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TMI Blog2013 (12) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... lant's business expenses. The AO did not doubted the genuineness of such payment of management fee to the franchisees – The disallowance was made on the basis of comparison made with the receipts and payments of immediately previous assessment year 2001-02 only The CIT(A) held that the AO has made disallowance on the basis of incorrect figures – The ld. DR could not bring any material to controvert the facts stated by ld. CIT(A) - The AO has made the disallowance by comparing a wrong figures of the previous year on adhoc basis – Decided against Revenue. - I.T.A. No. 3135/Mum/2011 - - - Dated:- 20-11-2013 - Shri B. R. Mittal,(JM) And Rajendra (AM),JJ. For the Petitioner : Shri K. Singh For the Respondent : Shri Bhupendra Shah ORDER Per B. R. Mittal, JM:- The department has filed this appeal for assessment year 2002-03 against order of ld. CIT(A) dated 2.2.2011 taking following grounds of appeal: "1. On the facts and in the circumstances of the case as well as in law, the ld. CIT(A) has erred deleting the disallowance of course execution charges of Rs.16,54,681/- without appreciating that the assessee has in the course of the assessment proceeding only filed de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. AR relied on the order of ld. CIT(A). We observe that the ld. CIT(A) has stated that in para 11 of the Assessment Order, the Assessing Officer has discussed this issue as under : "9.1 It is seen from the return of income that assessee has claimed expenses of Rs.1,60,66,688/- in respect of course execution charges. The assessee was asked to justify its claim. From the details filed in this respect, it may be seen that no name and addresses of the persons to whom execution charges are paid are furnished. Assessee has only filed the details stating numerical figures, from where; it cannot be ascertained the genuineness of the expenditure. However, to be more judicious to the assessee company's claim of course execution charges, is restricted to the percentage of course execution charges claimed in the previous year. It is seen that course execution charges is 17.24% of the total income as against 15.6% of operating income of previous assessment year. Course Execution Charges is therefore restricted to 15.6% of the operating income of Rs.9,19,26,767/- i.e. Rs.1.43 crores as against Rs.1,60,66,688/- claimed by the assessee company hence, an amount of Rs.16,54,681 is added to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 6. At the time of hearing, ld. DR could not dispute the facts that the AO had made adhoc disallowance of Rs.16,54,681/- by comparing charges paid by assessee in the preceding assessment year. We observe that the assessee filed entire details of the expenditures actually incurred, before the AO and the AO had not doubted the genuineness of the claim of the assessee. In the absence of any contrary material on record, we do not find any infirmity in the order of ld. CIT(A). Accordingly, we uphold the order of ld.CIT(A) and reject Ground Nos.1 and 2 of the appeal taken by department. 7. In Grounds No.3 to 5 of the appeal, the department has disputed the order of ld. CIT(A) in deleting the disallowance of Rs.9,65,300/- in respect of the franchisee management fee on the ground that no details of agreement entered were filed by the assessee before AO and the ld. CIT(A) considered the additional evidence in contravention of provisions of Rule 46A of the Income Tax Rules, 1962. 8. At the time of hearing, the ld. DR relied on the order of AO and whereas, ld. AR relied on the order of ld. CIT(A). We observe that the assessee paid franchisee management fee of Rs.3,06,11,682/-. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001-02 Rs. Course fees Ghatkopar sales 1,81,57,048 2,42,82,483 Course fees Delhi 19,86,308 Course fees Delhi Sylvan 3,17,360 - Franchise operation sales 5,01,78,423 8,37,00,181 Course gees IGNOU 22,63,437 7,44,848 Placement 30,841 66,680 Sylvan Course GKP 1,26,29,297 1,12,29,111 Franchise Fees Franchise Fees ATC 48,01,253 2,63,19,300 Franchise Fees ITES 6,00,000 65,00,000 Renewal Fees 7,87,800 29,00,000 Total revenue 9,19,26,767 15,62,57,603 Franchise Management fees paid 3,06,11,682 5,08,26,494 Management fees paid /total revenue 33.30% 32.53% Management fee paid/franchise Operation sales 61.01% 60.72% 9. It was contended that the management fee claimed in assessment year 2001-02 was 60.72% of aggregating franchisee operation sales at Rs.8.37 crores and whereas in the year under consideration the franchisee management fees paid at Rs.3.06 cores which is 61.01% of franchisee operation sales at Rs.5.01 crores. Ld. CIT(A) considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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