2016 (5) TMI 1185 - AT - Income Tax

Disallowance of claim of expenses incurred against the professional receipts received from Resonance Institute , Kota - Held that - The assessee has not produced any evidence either before the Assessing Officer or CIT(A) and also not before us. Therefore, we set aside this issue to the Assessing Officer to verify the expenses as claimed by the assessee. The assessee is also directed to produce all the evidences before the Assessing Officer to complete the set aside proceedings. Accordingly, both the appeals of the assessee for both the assessment years are set aside to the Assessing Officer for de novo. - Decided in favour of assessee for statistical purposes only.

Summary

Issues:
Disallowance of expenses claimed by the assessee against professional receipts for A.Y. 2007-08 and 2008-09.

Analysis:
1. The appeals filed by the assessee challenged the order disallowing expenses of ?7,94,673 incurred against professional receipts from a coaching institute. The Assessing Officer treated the salary income as professional income, citing tax planning concerns. The Assessing Officer relied on the Mc. Dowell & Co. case and concluded that the nature of work performed by the assessee did not qualify as professional services. The Assessing Officer assessed the income as salary for both years.

2. The CIT(A) partly allowed the appeals. For A.Y. 2007-08, the CIT(A) considered the consultancy agreement between the assessee and the institute. The CIT(A) noted that the agreement specified the nature of duties performed by the assessee, indicating a consultancy arrangement. The CIT(A) treated the receipts as professional income and salary income separately. The CIT(A) rejected the expense claim due to lack of evidence provided by the assessee.

3. For A.Y. 2008-09, the CIT(A) upheld the decision similar to A.Y. 2007-08. The CIT(A) rejected the expense claim based on the previous year's findings. The assessee contended that the expenses were incurred for business purposes under Section 37 of the Income Tax Act.

4. The ITAT directed the Assessing Officer to verify the expenses claimed by the assessee, as no evidence was produced during the assessment or appeal stages. The ITAT set aside both appeals for reassessment by the Assessing Officer with a directive for the assessee to provide all necessary evidence.

5. The ITAT allowed both appeals for statistical purposes only, emphasizing the need for proper verification of expenses by the Assessing Officer. The decision was pronounced on 22/04/2016.

This detailed analysis highlights the key arguments, decisions, and directives issued by the ITAT in response to the disallowance of expenses claimed by the assessee against professional receipts for the relevant assessment years.