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TMI Blog2017 (8) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 2,20,800/- on account of conveyance expenses paid to the two directors." 3. The business of the assessee is chartering of helicopters and Aero planes and thereafter giving them on lease to various clients. During the year under consideration assessee has declared total receipt from chartering hire charges of Rs. 7,35,22,068/- and declared net taxable income of Rs. 47,23,950/- which is better than preceding year in which gross hire charges receipt was Rs. 1,18,71,163/- and net taxable income was of Rs. 4,82,063/-. During the courses of assessment proceedings the assessee submitted details and books of account. The assessee allowed ground handling charges of Rs. 32,65,000/- to two person namely Smt. Rupak Malik of Rs. 16,00,000/- and Smt. Zinnia Singh of Rs. 16,25,000/- both the ladies are wives of both directors namely Shri Gorav Malik and Shri Ajay Vir Singh who are holding 100% shares of company 50% each. The Assessing Officer observed that the assessee failed to give any documentary evidences and date wise details of services and payment made by assessee on that basis of ground handling charges and hence disallowed the same. The Assessee had debited conveyance expenses of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / Towing Aircrafts b) PASSENGERHANDLING: * Any kind of assistance to arriving, departing, transfer or transit passengers, including checking tickets and travel documents, registering baggage and carrying in to the sorting area. * Passengers steps c) FREIGHT AND MAIL HANDLING: * Handling of related documents, custom procedures and implementation of any security procedure agreed between the parties or required in the circumstances; * The physical handling of freight and mail whether incoming, outgoing or being transferred between the terminal and aircraft. d) AIRCRAFT SERVICES: * The external and internal cleaning of the aircraft, and the toilet and water services. * The rearrangements of the cabin with suitable cabin equipment, storage of this equipment. * Repair of faults, fueling, wheel and tyre check. * Ground power supply. * Routine and non routine maintenance. e) FLIGHT OPERATION AND CREW ADMINISTRATION: * Preparation of the flight at the departure airport or at any other point * Post flight activities * Crew administration * In flight entertainment * Minor servicing of cabin fittings f) CATERING SERVICES: * Liaison with suppliers and administrative managem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on surmises and conjectures and without considering the relevant information / evidences. The assessee received lease money amounting to Rs. 7.35 crores (Page 41,PB). To earn this income, expenditure of Rs. 32,25,000/- on account of ground handling services had to be incurred. Without incurring this expenditure, it was not possible to earn the lease income of Rs. 7.35 crores. In fact both the ladies had filed their confirmation (Page 16-17, PB) as admitted by the AO in the assessment order itself. The Ld. AR submits that the assessee also filed copies of their IT returns where income from ground handling services is duly declared (Page 18-23, PB). The assessee also deducted tax at source on ground handling charges and duly paid the same to the Government account. The ladies also filed the TDS certificates before the AO u/s 133(6) besides confirmations and their IT returns (Page 24-25, PB). The Ld. AR submits that it is also clear from their IT Returns that Mrs. Rupam Malik and Mrs. Zinnia Singh have offered the income of Rs. 4,71,500/- and Rs. 4,08,540/- against receipt of ground handling charges respectively. The Ld. AR submitted that without the payment of ground handling charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) S.A. Builders Limited vs. CIT: 288 ITR 1 (SC) wherein it is held that no businessman can be compelled to maximize his profit. The IT authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own view point but that of a prudent businessman. (iv) M/s. Ericsson India Pvt. Ltd. vs. DCIT, (2012) 146 TT) 0708 (Del) wherein it is held that it will be wrong to hold that the expenditure should be disallowed only on the ground that these expenses were not required to be incurred by the assessee. The Ld. AR further submitted that though the AO has not referred to section 40A(2) yet it seems that the disallowance was made under this section because his emphasis for disallowance is only on the fact that the recipients are wives of the directors. Section 40A(2) can be invoked only if the amount paid is excessive or unreasonable w.r.t. the fair market value of the services rendered. Since the AO has not given any such finding, he could not make any disallowance u/s 40A(2). The Ld. AR relied on the latest case law from the jurisdictional 1TAT in case of Nippon Leakless Talbros Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that ground handling charges are doubtful. The finding of the AO on page 2 of the assessment order is as under: - "keeping in view of all the facts the claim of assessee as debited in P & L account of Rs. 32,25,000/- as ground handling charges is doubtful and remained unjustified. Hence, the same is disallowed and added to the income of the assessee." The Ld. AR further submitted that it is judicially settled that no addition can be made if the adjudicating authority makes an observation by using the words doubtful, appear, possible etc. on the basis of surmises and conjectures and not the relevant evidence. This view is confirmed by the Hon'ble ITAT Mumbai's judgment dated 7/1/2011 in the case of Guruprerna Enterprises vs. ACIT, ITA No. 255,256 & 257/Mum/2010, page 26, para 36, the relevant extract from which is as under: - "The addition cannot be made by making an observation that the loans do not appear to be genuine" c) There is a recent judgment from Hon'ble Delhi High Court in the case of Globus Infocom Ltd. vs. CIT, (2014) 108 DTR (Del) 363, wherein it has been held that the use of word "possible" means no finding but only surmises and conjectures. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as increased by 9.66 times as compared to last year though the turnover has increased only by 6.20 times (Page 7 of CIT(A)'s order). Hence, it is very clear that the net profit declared during this year is much better than last year. 6. The Ld. DR submitted that the Assessing Officer has rightly disallowed the ground handling charges and conveyance expenses as there was no documentary evidence given by the assessee during the Assessment Proceedings. The Ld. DR relied upon the orders of the Assessing Officer and the CIT (A). The Ld. DR further submitted that the ground handling charges was not given to the experts as the wives of the directors are not experts in the field. The Ld. DR submitted that the assessee has not proved the first test of services rendered as there is no evidence given by the Assessee. The Ld. DR pointed out that Section 40A(2) was not applied by the Assessing Officer. The Ld. DR also submitted that the case laws referred are not relevant in the present case, but the Ld. DR could not distinguish the ratio. 7. We have heard both the parties and perused the material available on record. All the details were filed before the AO vide letters dated 21/8/2012 (Page ..... X X X X Extracts X X X X X X X X Extracts X X X X
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