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TMI Blog2020 (5) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... that similar payment was paid by the assessee to avail similar services in that year. The Ld. AO termed the payment to be excessive and allowed partial claim to the extent of ₹ 37.97 Lacs. CIT(A) deleted the disallowance as proposed by Ld.AO which was agitated by the revenue before this Tribunal. Tribunal, inter-alia, noting that the payment was in accordance with the agreed terms, it was not correct on the part of AO to question the correctness of the decision taken by the assessee out of commercial expediency. Therefore, the revenue s appeal was dismissed. We find that an expenditure has been incurred by the assessee towards maintenance / upkeep of inventories and the same being part of trading operations, would constitute a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer's conclusion that during the year M/s. Sharan Co. has not rendered any professional services of verification of originality of paintings / artworks, providing estimates and investigating authenticity of paintings / artworks. The Appellant submits that the learned CIT(A) ought to have held that M/s. Sharan Co. have actually provided professional services to the Appellant for which a consideration of ₹ 1,40,01,500/- is paid by the Appellant to M/s. Sharan Co. as professional fees. With prejudice to the above: 3.On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the action of the Assessing Officer in not restricting the disallowance of professional fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter of appeal would be as given in succeeding paragraphs. 3.1 Briefly stated, the assessee being resident firm, stated to be engaged in trading of commodities, articles, shares etc. was assessed for year under consideration u/s 143(3) on 24/03/2014 wherein the income was determined at ₹ 1747.43 Lacs after sole disallowance of ₹ 140.01 Lacs, as against returned income of ₹ 1607.41 Lacs filed by the assessee on 30/09/2011. 3.2 During assessment proceedings, it transpired that assessee debited sum of ₹ 140.01 Lacs, being amount paid to M/s Sharan Co. towards services such as verification of originality of paintings / artworks, providing estimates, investigating authenticity of painting / artworks etc. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hibition. 3.7 In the above factual matrix, Ld. AO conclude that the assessee had not carried out on any activity which could be termed as trading of paintings. Therefore, the claim was disallowed since the same was held not to be a revenue expenditure. Alternatively, the claim was to be restricted to ₹ 40.36 Lacs, being fees paid to M/s First Canvass. 4. Before Ld. CIT(A), the assessee, inter-alia, relied on the favorable decision of Tribunal for AY 2009-10 dismissing revenue s appeal. However, the submissions could not find favor with Ld. CIT(A), who upheld the stand of Ld.AO by observing as under: - 4.4 I have considered the A.O's assessment order and the appellant's submissions I find that the Hon'ble IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Sharan Co. cannot, therefore, be said to be incurred wholly and exclusively for the purpose of business. In view of these facts, the Assessing Officer was justified in disallowing the professional fees of ₹ 1,40,01,500/- paid to M/s. Sharan CO. and the same is sustained. Aggrieved, the assessee is under further appeal before us. 5. From the perusal of details of sale and purchase of painting yearwise, as placed on record, it is observed that the assessee has purchased painting aggregating to ₹ 3654.72 Lacs during financial years 2006-07 to 2008-09. It has sold painting of ₹ 22.50 Lacs during financial year 2008-09. Thereafter, no sale or purchase of paintings have taken place. However, the undisputed positio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices in that year. The Ld. AO termed the payment to be excessive and allowed partial claim to the extent of ₹ 37.97 Lacs. Upon further appeal, Ld. CIT(A) deleted the disallowance as proposed by Ld.AO which was agitated by the revenue before this Tribunal. The Tribunal, inter-alia, noting that the payment was in accordance with the agreed terms, it was not correct on the part of Ld.AO to question the correctness of the decision taken by the assessee out of commercial expediency. Therefore, the revenue s appeal was dismissed. 8. Considering the entirety of facts and circumstances, we find that an expenditure has been incurred by the assessee towards maintenance / upkeep of inventories and the same being part of trading operations, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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