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TMI Blog2016 (2) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... of the following ingredients before the expenditure can be allowed as deduction: (a) the item of expenditure must not be of the nature described under sections 30 to 36 of the Act; (b) the item of expenditure must not be in the nature of capital or personal expenses of the assessee; (c) the expenditure must be laid out wholly and exclusively for the purpose of business or profession, that if the assessee fails to satisfy any of these tests, the expenditure claimed is not allowable. In our opinion, in the case under consideration the assessee has failed to discharge the initial onus to prove that the expenditure incurred under the heads rendering of services by ALT. Mere payment of a sum by accounting paying cheque is not sufficient. If w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal income of ₹ 8. 89 crores under the normal provisions of the Act and at ₹ 44. 98 crores u/s. 115JB of the Act. Later on, a revised return of income was filed by the assessee on 15. 3. 2007 declaring book profit at ₹ 33. 35 crores. The Assessing Officer (AO), completed the assessment on 18. 12. 2007 assessing the income of the assessee at ₹ 20. 37 crores and book profit at ₹ 56. 61crores. On receipt of an intimation from ITO-3(1)-1, Mumbai the assessment was re-opened, as per the provisions of Section 147 of the Act. After recording the reasons for re-opening the assessment, the AO completed the assessment u/s. 143(3) r. w. s 147 of the Act, on 29. 11. 2010 determining the income of the assessee at ₹ 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L, that the assessee had made general submissions without any documentary evidences, that furnishing of the copies of sanction letter did not justify the payment of commission, that the assessee itself had admitted that ATL was not authorised by bank for rendering the services such as arrangement of loans. Vide order sheet noting 16. 11. 2010, the AO directed the assessee to produce ATL for verification of claim of commission payment and to prove the genuineness of the transaction. It was explained by the assessee that one K. C Sethi exdirector of ATL had arranged the loan from IDBI and HSBC. As per the AO, the assessee had not provided the chronology of services rendered by ATL, that ATL was not authorised by any bank in any manner to do l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggrieved by the order of the AO the assessee preferred an appeal before the FAA. After considering the submission of the assessee and the assessment order, the FAA held that the assessee had merely stated that ALT had rendered the services, that there was no evidence to prove the claim, that there was a difference between making submissions and adducing evidences to prove a statement, that there was no record of any visit made by the staff/officers of ALT to the banks or to the assessee's office, that the IDBI Bank had stated that there was no consultant or any other person involved in sanction/disbursement of the loan, that the assessee had emphasized the services rendered by K. C. Sethi an ex-director of ALT to arrange the loan, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n/liaison officer for sanctioning/ disbursing of loans. The bank has verified that employee of the assessee had participated in loan sanctioning process. It is not known as to why the ex-director of ALT should approach the bank for alleged loan sanctioning/disbursement for an entity with whom his ex employee had no business relation-it was the sole transaction between ALT and assessee company. It is also strange that a retired person hands over the money to his ex-employer instead of taking it to home for the so called loan disbursement that was result of his personal relations. The assessee has simply said that loan was arranged, but, it has not produced any reliable documentary evidence in its favour. 5. 2. As per the established princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure can be made without a foundation. In the case before us, the foundation itself is missing. Both the authorities have given a finding of fact that proof of rendering of services by the assessee in the year under appeal is not existing. In our opinion, mere making a claim is not sufficient-it has to backed by documents and evidences. The assessee has failed in discharging the onus cast upon it by the provisions of the Act. Hon'ble jurisdictional High Court, in the matter of Ramanand Sagar (256 ITR 134), has held that Section 37 of the Act deals with the question relating to the allowability of the expenditure incurred for the purposes of business, that the onus of proof is upon the assessee to prove each of the following ingredients b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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