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TMI Blog2017 (11) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh against Shri Sandeep Murthy and Shri Ram Sriram. When the assessee company has found FIR against Directors of the company, there cannot be any dispute that the Directors were arrayed as accused in their official capacity and these expenses are certainly business expenditure and ld. CIT (A) has rightly and validly allowed the same by deleting the addition. So far as an addition under the head ‘legal and professional expenses’ paid to M/s. Insight Alpha for private phone consultations is concerned, ld. CIT (A) while deleting the same relied upon one consultancy agreement entered into between the assessee company and M/s. Insight Alpha effective from 12.11.2010, recital of the agreement (supra) as reproduced by ld. CIT (A) in para 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nected with the assessee company or its business. - Decided in favour of revenue Disallowance out of travelling expenses - no supporting document or any submission by the assessee company has been filed to substantiate the purpose of these visits - Held that:- Assessee company explained that Shri Ajit who has availed of the air travel services is the representative of Murugun Capital and Shri Ram is the representative of Sherpalo Mauritius LLC from whom the assessee company is charging cost plus 17% and 15% respectively for entire travelling expenses. So when the travelling expenses have been incurred by the assessee company on behalf of the associated company with 17% and 15% markup over and above the total expenditure, for which vouche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 15,12,000/- paid to M/s. Luthra Luthra and Insight Alpha but the AO found ₹ 2,37,150/- and ₹ 5,46,000/- paid to Luthura and Luthura and M/s. Insight Alpha respectively not in the nature of business expenditure of the company and made addition thereof to the income of the assessee company. AO further disallowed an amount of ₹ 6,43,236/- claimed by the assessee company as entertainment expenses for organizing a branch event in hotel Intercontinental Marine Drive on the ground that except one invoice dated 21.12.2010 on which guest name is not legible and another invoice dated 24.11.2010 only Function at Dome has been written. AO further disallowed an amount of ₹ 23,42,772/- out of travelling expenses claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd by the assessee company that the allegations in the complaints were of criminal breach of trust by one Shri Rabi Singh against Shri Sandeep Murthy and Shri Ram Sriram. When the assessee company has found FIR against Directors of the company, there cannot be any dispute that the Directors were arrayed as accused in their official capacity and these expenses are certainly business expenditure and ld. CIT (A) has rightly and validly allowed the same by deleting the addition. 6. So far as an addition of ₹ 5,46,000/- made by the AO and deleted by ld. CIT (A), claimed by the assessee company under the head legal and professional expenses paid to M/s. Insight Alpha for private phone consultations is concerned, ld. CIT (A) while delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the AO. First of all, ld. CIT (A) has not given the date of Annual Day allegedly celebrated by the assessee company nor he has got clarified from the assessee company as to why the two invoices one dated 21.12.2010 and another dated 24.11.2010 have been raised when it is also not explained by the assessee company before the AO as well as ld. CIT (A) if the Annual Day function took placed on 21.12.2010 and 24.11.2010 or two Annual Day functions were organized. At least invoices relied upon by the assessee company were required to be in the name of the assessee company with legible name of the, so both the bills relied upon by the assessee company cannot be connected with the assessee company or its business. So we are of the consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative of Murugun Capital and Shri Ram is the representative of Sherpalo Mauritius LLC from whom the assessee company is charging cost plus 17% and 15% respectively for entire travelling expenses. So when the travelling expenses have been incurred by the assessee company on behalf of the associated company with 17% and 15% markup over and above the total expenditure, for which vouchers as well as email communications have been produced, the ld. CIT(A) has rightly and validly deleted the addition of ₹ 23,42,772/-. So ground no.3 is determined against the Revenue. 9. Resultantly, the appeal of the Revenue is partly allowed. Order pronounced in open court on this 21st day of November, 2017. - - TaxTMI - TMITax - Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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