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TMI Blog2013 (6) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... Confirmation of disallowance on account of legal and professional charges - Held that:- CIT(A) has elaborately dealt with the issue and AR did not bring any fresh material in support of the expenses claimed. Therefore, no infirmity in the order of CIT(A). Against assessee. - ITA No.4540/Del/2012 - - - Dated:- 5-4-2013 - U B S Bedi and T S Kapoor, JJ. For the Appellant : Shri Saubhaghy Agarwal, Adv. For the Respondent : Ms Sumana Sen, Sr. DR ORDER:- Per: T S Kapoor: This is an appeal filed by the revenue against the order of Ld CIT(A) dated 27.8.201. The assessee has also filed cross objection to the appeal filed by the revenue. The grounds of appeals raised in the revenue's appeal and cross objection are as under:- I.T.A. No.4540/Del/2012: 1. That the order of Ld CIT(A) is erroneous and contrary to facts and law. 2. On the fact and in the circumstances of the case and in law, the Ld CIT(A) has erred in deleting the addition of Rs.30,91,500/- made by the Assessing Officer by disallowing the services charges paid on software development to DERPOL. 2.1. The Ld CIT(A) ignored the fact that the assessee did not get any new business for wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on had generated a revenue of Rs.65,50,500/- from software development and development services in financial year 2005-06 an amount of Rs.5,10,000/- in financial year 2006-07. 3. The Assessing Officer, however, observed that the expenditure of Rs.10,30,500/- as claimed in earlier year was disallowed in assessment year 2006-07 as these were held to be capital in nature on the basis of detailed discussion in the assessment order dated 10.12.2008. He further observed that the assessee company had been rendering its services through out the year whereas it had started availing services of DERPOL from January, 2006 and the income from invoices in the financial year 2005-06 were against invoices dated 10.4.2005 and 19.4.2005 and therefore he held that agreement made with DERPOL in January 2006 had no bearing with the revenue generated during financial year 2005-06. Therefore, holding that it was a sham transaction which was arranged by the assessee to inflate expenses, the Assessing Officer disallowed the same. 4. The Assessing Officer further observed that assessee had only three employees who were performing clerical services and company had claimed an amount of Rs.19,85,076/- as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition made by the assessee by holding as under:- 4.1 I have carefully considered the submissions made on behalf of the appellant, the findings of the Assessing Officer and the facts on record. It is not disputed that the assessee has claimed an amount of Rs.16,39,833/- on account of legal and professional charges paid to M/s. APC Securities (India) Pvt. Ltd. In support of the above claim the copy of the consultancy agreement dated 08.07.2006 made between the assessee and M/s. APC Securities (India) Pvt. Ltd. has also been furnished. The perusal of the said agreement reveals that the scope of work, fees and terms of payment read as under:- 1. SCOPE OF WORK ASP agrees, to provide certain consultancy and professional services and act as a financial advisor all the aspects including but not limited to optimizing return on investment looking for strategic' or financial buyer/acquirer for its existing investments. 2. FEES AND TERMS OF PAYMENT LTCW shall pay ASP a Consultancy fee of INR 14,61,006 to be paid in advance. The above fee will be paid by LTCW through cheques favouring APC Securities (India) (P) Ltd. The payment is exclusively of any tax. duti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that agreement was made in January, 2006 and it was the same agreement on which ld CIT(A) has relied on the basis of ITAT order in the preceding year. In view of this Ld AR argued that Ld CIT(A) had rightly deleted the addition. 10. In respect of cross objection filed by the assessee, the Ld AR submitted that there was no evidence before the Assessing Officer to claim that expenditure was a bogus expenditure. He further argued that services of M/s ASP was hired as the assessee had not requisite trained employees in this respect. Moreover, he argued that Assessing Officer himself has stated in the assessment order that employees of the assessee were doing job of clerical nature and had no expert people. Therefore, in view of this he argued that hiring by the assessee was justified. He further argued that Ld CIT(A) had ignored the documents which were filed as additional documents. 11. The Ld DR, on the other hand, argued that genuineness of expenses was not proved and in this respect para 4.1. to 4.3. of Ld CIT(A)'s order was read. In view of this, the Ld DR argued that disallowance of expenses was rightly confirmed. 12. We have heard the rival submissions of both the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the considered view that the expenditure incurred by the assessee is to be allowed as revenue expenditure irrespective of the fact whether any revenue has been generated from those services or not when particularly, the expenditure has incurred wholly and exclusively for the purpose of assessee's business of software development and deployment. We are, therefore, in full agreement with Ld CIT(A) in holding that the expenses claimed by the assessee are of revenue in nature and are, thus to be allowed as revenue deduction. The order of Ld CIT(A) is thus upheld. The Ld CIT(A) has just followed the ITAT order in earlier year relating to the same issue. 13. In view of the above, we do not see any infirmity in the order of Ld CIT(A) as regards the addition of Rs.30,91,500/-. 14. With regards to confirmation of disallowance of Rs.16,39,833/- on account of legal and professional charges,. We hold that Ld CIT(A) has elaborately dealt with the issue and findings of Ld CIT(A) are part of this order. The Ld AR did not bring any fresh material in support of the expenses claimed. Therefore, we do not see any infirmity in the order of ld CIT(A). 15. In view of the above, the appeal fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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