Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (9) TMI 949 - ITAT MUMBAIAdditions on account of professional fees paid to a member of the assessee Association of Person [AOP] - CIT(A) concluded that the income was transferred without actual receipt of any services and ITD was merely name lending entity and therefore the payments under question were mere appropriation of profits - business expediency - Held that:- Upon perusal of documents on record, we find that the entity namely ITD was merely a name lending entity whose association was vital to the award of the contract. The whole responsibility / obligations arising out of the contract lay on the other entity, which is also not in dispute. No material has been placed on record to suggest that ITD has provided any real services under the contract except lending its association / name against which it has been paid impugned leadership fees @3.5%. The assessee, all along has justified the same on the ground of commercial expediency. However, we find that the assessee was an AOP and the provisions of Section 40(ba) specifically disallow payment made by AOP to its member on account of interest, salary, bonus, commission or remuneration, by whatever name called. Secondly, upon careful consideration of the factual matrix, we find that the impugned payment were mere appropriation of profits and could not be allowed as a deductible expenditure. The share of the contract receipts was predetermined and the same was nothing but the profit sharing ratio only. So far as the contentions that no such additions have been made in earlier AYs, we find no strength in the same since each AY was independent unit of assessment and the principle of res-judicata were not applicable to income tax proceedings. - appeal dismissed
|