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TMI Blog2021 (2) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... he factum of incurring of such expenditure and the genuineness of which stands established. In these facts, the penalty on such disallowance is directed to be deleted. Building repair expenses disallowance assessee has carried out repair and maintenance for which it has paid to third party M/s. Sarvamanglam Pvt. Ltd. and these repair and maintenance was carried out on the rented place taken by the assessee for its business. However, out of total disallowance of ₹ 31,93,239/- the amount finally sustained in the quantum proceedings was ₹ 19.93 lacs. Thus, part of the same expenditure has been allowed. During the course of penalty proceedings, before the ld. CIT (A), assessee has filed all the details and evidences for the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty u/s. 271(1)(c) on account of disallowance of legal and professional expenses for sum of ₹ 36,11,832/- and disallowance account of building repair expenses of ₹ 19,93,239/-. The relevant observation for making the disallowance out of legal and professional charges by the Assessing Officer was as under:- 5. Disallowance out of legal professional charges On perusal of legal professional charges it is sees that assesses has debited ₹ 2,50,32,832/ and paid to holding company. Regarding management consultancy of ₹ 2,14,21,000/- the amount has been added by TPO. In the transfer pricing order dated 27-10-2009, TPO has recommended enhancement of ₹ 2,14,20,000/- on the basis that no such service has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f which reveals that an amount of Rs, 19,93,239/- has been paid to M/s. Sarvmangal Builders Developers P. Ltd. on account of Misc. Petty expenses incurred for office repairs but no details on evidence for such petty expenses have been furnished: Further perusal of the details shows that the assessee has also: incurred an amount of Rs.l2,00,000/-(₹ 900000 + ₹ 300000) for the repair of M.'D s House. In absence of any details or evidence, the amount of ₹ 19,93,239/- cannot be said to be revenue expenditure. Further, the maintenance expenses of M.D s house cannot be said to be for business purposes, Hence, the total amount of Rs,81,93,239/- (Rs, 19,93,239 + ₹ 12,00,000) is disallowed and added to total income. Sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of such expenditure has not been doubted. 5. On the other hand, ld. DR has strongly relied upon the order of the Assessing Officer and Ld. CIT (A). 6. After considering the aforesaid submissions and on perusal of the relevant material placed on record, we find that, in so far as the disallowance of legal and professional charges of ₹ 36,11,832/- is concerned, same has been paid by the assessee to its AE for consultancy services for which invoice was also filed. The disallowance has been made merely on the ground that the invoice mentions that the assessee has received and item, IPC item no. 10001669 and hence it was treated as capital in nature and not revenue in nature. Simply because, the consultancy services has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those evidences to substantiate its claim during the course of penalty. Penalty is not adjunct to assessment, it s a separate proceedings and assessee has right to rebut the charges levied on him which he may not have in quantum due to any circumstances. Accordingly, the action of the ld. CIT (A) to reject these evidences which goes to prove the incurring of expenditure by the assessee which is ostensibly revenue in nature, and therefore, in these circumstances in the light of the evidences placed on record, it cannot be held that the assessee had furnished any inaccurate particulars of income so as to warrant any levy of penalty u/s. 271(1)(c). Accordingly, the same is directed to be deleted. 8. In the result, the appeal of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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