2016 (7) TMI 1475 - AT - Income Tax

Additions of expenditure towards enrolment under RSBY scheme - allowable revenue expenditure u/s 37 - Held that - As decided in assessee s own case 2014 (7) TMI 1280 - ITAT PUNE DR could not controvert the finding given by the CIT(A) that the amount received during the year has been shown as income and the assessee has claimed the corresponding expenditure incurred on the printing and issue of smart cards. Under these circumstances and in view of the detailed reasoning given by the CIT(A) we find no infirmity in her order. The Ld. Departmental Representative also could not point out any other mistake in the order of the CIT(A). Merely because the amount appears to be huge cannot be a ground to disallow the same on the ground of enduring benefit to the assessee when the corresponding revenue earned has been considered as income of the impugned year. - Decided in favour of assessee Addition of Provision for Consultancy Charges - addition on the ground that the assessee has not been able to furnish any cogent evidence in support of the provision claimed - Held that - The assessee has filed the detailed list of consultants and the payments made to them during the period relevant to the assessment year 2010-11. The assessee has also filed sample copy of appointment letter to the consultant as additional evidence. Assessee has prayed that the assessee can demonstrate from the documents available with him the genuineness of provision for consultancy charges. We are of the considered view that this issue needs a revisit to the file of Assessing Officer. Accordingly, we remit this issue back to the file of Assessing Officer for reconsideration in the light of documents furnished by the assessee to substantiate its claim.

Summary

Issues:
1. Disallowance of enrollment expenses under RSBY scheme.
2. Disallowance of Provision for Consultancy Charges.

Analysis:

Issue 1: Disallowance of enrollment expenses under RSBY scheme
The assessee, a private limited company offering services as a third-party administrator for insurance companies, filed its return for the assessment year 2010-11. The Assessing Officer disallowed expenses of &8377; 4,40,54,578 under the Rashtriya Swasthya Bima Yojna (RSBY) Scheme and further disallowed professional charges of &8377; 12,83,690. The Commissioner of Income Tax (Appeals) upheld the disallowance of enrollment expenses but reduced the disallowance of professional charges. The assessee contended that the enrollment expenses were not deferred revenue expenditure and should not be amortized over three years. The Tribunal noted that in a previous assessment year, a similar disallowance was made but was later deleted by the Commissioner of Income Tax (Appeals) and upheld by the Tribunal. The Tribunal found no reason to take a different view in the current assessment year and deleted the disallowance of &8377; 4,40,54,578.

Issue 2: Disallowance of Provision for Consultancy Charges
Regarding the disallowance of &8377; 6,91,190 for consultancy charges, the Commissioner of Income Tax (Appeals) confirmed the addition due to lack of substantiating evidence from the assessee. The assessee provided a list of payments made to consultants and a sample copy of an appointment letter during the assessment year. The Tribunal decided to remit this issue back to the Assessing Officer for reconsideration based on the documents furnished by the assessee to substantiate the claim. The Assessing Officer was directed to decide this issue afresh in accordance with the law.

In conclusion, the Tribunal partly allowed the appeal of the assessee, deleting the disallowance of enrollment expenses under the RSBY scheme and remitting the issue of consultancy charges back to the Assessing Officer for reconsideration.