9911796707
TMI Blog2012 (10) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... ved survey fees amounting to Rs.26,72,587/- against which expenses inter alia on account of contract fees amounting to Rs.46,751/- and direct expenses amounting to Rs.2,07,965/- were claimed as deduction. Although the assessee tried to explain before the AO that the said expenses were incurred at Port on various occasions, the AO did not find the same to be acceptable in the absence of proper documentary evidence produced by the assessee to support and substantiate the same. Accordingly the contract fees and direct expenses claimed by the assessee were disallowed by him. On appeal, the learned CIT(Appeals) confirmed the disallowance made by the AO on account of contract fees observing that besides producing the copy of ledger account of Shri Ritesh Bhatia to whom contract fees was claimed to be paid, the assessee could not produce any other evidence in the form of confirmation, return of income of Shri Ritesh Bhatia, his P.A. No. or bank account details etc. to justify its claim for deduction on account of contract fees. As regards direct expenses, the learned CIT(Appeals) agreed with the stand of the assessee that some expenses at ports were required to be incurred by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. in our opinion, coupled with other details filed by the assessee was sufficient to establish the genuineness of the expenses incurred by the assessee on payment of contract fees to Shri Ritsh Bhatia. There is no dispute that such expenditure is required to be incurred for the purpose of assessee's business but the disallowance was made mainly for the lack of supporting evidence to support the claim of the assessee. In our opinion, the factum of deduction of tax at source by the assessee from the said payment is sufficient to fill this gap and relying on the same, we are of the view that the deduction claimed by the assessee on payment of contract fees to Ritesh Bhatia can reasonably be allowed. As regards direct expenses, it is observed that the learned CIT (Appeals) has rightly held in his impugned order that such expenses are required to be incurred at ports by the assessee keeping in view the very nature of its business. The disallowance made by the AO on account of direct expenses, however, was sustained by him to the extent of 50% of the total expenses due to unverifiable element involved in the said expenses. In our opinion, the disallowance so sustained by the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no disallowance made out of the said expenses in the earlier years. The learned DR, on the other hand, relied on the orders of the authorities below in support of Revenue's case on this issue that the disallowance of 50% out of bulk survey material expenses was justifiably made for want of proper documentary evidence. 10. We have considered the rival submissions and also perused the relevant material on record. It is observed that the nature of bulk survey expenses claimed by it was explained by the assessee before the authorities below and even the details thereof were furnished. The said expenses to the extent of 50%, however, were disallowed by the authorities below on the ground that in the absence of proper documentary evidence, the same were fully verifiable. In this regard, the learned counsel for the assessee has placed on record before us a ledger account extract of bulk survey expenses at page No. 46 and 47 of his paper book and a perusal of the same shows that most of the payments appearing therein were made to M/s A.K. Marine by cheques and even tax at source was also deducted from the said payments. In our opinion, having regard to these facts of the case as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disallowance to the extent of 50% out of fees paid to him was rightly made by the authorities below. He contended that merely because the payment to Shri Ritesh Bhatia was made by the cheques and tax was deducted at source will not discharge the onus that lay on the assessee to establish that the said payments were made for the purpose of its business. 15. We have considered the rival submissions and also perused the relevant material on record. It is observed that no explanation whatsoever has been offered by the assessee either before the authorities below or even before us in respect of the exact nature of services rendered by Shri Ritesh Bhatia in connection with office administration and business promotion work. As rightly contended by the learned DR, the onus in this regard is on the assessee to establish that expenses incurred on professional fees paid to Shri Ritesh Bhatia were wholly and exclusively for the purpose of its business and this onus cannot be said to be discharged merely by showing that such professional fees was paid by cheque and tax at source was also deducted from such payment. We, therefore, find ourselves in agreement with the learned CIT(Appeals) tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her by way of reimbursement or otherwise, to his employees. Moreover, as clarified in the said circular while answering frequently asked question No. 15, fringe benefit is deemed to have been provided if the employer has incurred expenses for any of the purposes referred to in the relevant provisions and there is no requirement to segragate such expenses between those incurred for official purposes and personal purposes. It was further clarified while answering question No. 81 that when expenditure on running and maintenance of motor cars is liable to fringe benefit tax, the employees will not be liable to income tax on the perquisite value of motor car provided by the employer. As rightly contended by the learned counsel for the assessee, circular No. 8/2005 dated 29-08-2005 issued by the Board explaining the provisions relating to fringe benefit tax thus makes it clear that fringe benefit tax is levied on the expenses incurred by the employer irrespective of whether the same are incurred for official or personal purposes. In our opinion, once fringe benefit tax is levied on such expenses as has been done in the present case, it follows that the same are treated as fringe benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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