9911796707
TMI Blog2024 (8) TMI 1422X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has acquired dominion over the asset and is in possession and control of the same. In the present case the assessee is using these assets for the purposes of business of the assessee - AO has not denied the same - AO has allowed all expenses relating to operating of these assets therefore, we allow the claim of depreciation of the assessee. Thus, this ground of the assessee is allowed. Disallowance of expenditure being 20% of total expenses - AO observed that during the assessment proceedings, the assessee had claimed various office and other expenses, which showed a significant increase compared to the previous year - AO s disallowance was primarily based on the assessee s failure to furnish complete documentary evidence for the claimed expenses - HELD THAT:- Tribunal concludes that the disallowance made by the AO was based on assumptions and not on concrete evidence. The assessee s increased expenses are justified by the corresponding increase in turnover, and the consistency in net profit margin further supports the genuineness of the expenses. Therefore, we direct the deletion of the disallowance of 20% of the total expenditure made by the AO. Therefore, this grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the total income of Rs. 26,87,870/- The return was processed u/s 143(1) of the Act. The case was selected for scrutiny and notices u/s 143(2) and 142(1) of the Act were issued to the assessee. In response thereto, the assessee filed the tax Audit Report and Audited Financial Statements. 2.1. The AO observed that the assessee has claimed ROC Expenses of Rs. 4,10,500/- relating to increase in share capital. The AO disallowed Rs. 4,00,000/- relying on some judicial pronouncements. The AO also observed that the assessee claimed depreciation of Rs. 43,480/- on the assets held in the name of directors. He disallowed the depreciation on such assets held in the name of directors. 2.2. During the course of assessment proceedings, the AO disallowed 20% of expenses amounting to Rs. 7,38,933/- and added back Rs. 1,47,786/- in the total income of assessee for want of evidence. The AO also disallowed membership fees of Rs. 12,000/- for want of details. 2.3. During the course of the assessment proceedings, the AO observed that the assessee has raised share capital for Rs. 75,00,000/- from Tripada Infrastructure Pvt. Ltd. A notice u/s 133(6) of the Act was issued to the said company and inspec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tripada Infrastructure Pvt. Ltd. 6. The learned Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming the addition of Rs. 75,00,000/- made on protective basis of share application money where the identity, genuineness and credit worthiness of the saher applicant has been established by placing various evidences on record. 7. The learned Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming the addition of share application money of Rs. 75,00,000/- on protective basis without bringing on record the fate of the addition in the hands of Tripada Infrastructure Pvt. Ltd. where substantive additions have been made. 8. The appellant craves leave to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal. On Ground Nos. 1 and 4 4. These two grounds are relating to ROC expenses of Rs. 4,00,000/- and membership fees of Rs. 12,000/-. During the course of hearing, the Ld.Counsel for the assessee submitted that since the issue of ROC expenses is covered by the judicial pronouncements and the issue of membership fees is of very small amount of Rs. 12,000/- he will not press for. In light of the submission of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on over the asset and is in possession and control of the same. 7.1. In the present case the assessee is using these assets for the purposes of business of the assessee. The AO has not denied the same. The AO has allowed all expenses relating to operating of these assets therefore, respecting the decision of Hon ble Apex court in case of Mysore Mineral Ltd. (supra), we allow the claim of depreciation of the assessee. Thus, this ground of the assessee is allowed. On Ground No. 3 8. This ground is pertaining to disallowance of expenditure of Rs. 1,47,786/- being 20% of total expenses of Rs. 7,38,933/-. The AO observed that during the assessment proceedings, the assessee had claimed various office and other expenses, which showed a significant increase compared to the previous year. The expenses in question included: Other expenses : Rs. 95,977/- Office expenses (including misc. of Rs. 3,15,673/-) : Rs. 5,03,234/- Vehicle running and maintenance expenses : Rs. 3,27,283/- Total : Rs. 7,38,933/- 8.1. During the course of assessment proceedings, the AO requested documentary evidence for these expenses but noted that the assessee failed to provide complete bills, invoices, or vehicle logb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses were identified by the AO. Business expenses naturally fluctuate due to various factors. The assessee demonstrated that vehicle expenses had decreased from Rs. 3.29 lakhs to Rs. 3.27 lakhs, which contradicts the AO s assertion of an unjustifiable increase in expenses. The assessee s books of accounts were audited under both the Companies Act, 1956, and section 44AB of the Income Tax Act, 1961, with no adverse remarks in the audit report. This supports the credibility of the assessee s financial records. 11.2. The facts of Assam Pesticides v. CIT (227 ITR 846) are not comparable to the present case. The payments in Assam Pesticides were made to sister concerns without any commercial consideration, whereas the assessee made payments to third parties. The disallowance in Assam Pesticides was based on the absence of services rendered, which is not the case here. The assessee cited relevant judicial pronouncements, such as Rajat Tradecom Pvt. Ltd. v. DCIT and DCIT v. Surface Finishing Equipment, which support the contention that ad hoc disallowances without specific evidence are not sustainable. 11.3. Given the above findings, the Tribunal concludes that the disallowance made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Del) which held that once an assessee furnishes evidence to prove the identity and genuineness of the transactions, the onus shifts to the Revenue to disprove it. 14.1. About the protective addition of Rs. 75,00,000/- made in the hands of assessee, the counsel for the assessee argued that assessment can be considered protective only when there is substantive assessment. Therefore, in absence of assessment of TIPL as stated by the AO in his order, no addition can be made on protective basis in the hands of assessee. He placed reliance on decisions of co-ordinate bench in case of Pravinkumar Valjibhai Pujara HUF Vs. ITO, Ward-2, Patan (ITA No. 142/AHD/2016). 15. We noted that the assessee had furnished substantial evidence, including bank statements, ITR copies, and confirmations from TIPL. These documents prima facie established the identity, creditworthiness, and genuineness of the share application money received. We also noted that that the AO's primary concern was TIPL not being found at the given address. However, it was emphasized that the AO did not conduct further investigations, such as verifying the bank accounts or pursuing information from the Registrar of Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
