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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 ..... ounds raised by the assessee is as under:- "1. The authorities below erred in disallowing interest expenses amounting to Rs.27,94,519/- (the only issue raised in the assessment year 2014-15 is also same except for the figures). 2. The authorities below erred in disallowing manpower cost amounting to Rs.88,19,232/-." 3. The sole effective grounds raised by the assessee for the assessment year 2014-15 is as under:- "The authorities below erred in disallowing interest expense of Rs.63,32,055/-manpower cost amounting to Rs.88,19,232/-." 4. The brief facts of the case are that the assessee company is engaged in some consultancy services and during the year it received interest income. The assessee company is a subsidiary of M/s Bangal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 before Income Tax Appellate Tribunal. 7. The ld.AR reiterated the submissions made before the lower authorities and further submitted that the loan taken from M/s Sagar International, a proprietorship concern of Shri Mulraj P Mody, who is one of the Director of the assessee company. The TDS has also been made on the interest payment which is reflected in form No.26AS and said loan was utilized in the payment of United Breweries (Holdings) Ltd., [UBHL]. The unsecured loan taken from UBHL was interest free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. 9. We have heard the rival submissions and carefully considered the same along with the order of the authorities below as well as the documents referred to and relied on before us during the course of the hearing. We observe that the assessee has earned interest income amounting to Rs.2,20,12,744/- which has been credited into the profit and loss account as interest income 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 financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings for the asst. year 2015-16, the AO observed that the assessee has taken man power cost of Rs.1,13,82,597/- as on 31.3.2015 and Rs.25,63,365/- as on 31/3/2014. During the course of asst. proceedings, the AO asked the assessee to provide the details of the payments made towards retainership fee to Mr.A Harish Bhat and Mr. TR Venkatadri along with their appointment letters and nature of services rendered. The assessee submitted that these 2 persons were employed for a limited period of 1 year and as per terms and conditions, the services of these two employees were exclusively rendered for UB group. The details of manpower cost submitted is as under:- Sl. No. Particulars Amount Rs. 1 Retainer ship 1,06,81,896 2 Transportation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, therefore, authorities below were justified to disallow the claim of the expenditure to the extent of Rs.88,19,232/-, hence the order of the authorities should be upheld. 17. We have heard the rival submissions and carefully considered the same along with the order of the authorities below as well as the documents referred to and relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also been increased by Rs.88,19,232/-. Before us, the assessee is not furnished any nature of services rendered by these two employees to whom the amount has been paid. No doubt, for earning income the expenditure is required to be incurred by the assessee. Considering the totality of the facts and circumstances of the case, we restrict to the disallowance from the total expenditure to the extent of 50%. Accordingly, the assessee gets benefit of Rs.44,09,616/-. 18. In the result, this issue is partly allowed. 19. Since the issue involved in ground no.3 for the assessment year 2014-15 is being identical and similar to the facts and circumstances of case and also in line with the decision of the assessment year 2015-16, we remit back this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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