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TMI Blog2022 (2) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... fact or evidence. Thus, there seems no reason to interfere in the finding of Ld. CIT(A) deleted the addition u/s 40(a)(ia) of the Act. Accordingly, ground raised by the revenue stands dismissed. Disallowance of legal and professional expenses - HELD THAT:- We find that the legal and professional charges have been claimed which have increased during the year as compared to the preceding year. The amount in dispute which has been given to six professional. All the details of the professional services provided by these six professional have been filed before us. Tax has been deducted at source on prevailing rates of TDS. The alleged amount received by six professional have been offered to tax in their respective return of income. Under these facts and circumstances of the case there remains no reason to question the genuineness of the expenditure claimed by the assessee and ld. CIT(A) has rightly appreciated the fact of this issue and deleted the disallowance correctly. - Decided in favour of assessee. - ITA No.821/Ind/2018 - - - Dated:- 30-11-2021 - Shri Mahavir Prasad, Judicial Member And Shri Manish Borad, Accountant Member For the Revenue : Shri Harshit Bari, AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the addition is based on mere presumptions and surmises. 3. Whether on the facts and in the circumstances of the case the ld. CIT(A) was justified in deleting the addition of ₹ 16,08,000/- by holding that based on various evidences, the disallowances cannot be termed as justified. 5. Ld. Departmental Representative (DR) supported the order of ld. AO and also placed on record the remand report dated 23.08.2019. 6. Per contra Ld. counsel for the assessee apart from strongly relying on the finding of Ld. CIT(A) also referred relevant documents and details filed in the paper book dated 05.07.2019 containing 164 pages. 7. We have heard rival contentions carefully perused the records placed before us. Apropos to Ground no.1 raised by the revenue, we find that it relates to the addition of ₹ 1,31,50,000/- made by the ld. AO u/s 68 of the Act for the unexplained share application money received from following three persons:- 1. Shri Jayant N. Patel ₹ 88,50,000/- 2. Smt. Anju Baijal ₹ 3,00,000/- 3. Smt. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- received from received from Smt. Anjali Baijal, it is observed that the appellant has filed confirmation and copy of passport which proves the identity of Smt. Baijal. Regarding creditworthiness, the certificate of Financial Advisors practicing in UK has been filed which states that husband of Mrs Anjali Baijal is a retired surgeon, who has spent his entire life with the National Health Services, UK and that the combined net worth of both husband and wife is more than five hundred thousand pounds. It has also been certified that the money sent to her Indian NRE account was fully repatriable. The statement of the NRE account of Mrs. Anjali Baijal shows continuous transactions other than the transaction in question. Regarding the genuineness of transaction, it is observed that the money was routed through banking channel and the transaction has been confirmed by Smt. Baijal. Therefore, the identity and creditworthiness of this person and genuineness of the transaction also stands proved. 8.7 Copies of order sheet of assessment record has been filed by the appellant. It is observed that no specific query was raised by the A.D. in this regard nor any specific evidence was soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. Share application money has been given through NRE account. All relevant details including Passport, proof of earing income outside India, bank statements, support the finding of Ld. CIT(A). It is also evident from records that the identity, genuineness and creditworthiness of both these share applicants named Shri Jayvant N. Patel Smt. Anjali Baijal also came up for examination in the past before revenue authorities. During the A.Y. 2007-08 also Jayvant N. Patel invested in equity shares and addition was made for unexplained cash credit. The matter traveled up to this Tribunal and vide ITANo.185/Ind/2012 dated 02.07.2012 issue was set aside to the ld. AO and in the set aside proceedings Ld. AO accepted the share capital received from various persons including Shri Jayvant N. Patel. Similarly in the case of ACIT-3(1), vs. M/s. Sunegra Food Pvt. Ltd. this Tribunal vide order dated 18.06.2013 in ITANo. 413/Ind/2012 adjudicated the issue of unexplained share application money received from Smt. Anjali Baijal and after examining details confirmed the finding of Ld. CIT(A) accepting the identity, genuineness and creditworthiness of Anjali Baijal. 7.3 As regards the share a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the balance amount of ₹ 19,79,098/-, disallowance ss] 40(ia) was made. 8.1 We further find that before the ld. CIT(A) assessee made following submissions: It is worth mentioning here that during the year under consideration the total manufacturing and other expenses include ₹ 52,26, 858/ - on account of commission and discount (your good self may kindly refer to the schedule 7 annexed to the P L and Balance Sheet of the assessee for the year under consideration). The detail of commission and discount is as under: The Ld AD while disallowing the ₹ 19, 70,098/ - stating that the balance commission paid by the assessee company is contradictory by its nature as the Ld AO has not brought any fact on record that all the amount shown under the head commiseion Discount Expenses amounting to ₹ 52,26,858/ - does not includes any amount of discount but to represents commission amount only. And for this assumption he has taken TDS amount as base which the assessee has deducted and deposited to the Government account by backward calculating the gross amount. In fact the Ld AD failed to understand that the discount is the integral part of busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounting to ₹ 52,26,858/- did not include any amount of discount but represented commission only. This assumption was based on the TDS amount which the appellant had deducted. At page 3 of his order, the A.O. has himself mentioned that the appellant had submitted the details of ₹ 52,26,858/ - of Commission and Discount on 08.11.2011. Further, from the submission filed before the A.O., it is observed that in respect of details of discount the address of most of the parties to whom discount had been given was already there. Further, from copy of order sheet maintained by the A.O. it is observed that no further detail such as detail of sales / complete address of all these parties etc. was ever asked by the A.O. During appeal, the AR submitted summary of 'commission and discount' along with the ledger copy of discount on sale. Copy of Ledger account of all the parties to whom discount had been allowed on sale has been filed which shows complete name and address of the parties to whom discount has been allowed. The accounts show that the discount has been allowed in normal course of business. It is also seen that the AO failed to recognize that the discount is an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled submissions along with details of income Tax Return of the professionals who offered the alleged amount to tax and the same has been reproduced in the impugned order which reads as follows: The details required by the Ld AO was submitted during the proceedings of the assessment to the extent demanded by him. Further details were not submitted to him as they were not asked by the Ld AD. He did not seek any further clarifications and disallowed 1608000/ - out of the legal and professional expenses. Sir in this regard we would like to submit that, the appellant has produce all the books of accounts and no deficiencies has been found by the Ld AO specially where the liability of deduction of tax on various expenditures incurred by the assessee during the year, this has been proved by this fact that the Ld AO has disallowed expenditure by applying section 40a(ia) of the act in the same assessment order in other head of account. Therefore it is obvious that the applicability of this section has also been seen during the assessment proceedings where payment of legal and professional charges is concerned. Further while disallowing these expenses the Ld AO is also not invoking the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have been found therein by the AO. In the circumstances, the A.O.'s finding that PAN was not produced by the appellant is not found to be reasonable. Further, the AO's reason that no written agreement with parties was produced is not material as such work in many cases is got done without written agreements. In any case such detail was never asked by the A.O. Further, another basis of disallowance is that there has been increase in expenditure in comparison to previous year. The A.O. has not has not brought any fact on record to prove that the incremental expenditure has not been incurred for the purpose of business. 10.4 During appeal, complete information of addresses of the said six professionals along with the copy of acknowledgement of their IT returns for the A.Y. 2009-10 and copies of relevant TDS certificates have been filed. Further, copies of letters issued by the appellant company to these professionals have been filed which shows that they were engaged as Financial Advisor / Financial Controller / HR Consultant/ Marketting Advisor/Medical Officer /Placement Services Consultant on retainer ship basis. It is observed that the letter of engagement do constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rns, copies of TDS certificates showing due deduction of TDS and letters of engagement has been filed, the disallowance cannot be termed as justified. The addition is therefore, deleted. 10.9 This ground of appeal is allowed. 9.3 From perusal of the above finding as well as the documents filed before us, we find that the legal and professional charges have been claimed which have increased during the year as compared to the preceding year. The amount in dispute at ₹ 16,08,000/- which has been given to six professional. All the details of the professional services provided by these six professional have been filed before us. Tax has been deducted at source on prevailing rates of TDS. The alleged amount received by six professional have been offered to tax in their respective return of income. Under these facts and circumstances of the case there remains no reason to question the genuineness of the expenditure claimed by the assessee and ld. CIT(A) has rightly appreciated the fact of this issue and deleted the disallowance of ₹ 16,08,000/- for which no interference is called for. Thus, ground no.3 raised by the revenue stands dismiss. 10. In the result, appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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