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TMI Blog2011 (12) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... sement of salary of Dr.Bomi B. Patel and U.A.Maroo, the Sr. Technical and Financial Executives of M/s.Gharda Chemicals Ltd. under section 40A(2)(b) of the I.T.Act, 1961 ? C. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in disallowing Rs.91,04,865/- reimbursed to M/s.Gharda Chemicals Ltd. under section 40A(2)(b) of the I.T.Act, 1961 ? D. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in disallowing the training expenses of Rs.10,80,000/- actually paid by the assessee to M/s.Gharda Chemicals Ltd. and accordingly taxed in the hands of the latter ? E. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t payments of Rs.5 lac each towards commission were made on 20.4.99 i.e. before framing of terms vide letter dated 19.5.1999. It is further noted that the assessee has given loan of Rs.4,50,00,000/- to Nipun Investment Pvt. Ltd., a associate co. of Nipun Finvest Pvt. Ltd. having their offices in the same commercial complex at Mumbai and the assessee has claimed to have been not in a position to recover loan amount along with interest from Nipun Investment Pvt. Ltd and how the assessee co. has effected sale through Nipun Finvest Pvt. Ltd. and also relied upon such co. for realisation of sale consideration. Further common defects are noticed, as noticed in the case of House Hold Remedies Pvt. Ltd. 7.2 Further, in the credit note No.21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered any serviles to the assessee nor the ld. AR appearing on behalf of the assessee referred us to any such evidence. Mere existence of an agreement, without anything more, is not enough for disallowance of deduction (Lachminarayan Madan Lala v. CIT,86 ITR 439 (SC), Precision Instrument Mfg. Co. vs. CIT 317 ITR 5 (Del.) The burden of proving that the amount of commission was actually expended as commission for the purpose of business lies on the assessee as held in Goodlas Nerolac Paints Ltd. v. CIT, 137 ITR 58 (Bom.). Since in the instant case not even an iota of evidence has been brought to our notice that the aforesaid party had indeed rendered services to the assessee nor genuineness of payment of commission has been established, we ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. The Assessing Officer, however, disallowed the claim of the assessee making following observations: "The assessee claimed Rs.50 lac towards ERP software expenses. The assessee has furnished copy of agreement entered into by GCL with RAMCO SYSTEMS LTD for system finalization, wherein Rs.25.20 lac to be paid by GCL to RAMCO on behalf of the assessee company. Further the sum of Rs.14 lac has been reimbursed as professional services rendered by RAMCO as per agreement dated 9.7.97. The balance of Rs.10.80 lac appears to be adhoc charges levied by GCL, without any basis whatsoever. During the course of assessment proceedings, the assessee has not furnished any details of service rendered by the GCL to assessee. Even the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O disallowed the same. Before the Ld. CIT(A), the assessee claimed that expenditure is on training for operation of the aforesaid software and had been reimbursed to Gharda Chemicals Ltd. However ld. CIT(A) observed that this statement was not substantiated by any evidence of such expertise available with parent company to impart such training to staff of the assessee and that the training was actually rendered by RAMCO Systems Ltd as part of licensing the software. Even before us, situation is no better. No an iota of evidence has been brought to our notice that the expenditure of Rs.10.80 lacs reimbursed to GCL towards training of employees of the assessee for operating the aforesaid software. In the absence of any basis for taking a diff ..... X X X X Extracts X X X X X X X X Extracts X X X X
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