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TMI Blog2006 (9) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... g shown on that account in P L a/c specially when he was accompanied by his family and the so-called recovery of Rs. 99,10,506 from M/s Sumitomo Corporation next year was not feasible when it did not exist in balance sheet of the firm and further the income shown as fees from project in the P L a/c was only Rs. 1,10,898. 3. The learned CIT(A) erred in deleting addition of Rs. 7,37,000 claimed as consultancy expenses when the assessee could not prove the services rendered by M/s Hi Tech Engg. and fee from projects shown in P L a/c was only Rs. 1,10,898." 3. Rival contentions have been heard and record perused. In the course of assessment under s. 143(3), the AO observed that the assessee has two proprietary concerns in the name and style of M/s Triume International and M/s Apten Corporation. Perusal of P L a/c of M/s Triume International reveals that the following income are credited: (Rs.) (i) Dividend income 9,33,688 (ii) Interest income 14,79,280 (iii) Interest on PPF deposit 41,853 Against these incomes the assessee has claimed the following expenses: (i) Audit fees 3,000 (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the findings recorded by the AO with regard to inspection of the property by the Inspector, wherein it was found to be used by the proprietor and his family members for his personal purposes, the CIT(A) was not justified in directing the AO to allow 2/3rd of these expenses while computing business income. 8. On the other hand, it was submitted by the learned Authorised Representative that in the earlier assessment year, the Department has accepted the use of property for business purposes to the extent of 2/3, therefore, the expenses sought to be allowed to the extent of 2/3, the CIT(A) was justified in directing the AO to restrict disallowance to the extent of 1/3rd of the expenses as already agreed by the assessee in the computation of income itself. He further submitted that no copy of Inspector's report was given to assessee as no Inspector has visited the premises, therefore, observation of AO in this regard is not correct. 9. We have considered the rival contentions carefully gone through the orders of the authorities below. There is no dispute to the fact that income offered by the assessee in respect of M/s Triume International in the form of dividend income, inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO regarding furnishing copy of Inspector's report to assessee and the opportunity given to him to cross-examine the alleged report. We, therefore, set aside the order of CIT(A) on this ground and in the interest of justice restore this matter again to the file of CIT(A) to call for a remand report regarding actual use of property during the relevant period and to find out if the property for the whole year was not utilized for the purpose of assessee's business to the extent of 2/3rd, or only for shorter period during visit of Inspector it was found to be not so utilized. The CIT(A) is directed to give his specific finding to this effect and decide the issue afresh. 10. With regard to deletion of disallowance of travelling expenses of Rs. 5,40,754 from the record, we found that the AO noted that out of total expenses of Rs, 7,81,015, the assessee himself added back Rs. 2,40,261 being air fair charge of the family members of the assessee. Regarding the remaining expenditure of Rs. 5,40,754, the assessee was requested to furnish documentary evidence for visit ofFrance,UK,USAandCanada. The assessee explained that the trip was undertaken for realizing the money from the debtors a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the CIT(A) for deleting. disallowance of 50 per cent of foreign expenses, after considering the business needs of the assessee and the disallowance shown by the assessee himself not only in its return of income, but also the withdrawals of 4000 US $ for personal and other expenses relating to the travelling. 15. With regard to consultancy expenses, we found that the assessee has claimed consultancy expenses of Rs. 7,37,000 in the account of M/s Apten Corporation. The assessee was required by the AO to furnish complete name and address of parties to whom the consultancy expenses were paid. The assessee was also required to furnish documentary evidence to prove the service rendered by these persons, against the consultancy payments. It was submitted by the assessee that the consultancy amount was paid to M/s Hitech Engineering and Consultancy Services based in Chennai. The address of this concern is 3, Second Seaward Road, Valmiki Nagar, Madras-41. 16. The AO found that the assessee has not given any evidence to prove the services rendered by this concern to the assessee, nor the copy of the agreement entered into with this party, thus, the assessee has failed to di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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