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TMI Blog2014 (1) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... ajiv Behal - Except the ledger account of business development expenditure being submitted, no other evidence was brought by the assessee on record to prove that the expenses were not the personal expenses and has been incurred wholly and exclusively for the purpose of the business – Order of the CIT(A) set aside and the matter remitted back to the AO – Decided in favour of assessee. Deletion made u/s 40A(2)(b) of the Act – Held that:- This is an undisputed fact that Shri Rajiv Behal who was paid salary and consultancy charges, was director of the company, till 20.12.2008 and till that he got remuneration at the rate of 2,00,000/- p.m. that is at the rate at which he was paid remuneration during the assessment year 2008-09 – later on, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 21,45,162/- made u/s 40A(2)(b) of the Income Tax Act, 1961." 2. Ground No.1 relates to the deletion of the disallowance of Rs. 1,88,834/- incurred by the assessee for the business development. Facts revealed that all the expenses are basically credit card (AEB card) expenses incurred by Shri Rajiv in Hotel Crown Plaza, Mainland China, China Club, Sheraton, Palm Town and Country club. The assessing officer disallowed the SAME as being personal expenses of the assessee and no details have been submitted by assessee in regard of such expenses. When the matter went before the CIT(A), CIT(A) deleted the addition by observing as under. "I have considered the submission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. The expenses has been incurred through credit card by Shri Rajiv Behal, who was the director of the Company up to 20.12.2008 and subsequent to that he was working as consultant of the company up to 31.03.2009 and reimbursed by the company. 4. The assessing officer treated these expenses to be personal expenses of Mr. Rajiv Behal. CIT(A) did not give any finding whether the expenses are the personal expenditure of Shri Rajiv Behal or not but took the view that the expenses are incurred wholly and exclusively for the purpose of the business and expenses incurred are routine and generally incurred by the person who are looking after the development and promotion of the business of the assessee. In our opinion, while the expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs. 10,39,447/- and disallowed a sum of Rs. 21,45,162/-. When the matter went before the CIT(A), CIT(A) deleted the disallowance after considering submissions of the assessee by observing as under:- "I have considered the submission of the appellant, observation of the Assessing Officer and consultancy agreement entered in to with Sh. Rajiv Behal by the appellant company. It is seen that appellant company was promoted by Sh. Rajiv Behal alongwith other Director. By an agreement dated 25.07.2008 executed between the appellant company and other promoters have sold 100% equity of the appellant company to Dr. Oetker India Pvt. Ltd, Fort Mumbai. After the sale of the shares Sh. Rajiv Behal was Director of that appellant company till 18.12.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y at the retainer ship fee of Rs. 50,00,000/- p.a. which was paid as per the agreement entered into between Sh. Rajiv Behal and appellant company. The salary payment made to Sh. Rajiv Behal was as per last year and in the A. Y. 2008-09 no disallowance on account of salary payment has been made, therefore, there is no question of disallowing out of salary payment during the year. The salary payment was made for the services rendered by Sh. Rajiv Behal as Director of the appellant company. Hence, disallowance made by Assessing Officer was not justified. As regards the consultancy service charges paid to Sh. Rajiv Behal of Rs. 14,68,480/- by the appellant company, it is seen that same was paid as per agreement entered into vide dated 20.12.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -09. Subsequently, shri Rajiv Behal and other directors sold the entire equity share capital of the assessee company to Dr. Oetker India Pvt. Ltd, Fort Mumbai and Shri Rajiv Behal was not having any shareholding in the company, what to talk of substantial interest. During the assessment year 2008-09, no such disallowance was ever made. Subsequently, the company entered into agreement with Shri Rajiv Behal for rendering the professional services at the rate of 50,00,000/- p.a. and accordingly Shri Rajiv Behal was paid up to 31st March, 2009. So far as the payment up to 20.12.2008 is concerned since the remuneration was found to be reasonable during the assessment year 2008-09, therefore, if the remuneration was paid at the same rate up to 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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