statute that legal charges cannot be made to the close relative. Even otherwise, when a legal person is available within the close relative, the assessee is not expected to seek legal consultancy from outside. It is also noted that the Shri Mahesh Kher is a law graduate and copy of agreement drafted by him were filed before the Assessing Officer vide letter dated 22/11/2010. Thus, the payment is not in doubt, consequently, we don’t find any reasoning to disallow the same, thus, this ground of the assessee is allowed. - Decided against revenue Disallowance of cash expenditure under the head musician and show related expenses - Held that:- There is categorical finding in the assessment order that the above expenditure was claimed to be through self made vouchers, which neither contained the name of the recipient nor signature, consequently, the genuineness of the claim was not established and even the identity of the payee was not established by the assessee. The datewise claim of expenses and place has been reproduced at page-6 (para-10.1) of the assessment order for the amount of ₹ 13,55,000/-, no receipt/bill was shown. The finding contained in para 10.2 of the assessment order was neither controverted nor produced any satisfactory evidence for the claim by the assessee. Even, before the ld. Commissioner of Income Tax (Appeals), the finding contained in para 8.4 was neither substantiated nor any evidence was placed before us. It is also noted that the ld. Commissioner of Income Tax (Appeals) examined the vouchers and the cash book and it was found by the ld. Commissioner of Income Tax (Appeals) that they are not matching, thus, it was concluded that the claimed amount is not only bogus and unvouched but also hit by the provisions of section 40A(3) of the Act - Decided against assessee
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