9911796707
TMI Blog2020 (8) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... he submissions of assessee, which is unjustified and liable to be quashed." 2. Briefly the facts of the case are that during the course of assessment proceedings, the Assessing Officer noticed that the assessee company has paid rent of Rs. 2,40,000/- to one of its directors for its registered office at 14, Bajaj Nagar Enclave, Bajaj Nagar, Jaipur pursuant to rent agreement dated 01.04.2008 The enquiries were conducted through Inspector of ACIT, Cirecle-6, Jaipur and as per the inspector's report, the assessee company was using the said premises just for address purposes and no business activities were being carried out from the said premises. According, a show cause was issued to the assessee-company as to why the rent payment should not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee- company has paid excess rent of Rs. 2,40,000/- which is not inclined to the business activities of the assessee-company and even otherwise, the said payment is covered under the provisions of 40A(2)(b) of the IT Act and accordingly, the said amount was disallowed and added to the total income of the assessee-company. 4. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) which has since sustained the said addition. As per the ld. CIT(A), the rent paid to the Director of the assessee was unreasonable as there was no separate electric and water connection in the name of the assessee-company and as per provision of Section 40A(2)(b) of the Act, any unreasonable expenditure is disallowable. Against the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was excessive. It was accordingly submitted that the addition so made by the AO should be deleted. 6. Per contra, the ld. DR is heard who has relied on the order of lower authorities and has taken us through its findings of the lower authorities which have been taken note of and not been repeated for the sake of gravity. 7. We have heard the rival contentions and perused the material available on record. As per the rent agreement dated 01.04.2008 entered into between the assessee-company and Smt. Reshma Morani, one of the directors of the assessee-company and also the owner of the premises situated at 14, Bajaj Nagar Enclave, Bajaj Nagar, Jaipur, the assessee-company has taken the premises at the first floor consisting of an office al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, it is admitted fact that the rent payments have been made by the assessee company to one of its Directors, however, merely because payment has been made to a related person would not be sufficient to make the disallowance U/s 40A(2)(b) of the Act. The onus is on the Revenue to bring on record comparable instances wherein the rent payment for similar premises are the lower than the rent paid by the assessee-company. However, there is nothing on record which has been brought by the Revenue to hold the payment as excessive. Therefore, in light of the aforesaid discussion, the disallowance so made by the Assessing Officer is hereby deleted and the sole ground by the assessee-company is allowed. In the result, the appeal of the assessee is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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