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2024 (6) TMI 929 - AT - Income TaxIssues Involved: 1. Deletion of addition for excessive payment to specified persons u/s 13(3). 2. Deletion of addition for commission and brokerage expenses. 3. Deletion of addition for depreciation on fixed assets. Summary: 1. Deletion of Addition for Excessive Payment to Specified Persons u/s 13(3): The revenue challenged the deletion of Rs. 29,15,639/- by the CIT(A) on grounds that the payment to Red Eye Media Pvt. Ltd., a specified person u/s 13(3), was excessive. The Tribunal noted that the advertisement expenses included newspaper insertions and hoardings, with Red Eye Media Pvt. Ltd. charging the same rates as the newspaper companies. The Tribunal found no unreasonable profit was made by Red Eye Media Pvt. Ltd. and upheld the CIT(A)'s decision regarding newspaper advertisement expenses. However, for hoarding expenses, the Tribunal restored the matter to the A.O for verification of additional services claimed to be provided by Red Eye Media Pvt. Ltd. Thus, the grounds were partly allowed for statistical purposes. 2. Deletion of Addition for Commission and Brokerage Expenses: The A.O disallowed Rs. 38,26,608/- for lack of supporting evidence. The CIT(A) allowed the claim, noting the expenditure was for student counseling services. The Tribunal observed that the A.O had not provided cogent reasons for disallowance and noted that the assessee had submitted substantial evidence. The matter was restored to the A.O for re-adjudication, requiring the assessee to substantiate its claim and explain bills raised in other locations' names. Thus, the ground was allowed for statistical purposes. 3. Deletion of Addition for Depreciation on Fixed Assets: The A.O disallowed Rs. 2,34,92,053/- on grounds that once the cost of assets was allowed as application, no further depreciation could be claimed, citing the Kerala High Court judgment in Lissie Medical Institutes Vs. CIT. The CIT(A) vacated the addition, noting that Section 11(6), restricting depreciation claims, was applicable from A.Y. 2015-16 onwards, and the assessee had not claimed the cost of assets as application. The Tribunal upheld the CIT(A)'s decision, referencing the Supreme Court judgment in CIT Vs. Rajasthan and Gujarati Charitable Foundation, which allowed depreciation claims on assets whose cost was treated as application. Thus, the ground was dismissed. Result: The appeals for A.Y. 2013-14 and A.Y. 2015-16 were partly allowed for statistical purposes, with specific issues restored to the A.O for re-evaluation. The order was pronounced in open court on 20th March 2024.
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