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TMI Blog2020 (11) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... r Mr. Pankaj Dayal was excessive or unreasonable. There is no finding by the lower authorities that the said Director is not competent or not technically qualified to receive such remuneration. In any case, the disallowance has been made only on an adhoc basis by the lower authorities. Since, the assessee has not preferred any appeal against the order of the ld. CIT(A) before us, we do not deem this as a fit case to interfere with the finding recorded by the ld. CIT(A). Accordingly, we direct the ld. AO to restrict the disallowance at 20% of total salary paid to the Director - Ground No.2 raised by the revenue is dismissed. Disallowance of 50% of total advertising and publicity expenses - HELD THAT:- GMR Sports Pvt. Ltd., possessed the sponsorship of IPL team of Delhi Dare Devils and this sum paid for purchase of 32 tickets in corporate tax for watching IPL matches enabled the assessee company to advertise its real estate projects by way of display boards in all the matches at Feroz Shah Kotla Cricket Stadium, New Delhi. This obviously improved the performance of the functioning of the assessee company and hence, the same would be wholly and exclusively for the purpose of busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee without pointing out any discrepancy in the books of accounts produced before him during the course of assessment proceedings. We also find that the entire details of opening stock, purchases and project expenses and closing stock were also filed before the AO as narrated hereinabove and the same were duly reproduced in the order of the ld. CIT(A). The said facts as reproduced in the order of ld. CIT(A) has not been controverted by the ld. DR before us. The law is now very well settled that without pointing out any discrepancy in the books of accounts produced by the assessee, the ld. AO cannot reject the book results as per his whims and fancy. See POONAM RANI [ 2010 (5) TMI 57 - DELHI HIGH COURT] and M/S JAS JACK ELEGANCE EXPORTS. [ 2010 (4) TMI 84 - DELHI HIGH COURT] . No infirmity in the order of the ld. CIT(A) deleting the addition made on account of cost of goods sold - Ground No.6 raised by the revenue is dismissed. - ITA No.6692/Del/2013 - - - Dated:- 1-7-2020 - Shri Amit Shukla, JM And Shri M. Balaganesh, AM For the Assessee : Shri R.S. Ahuja For the Revenue : Shri Amit Kumar Jain ORDER PER M. BALAGANESH (A.M): This appeal in ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against 50% made by the ld. AO, in the facts and circumstances of the case. 3.1. We have heard rival submissions and perused the materials available on record. We find that assessee company had paid salary of ₹ 45 lakhs to its Director Mr. Pankaj Dayal who is also a proprietor of M/s. NAI Collaborators India which was also in respect of substantial commission income. Based on this, the ld. AO concluded that the said Director could not have devoted full time and attention to the functioning of the assessee company warranting the remuneration to the tune of ₹ 45 lakhs. The ld. AO had further observed that the assessee company had engaged a full time CEO Mr. A.K.Sheth on an annual salary of ₹ 18 lakhs and accordingly, the salary paid to the Director Mr. Pankaj Dayal is excessive in terms of Section 40A(2)(a) of the Act. Accordingly, he disallowed 50% of the salary paid to the Director and disallowed ₹ 22,50,000/- in the assessment. This was reduced to 20% of the ld. CIT(A) in the first appellate proceedings. 3.2. Aggrieved, the revenue is in appeal before us. We are informed by both the parties that assessee had not preferred any appeal before us against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 17,92,000/-. 4.2. Aggrieved, the revenue is in appeal before us and assessee has not preferred any appeal before us. 4.3. As stated earlier, it is not in dispute that GMR Sports Pvt. Ltd., possessed the sponsorship of IPL team of Delhi Dare Devils and this sum of ₹ 17,92,000/- paid for purchase of 32 tickets in corporate tax for watching IPL matches enabled the assessee company to advertise its real estate projects by way of display boards in all the matches at Feroz Shah Kotla Cricket Stadium, New Delhi. This obviously improved the performance of the functioning of the assessee company and hence, the same would be wholly and exclusively for the purpose of business. But since the assessee has not preferred any appeal before us, against the order of the ld. CIT(A) granting relief only to the extent of 50% of the said expenditure, we do not deem it fit to interfere with the said finding of the ld. CIT(A). Accordingly, ground No.3 raised by the revenue is dismissed. 5. The next issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in restricting the disallowance of rent expenses to 10% as against 60% disallowed by the ld. AO, in the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p companies and had restricted the disallowance to 10% of the total rent paid. When a particular premises is occupied by the assessee and others (whether it is a group company or not), the rental payment and other maintenance expenses included therein are to be apportioned in a just and fair manner. When this is not done by the assessee, disallowance of expenses had to be made in the hands of the assessee. In the instant case, the ld. CIT(A) had restricted the disallowance to 10% of the total rent paid in the hands of the assessee. We find that assessee had not preferred any appeal against the order of the ld. CIT(A) before us and hence, we do not deem it fit to interfere with the said finding of the ld. CIT(A). Accordingly, the ground No.4 raised by the revenue is dismissed. 6. The next issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in restricting the disallowance of business promotion, electricity, legal and professional charges, repairs maintenance, travelling and conveyance and miscellaneous expenses to 10% of total sum of ₹ 30,29,954/- as against 40% disallowed by the ld. AO on adhoc basis in the facts and circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12,20,06,681 Purchase of area ₹ 14,51,00,000/- Closing Stock ₹ 4,78,49,550 Cost of Goods sold ₹ 59,36,99,173 7.2. During the course of assessment proceedings, the assessee company had provided the following calculation for arriving at the value of closing stock in respect of Medicity Project as under:- Total Area (A) 1,09,573 less: Area Sold (B) 88874 Closing Stock (C) - (A) - (B) 20699 Estimated Cost Estimated Cost 500000000 Total Estimated Cost (D) 500000000 Construction cost incurred 195100000 Less : Material Stock - Total Construction cost incurred (E) 195100000 Land Cost - Add : Other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils in respect of purchase of area being the copy of the collaboration agreement along with the copy of account in respect of amount paid for .purchase, of area has already been filed during the course of assessment proceeding vide submission dated 23/12/2011 (the copy of submission dated 23/12/11 is enclosed and forms part of paper book at page no 01 to 06. Further documentary evidence in respect of construction and other direct, expenses incurred in respect of project has also been filed during the course of assessment proceeding. c) Closing stock As mentioned earlier the assessee follows AS-7 (Accounting standard - 7) and recognizes sale on the basis of percentage of completion method. In the percentage of completion method sale as well as closing stock is determined on the basis of percentage of completion of the project. In this connection we would like to draw your kind attention that, working of closing stock on the basis of percentage of completion method (AS-7) has been furnished during the course of assessment proceeding and the same has also been quoted by the assessing officer in the assessment order. 7.5. We find that the ld. CIT(A) had given a categorica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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