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TMI Blog2024 (10) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal before us. Since the adjudication of Ld. CIT(A) is based on findings of Ld. AO, no interference is required in the same. Disallowance of Service charges - The same represent service charges, valuation charges, installation charges and computer service charges. The details thereof have been extracted in the impugned order. It could be seen that the payment has been made to procure services from vendors and the payments are to organized sector and through banking channels. Apparently, the expenditure fulfills the requirements of Sec. 37(1). Therefore, we direct Ld. AO to delete the same. The grounds raised by the assessee stand allowed. Addition of Investments - AO accepted the explanation of the assessee after examining the necessary evidences including share transfer application, bank account, confirmation letters etc. Considering the same, the impugned addition was deleted. Since the adjudication of Ld. CIT(A) is based on remand report, no interference is required in the same. Addition of professional fees paid to Chartered Accountant in connection with a loan - assessee paid fees @3% of loan amount. Due tax was deducted at source - AO accepted such claim. The Ld. CIT(A) acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that assessment cannot be stated to be invalid in the eye of law. Accordingly, the matter is remanded to the Tribunal to take a decision on merits. The Hon ble Court has thus directed the Tribunal to take a decision on merits since the order could not be held to be invalid. Pursuant to these directions, we proceed for adjudication of cross-appeals on merits as directed by Hon ble Court. 1.2 The grounds raised by the assessee read as under. 1. The learned Commissioner of Income tax (Appeals)-III, Chennai, has erred in confirming the disallowance of Rs. 4,00,000 made by the Assessing Officer in respect of the expenditure incurred by the appellant on stamp charges. 2. The learned Commissioner of Income tax (Appeals)-III has erred in sustaining the disallowance of expenditure on brokerage to the tune of Rs. 71,48,050/- out of Rs. 72,93,929/- made by the Assessing Officer. 3. The learned Commissioner of Income tax (Appeals) erred in confirming the disallowance of service charges of Rs. 4,64,560/- made by the Assessing Officer. 4. The learned Commissioner of Income tax (Appeals) has erred in sustaining the disallowance of expenditure on professional fees incurred for arranging loans to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishing any evidences in support of his claim. The assessee was asked to furnish the evidences in support of the written submissions. No response from the assessee with regard to the evidences. 5. The Learned Commissioner of Income-tax (Appeals) erred in deleting the disallowance of professional charges and service charges made by the Assessing Officer. 5.1. The Learned Commissioner of Income-tax (Appeals) failed to note that the assessee could not furnish details of payments of Professional charges of Rs. 30,00,000/- since the said transactions neither reflected in the bank statements nor produced evidences in support of the transactions. 6. The Learned Commissioner of Income-tax (Appeals) has erred in deleting the disallowance of investments made u/s. 69B of Rs. 21,75,00,493/-. 6.1. The Learned Commissioner of Income-tax (Appeals) failed to note that the assessee could not furnish any evidences and also there is no response from the parties concerned in spite of this office letters u/s. 133(6). 7. The Learned Commissioner of Income-tax (Appeals) has erred in deleting the disallowance made by the Assessing Officer in respect of office maintenance expenses. 7.1. The Learned Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there was no violation of Rule 46A as stated by the revenue. 1.6 Having heard rival submissions and upon perusal of case records and remand reports of Ld. AO as placed on record, our adjudication would be as under. Assessment Proceedings 2.1 The assessee declared loss of Rs. 78.42 Lacs. Initially, the return was processed u/s 143(1). However, the case was reopened and an assessment was framed u/s 143(3) r.w.s. 147 of the Act on 31-12-2007 making certain addition in the hands of the assessee. Upon further appeal, Ld. CIT(A) granted partial relief which has led to present cross appeals before us. 2.2 The issues / additions which form subject matter of cross-appeals are as under: - No. Particulars Amount (Rs.) 1. Addition of Increase in share capital 9999000 2 Addition of Unsecured loan 36074309 3 Disallowance of Interest expenditure 4284140 4 Disallowance of Service charges 3299560 5 Addition of Investments 217500493 6 Disallowance of Electronic Transfer charges 7693929 7 Disallowance of Office Maintenance expenses 2279697 8 Disallowance u/s 14A @ 5% of Rs. 8,00,256/- 40013 2.3 Addition of increase in Share Capital The addition of increase in share capital and unsecured loans as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re The assessee claimed interest payment of Rs. 42.94 Lacs which was disallowed on the ground that the assessee could not establish that the same was paid within the due date of filing of return of income. 2.6 Service charges The assessee paid service charges of Rs. 30 Lacs out of which the assessee furnished evidences for Rs. 1.65 Lacs. The cheque entry of Rs. 28.35 Lacs was claimed to be paid was not traceable in the bank statement. Therefore, the same was disallowed. Another service charge of Rs. 4.64 Lacs as claimed by the assessee was also disallowed for want of evidences. 2.7 Addition of Investments The assessee made investments of Rs. 2490 Lacs. The assessee could not furnish requisite details for investment of Rs. 2175 Lacs. Therefore, these investments were held to be not explained satisfactorily and not fully disclosed as per section 69B and added to the income of the assessee. 2.8 Disallowance of Electronic Transfer Charges The assessee paid brokerage of Rs. 72.93 Lacs and also paid stamp expenses of Rs. 4 Lacs. Both these items were added for want of evidences. 2.9 Office maintenance Expenses The assessee claimed office maintenance expenses for Rs. 22.79 Lacs. The same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs given by Ld. AO in remand report dated 27-04-2009. The Ld. CIT(A), in paras 4.3 to 4.5 of impugned order, noted that the assessee furnished details of increase in share capital and unsecured loans. The same were journal entries and the explanation furnished by the assessee was held to be satisfactorily by Ld.AO. Considering the same, the Ld. CIT(A) deleted the addition of increase in share capital and unsecured loans. The same form part of subject matter of revenue s appeal. Since the above transactions are mere journal entries and the assessee has furnished satisfactory explanation thereof during remand proceedings to the satisfaction of Ld. AO, the adjudication of Ld. CIT(A) could not be faulted with. The corresponding grounds raised by the revenue stands dismissed. 3.5 Similarly, the assessee demonstrated that the interest of Rs. 42.94 Lacs was duly paid and requisite particulars in this regard were duly furnished. The same were accepted by Ld. AO. Considering the same, Ld. CIT(A) deleted the same against which the revenue is in further appeal before us. Since the adjudication of Ld. CIT(A) is based on findings of Ld. AO, no interference is required in the same. 3.6 The claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x was deducted at source. The Ld. AO accepted such claim. The Ld. CIT(A) accepted the claim to the extent of 1% only and confirmed the remaining addition. We find that this is contractual payment and accepted by Ld. AO in the remand report. The assessee has deducted due TDS and the claim is duly substantiated. In the absence of any adverse finding, this claim is to be accepted. We order so. The grounds raised by the assessee stand allowed whereas the grounds raised by the revenue stand dismissed. 3.10 On the issue of investments, Ld. AO accepted the explanation of the assessee after examining the necessary evidences including share transfer application, bank account, confirmation letters etc. Considering the same, the impugned addition was deleted. Since the adjudication of Ld. CIT(A) is based on remand report, no interference is required in the same. 3.11 The claim of office maintenances expenses has also been accepted except for an amount of Rs. 1.52 Las for want of explanation from the assessee. The Ld. AR has not pressed this ground and therefore, the corresponding ground of assessee s appeal stands dismissed. The other expenditure has been allowed as per remand report and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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