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TMI Blog2015 (10) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... made to Mr. M. H. Pandey on account of legal and Professional charges under the provisions of Section 40A(2) (b) of the Income Tax Act, 1961. 2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in disallowing a sum of Rs. 1,80,000/- out of rent paid by the appellant. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in disallowing a sum of Rs. 15,00,000/- on account of Photo Films and Software expenses by treating it as capital expenditure, whereas assessee company claimed it as revenue expenses. 4. That having regard to the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and professional charges claimed by the assessee to the extent of Rs. 4,20,000/- (Rs.2,60,000+1,60,000) was disallowed and added to the income of the assessee by the Assessing Officer. 4. The CIT(A) held that the AO has also disallowed an amount of Rs. 1,60,000/- on account of payment made to Mr. M. H. Pandey, one of the Directors of the company for services rendered by him. The above payment is covered by the provisions of Section 40A (2) (b) of the Income Tax Act, 1961 (hereinafter referred as the Act), since the payment has been made to a director of the assessee company. No details have been filed by the assessee regarding the nature of services rendered by Mr. Pandey for which the above payment of Rs. 160000/- has been made to him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground No. 1 of the assessee's appeal is dismissed. 8. As regards to Ground No. 2, the Assessing Officer held that during the period from Aug., 2005 to Dec., 2005, the assessee company had paid rent @ Rs. 15,000/-p.m. to one Mrs. Ranjana Pandey but in Jan., 2006 a lumpsum payment of 1,20,000/- was paid to the same land lady and thereafter for Feb., 2006, it was paid @ Rs. 50,000/-p.m. and for March 2006 to same landlord @ Rs. 55,000/-. The AR of assessee was asked to furnish justification for variation for the abnormality in increase of rent to above mentioned landlady. The assessee company could not furnish any justification and evidences including lease agreement in support of substantial increase in rent for Jan., 2006 to March, 2006 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act and dismissed this ground. 10. The AR submitted that the Agreement clearly stated that lease rent of Rs. 50,000/- be paid to Mrs. Ranjana Pandey w.e.f. 1.08.2005. There are two separate Agreements, one is for entire 2nd floor and the other for part of portion of first floor. Thus, there is no excessive payment made to her by the assessee company. 11. The DR submitted that rent is on higher side and no documents submitted by the assessee before the Assessing Officer. Thus the same cannot be taken into account as the AO has rightly invoked Section 40A(2)(b) of the Act. 12. We have perused all the records including lease agreements as well as the arguments of both the parties. The assessee company has shown the lease agreement but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had claimed an expenditure of Rs. 15.00 lakhs on account of making 3 films on traffic education on behalf of M/s Hubert Ebnor Gambh, Austria. The assessee had claimed the above expenditure as revenue expenditure but the AO disallowed the above expenditure, in view of the facts that the assessee could not submit any evidences in support of the above expenditure. The AO disallowed the above expenditure of Rs. 15.00 lakhs but however, allowed depreciation @ 60% on the above photo film and software amounting to Rs. 4.50 lakhs thus resulting in a net disallowance of Rs. 10.50 lakhs. The expenditure claimed by the assessee on account of making films and software is clearly in the nature of capital expenditure. Since no evidences were filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f expenses which were reimbursed were also not filed. Further, the assessee also failed to establish nexus between incurring of expenses and reimbursement of expenditure. Since the assessee could not furnish documentary evidences in support of reimbursement of expenditure, the nature of income has been changed and treated as 'Income from Other Sources' instead of business income. 20. The CIT(A) held that the assessee has claimed that the income of Rs. 3346469/- was received on account of making of films and software programme for M/s Hubert Ebner Gambh, Austria and was therefore, business income. The primary business of the assessee is to prove driver training courses to educate the users in all aspect of safe driving. The making of films ..... X X X X Extracts X X X X X X X X Extracts X X X X
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