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TMI Blog2022 (9) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, considering the totally of the facts and circumstances of the case we think it to send back to the assessing officer for the verification the raised by the assessee before us, and the assessee is directed to establish/substantiate before the AO that the particular interest bearing funds have not been utilized for the purpose of interest free loans. Appeal of the assessee is allowed for statistical purposes. Expenditure on management consultancy services - AO has accepted the revenue generated and restricted the addition to the extent which is incurred over and above from in the previous assessment year. The AO has accepted the revenue generated towards management consultancy fees but the assessee has not filed any agreement made with the UB holding company Ltd. with regard to the nature of services to be provided. Even before us the ld. AR could not file any documentary evidence for justifying any services rendered by them. On perusal of the assessment year 2014-15 the assessee has incurred the similar nature of expenditure but no any revenue has been received. During the impugned assessment year the assessee has received consultancy income which has been credited into pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest free loans and after examining the details, the interest expenses amounting to Rs.27,94,519/- was disallowed and added back to the total income of the assessee. Further, he observed that the assessee has incurred manpower cost amounting to Rs.1,13,82,597/- and similar expenditure was also incurred during the previous financial year was only Rs.25,63,365/-. The assessee filed details with regard to the increase in manpower cost of two persons viz., Shri Harish Bhat and Shri T.R Venkatdri and both were appointed during the period for providing consultancy services exclusively to the UB groups. The AO observed from the entire submissions that the assessee has not provided the details of services rendered by these two employees. Accordingly, for want of details and comparing to the previous year s expenditures, he disallowed the expenses to the tune of Rs.88,19,232/- as excess claim made towards the expenses for reducing the taxable profits and added back into the total income of the assessee. 5. Feeling aggrieved from the order of the AO, the assessee filed appeal before the CIT, who confirmed the order of the AO. 6. Aggrieved by the order of the CIT(A), the assessee is bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me and has debited towards interest on borrowings of Rs.63,32,055/-. Further it has been observed that during the impugned assessment year the assessee has taken loan of Rs.10 crores from M/s Sagar International, a proprietorship concern of Shri Mulraj P Modi who was one of the Directors and 3 crores were repaid during the impugned assessment year. As per financial statement, it is also clear that the borrowed funds have not been utilized for the investments in LKP Finance Ltd., since opening and closing balance reflects the same figure. It has been further observed that there is increase in the loan from UBHL to the extent of Rs.13.39 crores and on further perusal of long term loan schedule no.7 there is increase of 13.39 crores which is interest free loans and advances. Further, during the course of arguments, the ld.AR drew our attention to the paper book pg no.2 which is the copy of HDFC Bank current account and ld.AR of the assessee was tried to reconcile that the particular interest bearing funds have been returned to the UBHL but he produced the bank statement only. From the bank statement, it cannot be ascertained that the funds have been utilized for refunding to the UBHL. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the balance of Rs.88,19,232/- was held to be excess claim made towards expenses to reduce the taxable profits and accordingly added back to the total income of the assessee. 13. Aggrieved from the order of the AO, the assessee filed appeal before the CIT(A), after considering submissions, confirmed the order of the AO. 14. Aggrieved from the order of the CIT(A), the assessee is before this Tribunal. 15. The ld.AR reiterated submissions made before the lower authorities and submitted that the AO without giving proper reasons, restricted the expenditure to Rs.88,19,232/-. He submitted that these 2 persons were employed to provide management consultancy services to UBHL group companies and the assessee received Rs.1,19,52,284/- towards management consultancy fee. Therefore the expenditure incurred by the company is justified. 16. On the other hand, the ld.DR relied on the lower authorities and submitted that the nature of services to be rendered by these 2 employees was not given before the authorities below and in the appointment letter the address of the employees are also not mentioned. Merely deducting TDS is not a sufficient evidence in rendering the services, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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