Income Tax Appellate Tribunal - Delhi
Acit, New Delhi vs M/S A.K. Services Pvt. Ltd.,, New Delhi on 20 March, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'A', NEW DELHI
Before Sh. N. K. Saini, AM and Sh. Sudhanshu Srivastava, JM
ITA No. 4987/Del/2013 : Asstt. Year : 2006-07
ITA No. 4988/Del/2013 : Asstt. Year : 2007-08
ITA No. 4989/Del/2013 : Asstt. Year : 2008-09
A. K. Services Pvt. Ltd., Vs Deputy Commissioner of Income
Flat No. N, Sagar Apartment, 6, Tax, Central Circle-20,
Tilak Marg, New Delhi-110001 New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AABCA1591L
ITA No. 5616/Del/2013 : Asstt. Year : 2008-09
Deputy Commissioner of Income Vs A. K. Services Pvt. Ltd.,
Tax, Central Circle-20, Flat No. N, Sagar Apartment, 6,
New Delhi Tilak Marg, New Delhi-110001
(APPELLANT) (RESPONDENT)
PAN No. AABCA1591L
Assessee by : Sh. Ved Jain, Adv., Sh. Ashish Chadha &
Sh. Ashish Goel, CA
Revenue by : Sh. Ravi Jain, CIT DR
Date of Hearing : 10.02.2017 Date of Pronouncement : 20.03.2017
ORDER
Per N. K. Saini, AM:
The appeals by the assessee for the assessment years 2006-07 & 2007-08 and the cross appeals by the assessee as well as the department for the assessment year 2008-09 are 2 ITA Nos. 4987 to 4989 & 5616/Del/2013 A. K. Services Pvt. Ltd.
directed against the separate orders each dated 12.07.2013 of the ld. CIT(A)-XXXI, New Delhi.
2. Since the issues involved are common and the appeals were heard together so these are being disposed off by this consolidated order for the sake of convenience and brevity.
3. First we will deal with the appeal of the assessee for the assessment years 2006-07 and 2007-08.
4. The only grievance of the assessee in these appeals relates to the confirmation of addition made by the AO by invoking the provisions of Section 48 of the Income Tax Act, 1961 (hereinafter referred to as the Act) amounting to Rs.23,24,972/- and Rs.12,98,591/- for the assessment years 2006-07 and 2007-08 respectively.
5. Facts of the case in brief are that search and seizure operations u/s 132 of the Act and survey u/s 133A of the Act were conducted in the case of M/s A. K. Capital Services Ltd., its group companies, directors of such companies and their relatives on 26.04.2007. The assessee filed the return of income for the assessment year 2006-07 on 30.11.2006 showing a loss of Rs.59,11,646/-. The AO issued notices u/s 153A of the Act on 26.05.2009. In response, the assessee stated that the returns of income as filed originally may be treated as 3 ITA Nos. 4987 to 4989 & 5616/Del/2013 A. K. Services Pvt. Ltd.
returns filed in compliance to the notices u/s 153A of the Act. The AO during the course of assessment proceedings noticed that the assessee had shown income from dividend at Rs.12,63,42,590/- out of which the dividend income at Rs.11,78,94,220/- was claimed as exempt from tax. The assessee claimed that the interest of Rs.84,48,370/- was directly allocable to investment from which the dividend had been earned. The AO asked the assessee to explain as to why expenses may not be disallowed proportionately u/s 14A of the Act. The assessee submitted that interest of Rs.84,48,370/- had been claimed in profit and loss account, apart from this an interest of Rs.1,26,06,381/- was claimed to be on the investment in bonds for which the bank had marked instruction to the assessee not to invest borrowed funds in any other investment. The AO observed that though interest on investment in bonds had been stated to be denied yet the diversion of funds out of sale of bonds and vice versa cannot be ruled out. The AO also observed that the main sources of the income of the assessee were merchant banking (fund arrangement etc.) and income on investment, the assessee had diversified portfolio of investment in share and was top merchant banker and monitors the market very keenly so as to earn maximum dividend. The AO worked out the disallowance u/s 14A of the Act at Rs.23,24,972/- in the following manner:
4 ITA Nos. 4987 to 4989 & 5616/Del/2013A. K. Services Pvt. Ltd.
Formula as prescribed in Rule 8-D -A X B / C A - Expenditure by Rs.1,26,06,381 way of interest B - Average value As on 1.4.2005 9,04,09,806 6,60,38,078 of investment As on 31.3.2006 6,16,66,351 C- Average value of As on 1.4.2005 23,92,36,295 41,73,39,499 total assets As on 3 1.3.2006 59,54,42,703 Inadmissible 1,26,06,381 6,60,38,078 / Rs.19,94,782 expenditure 41,73,39,499 A multiplied by (B/C) 0.5% of average 0.5% of Rs. 6,60,38,078 Rs. 3,30,190 investment Total disallowance (19,94,782+3,30,190) Rs. 23,24,972 4.1 Thus disallowance under section 14A of Income tax Act 1961 read with Rule 8-D of Income Tax Rule 1962 is made at Rs.23,24,972/-. Penalty proceedings are initiated under section 271(1)(c) of Income Tax Act 1961 for filing inaccurate particulars of income."
Addition : Rs. 23,24,972/-
6. Being aggrieved the assessee carried the matter to the ld. CIT(A) who partly allowed the appeal of the assessee vide order dated 01.06.2010. Against the said order, the department preferred an appeal to the ITAT wherein vide order dated 14.10.2011, the case was remanded back to the ld. CIT(A) to be decided afresh. The assessee submitted to the ld. CIT(A) that invoking of the Section 14A 5 ITA Nos. 4987 to 4989 & 5616/Del/2013 A. K. Services Pvt. Ltd.
of the Act, during the course of assessment proceedings u/s 153A of the Act was not justified particularly when no material was found during the course of search. It was further submitted that the calculations made by the AO under Rule 8D of the Income Tax Rules, 1962 were incorrect in as much as the AO had wrongly included those investment in respect of which the income received or receivable was chargeable to tax in the calculations of average investment, income from which was exempt from tax. It was stated that as per the computation made by the assessee the disallowance came to Rs.2,41,400 instead of Rs.23,24,972/- computed by the AO.
7. However, the ld. CIT(A) after considering the submissions of the assessee sustained the disallowance by observing in paras 4.5.2 and 4.5.3 of the impugned order as under:
"4.5.3. The submissions made by the AO during the present appeal proceedings have already been reproduced in the above paragraphs. He has submitted that the appellant had computed the returned loss-only after considering net dividend at Rs. 11,78,94,220/- and hence there is no case for recomputing the income by reducing the amount of Rs.84,48,370/- from the declared loss of Rs.59,11,646/-. The relevant paragraph from the order of CIT(A)-I dated 31/05/2010 is as under.
I have considered the submissions made by the assessee and have also gone through the relevant material on record. As has been held by me in earlier years in the case of the assessee, 6 ITA Nos. 4987 to 4989 & 5616/Del/2013 A. K. Services Pvt. Ltd.
the A.O. did have a valid jurisdiction to make disallowance u/s 14A of the Act as the same is based on statutory provisions of the Act and non seized material is required for making such a disallowance. Having held so, I am also of the considered opinion that what can be taxed in the hands of an assessee is only the correct income as per law and not merely on the basis of otter of the assessee. It is seen that the disallowance u/s 14A has been computed by the A.O. under Rule 8D at Rs. 23,24,972/-. This amount has been added back to the loss declared by the assessee along with other addition made by the A.O, to compute the assessed income. It is however, seen that the declared loss of the assessee already includes disallowance u/s I4A at Rs. 84,48,370/- which the assessee has been offered suo moto. The basis of making such a disallowance could not be explained by the A.R. during the course of appellate proceedings. However, the fact remains that the amount disallowable under Rule 8D has been computed by the A.O. at Rs. 23,24,972/-. Therefore even though this disallowance of Rs. 23,24,972/- is to be confirmed, still the assessee is to be given the benefit of reduction of its taxable income by Rs. 84,48,370/- which was already included in the declared loss of Rs.59,11,646/-. Concluding the above discussion the A.O. is directed to recompute the income of the assessee by reducing the amount of Rs. 84,48,370/- from the declared loss of Rs. 59,11,646/- and only after that the addition of Rs. 23,24,972/- should be made. As a result the assessed loss of the 7 ITA Nos. 4987 to 4989 & 5616/Del/2013 A. K. Services Pvt. Ltd.
assessee will get increased by an amount of Rs. 61,23,398/-.
4.5.3 It is observed that at Schedule-N to the P&L account, the dividend carried over to P&L account was net of interest paid in connection with dividend Income. Therefore, there is merit in AO's submission on the issue. Therefore, it is to be held that the declared loss need not be recomputed by reducing the said Rs.84,48,370/-. I hereby confirm the disallowance of Rs. 23,24,972/- made by the assessing officer and reject the ground."
8. Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that Rule 8D of the Income Tax Rules, 1962 had been applicable from assessment year 2008-09 as has been held by the Hon'ble Delhi High Court in the case of Maxopp Investment Ltd. Vs CIT reported at 347 ITR 272 wherein the views exporessed by the Hon'ble Bombay High Court in the case of M/s Godrej and Boyce Mfg. Co. Ltd. Vs DCIT reported at 328 ITR 81 had been followed. It was further submitted that in the said case, it has been held that the provision of Rule 8D of the Income Tax Rules, 1962 had prospective effect and shall apply with effect from 2008-09 onwards, therefore, the addition made by the AO and sustained by the ld. CIT(A) by invoking the provisions of Rule 8D of the Income Tax Rules, 1962 was not tenable. It was further submitted that out of the total 8 ITA Nos. 4987 to 4989 & 5616/Del/2013 A. K. Services Pvt. Ltd.
expenditure on account of interest amounting to Rs.2,10,54,751/-, a sum of Rs.1,26,06,381/- was directly related to the credit limit/ICD for the purpose of business of purchase and sale of debt securities and that the loan on which this interest was paid was with a clear instruction as per the bank to be utilized only in respect of the transaction of purchase and sale of bonds. It was contended that the assessee in respect of this business earned the trading income of Rs.1,34,31,484/- and also earned interest of Rs.86,14,059/-. Thus, the net interest expenditure on account of this dealing in debt securities was Rs.39,92,322/- (Rs.1,26,06,381 - Rs.86,14,059) which was claimed as deduction against the above said income of dealing in bond security of Rs.1,34,31,484/-. A reference was made to page no. 13 of the assessee's paper book. It was further contended that the assessee paid an interest of Rs.84,48,370/- on the loan which was utilized in making the investment from which exempted dividend income was received, therefore, this entire interest of Rs.84,48,370/- was disallowed and added back by the assessee itself and not claimed as deduction in view of the provisions of Section 14A of the Act. However, the AO ignored the aforesaid facts and assumed that interest expenditure of Rs.1,26,06,381/- needs to be apportioned in the ratio of investment to total assets and that there was no need for making further disallowance when the assessee correctly allocated the expenses and disallowed the same u/s 14A of the Act. It was stated that the ld. CIT(A) in the first round in his order dated 9 ITA Nos. 4987 to 4989 & 5616/Del/2013 A. K. Services Pvt. Ltd.
13.05.2010 had appreciated this fact in right perspective and deleted the addition. A reference was made to page nos. 77 to 78 of the assessee's paper book. Alternatively, it was stated that in case the AO and the ld. CIT(A) are of the view that interest expenditure needs to be disallowed then the entire expenditure of Rs.2,10,54,751/- ought to have been considered and allocated in the ratio of investment to the total assets, by doing this exercise the ineligible interest comes to only Rs.33,31,616/- as against the amount of Rs.84,48,370/- considered and disallowed by the assessee u/s 14A of the Act, therefore, no further disallowance is called for. It was further submitted that since Rule 8D of the Income Tax Rules, 1962 is not applicable for the assessment year under consideration. Therefore, the AO was not justified in making the disallowance by considering the provisions of Rule 8D. It was also submitted that own funds of the assessee were more than the investment made, therefore, the disallowance u/s 14A of the Act was not called for. It was stated that average investment made by the assessee were as per following details:
"1st April, 2005 : Rs.9,04,09,806 31st April, 2006 : Rs.4,16,66,351 As against the said investments, own funds held by the assessee were as under:-
1st April, 2005 : Rs.19,16,89,422 31st March, 2006 : Rs.30,27,08,317"10 ITA Nos. 4987 to 4989 & 5616/Del/2013
A. K. Services Pvt. Ltd.
9. It was further submitted that the ld. CIT(A) vide order dated 12.07.2013 for the assessment year 2008-09 had deleted the disallowance on account of interest and the facts of the year under consideration were identical to the facts for the assessment year 2008-09, so, there was no reason for the ld. CIT(A) to take a different view in this assessment year 2006-07. The reliance was placed on the following case laws:
Ø Maxopp Investments Ltd. Vs CIT 347 ITR 272 (Del.) Ø CIT Vs Taikisha Engineering India Ltd. (2015) 370 ITR 338 (Del) Ø CIT Vs Suzion Energy Ltd. (2013) 354 ITR 630 (Guj.) Ø CIT Vs Winsome Textile Industries Ltd. 319 ITR 204 (P&H) Ø CIT Vs Reliance Utilities & Power Ltd. 313 ITR 340 (Bom.) Ø CIT Vs Torrent Power Ltd. (2014) 363 ITR 474 (Guj.) Ø CIT Vs Kalthia Engineering and Construction Ltd.
in ITA No. 11 of 2015 dated 13.01.2015 of Hon'ble Guj. H.C. Ø CIT Vs Gujarat Apollo Industries Ltd. in ITA No. 928 of 2014 dated 16.09.2014 of Hon'ble Guj. H.C.
10. In his rival submissions the ld. DR strongly supported the orders of the authorities below.
11. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the 11 ITA Nos. 4987 to 4989 & 5616/Del/2013 A. K. Services Pvt. Ltd.
present case, it appears that neither the AO nor the ld. CIT(A) appreciated the fact in right perspective while making the disallowance u/s 14A of the Act. We are of the confirmed view that as per the ratio laid down in the judgment of the Hon'ble Jurisdictional High Court in the case of Maxopp Investment Ltd. Vs CIT 347 ITR 272 (supra), Rule 8D of the Income Tax Rules, 1962 is not applicable for the assessment years 2006-07 and 2007-08. In the present case, the contention of the assessee that during the year under consideration own funds held by the assessee were more than the investment made which were to be considered for the purposes of making the disallowance under Section 14A of the Act was not rebutted, therefore, no disallowance is called for as per the ratio laid down by the Hon'ble Jurisdictional High Court in the case of CIT Vs Taikisha Engineering India Ltd. (2015) 370 ITR 338 (supra) wherein it has been held as under:
"That the clear findings of the appellate authorities were that the assessee had sufficient funds for making investments in shares and mutual funds. The findings coupled with the failure of the Assessing Officer to record his satisfaction clinched the issue in favour of the assessee. The voluntary deductions made by the assessee were not rejected or held to be unsatisfactory, on examination of accounts. The Assessing Officer erred in invoking sub-rule (2) without elucidating and explaining why the voluntary disallowance made by the assessee was unreasonable and unsatisfactory. There was no such satisfaction recorded by the Assessing Officer before he invoked sub-rule (2) of rule 8D and made the recomputation."12 ITA Nos. 4987 to 4989 & 5616/Del/2013
A. K. Services Pvt. Ltd.
12. In a similar case the Hon'ble Gujarat High Court in the case of CIT Vs Suzlon Energy Ltd. (2013) 354 ITR 630 (Guj.) (Supra) held as under
(Head Note):
"Disallowances were made in/ the Assessing Officer under section 14A in respect of interest expenses incurred for investments made in subsidiaries and administrative expenses. The Commissioner (Appeals) deleted the disallowances. The Tribunal bifurcated the expenditure into two parts. The first related to investments of Rs. 5907.18 lakhs in foreign subsidiaries in respect of which it held that the dividend income from such subsidiaries was taxable in India and that, therefore, section 14A would have no applicability. The remaining amount pertained to investment of Rs. 38 crores made in Indian subsidiaries. In this respect, the Tribunal noted that the assessee had at its disposal, its own interest-free funds many times over the investment in question."
It has further been held that:
"iii) That the Tribunal was right in law and on facts in deleting disallowance under section 14A in respect of interest expenses incurred for investments in subsidiaries and administrative expenses such as staff salary of corporate office, audit fees, building rent and communication expenses."
13. In the present case also the assessee was having own funds which were more than the investment made by it, therefore, the disallowance made by the AO u/s 14A of the Act was not justified particularly when the assessee itself allocated the expenditure relating to the exempted income and disallowed the same u/s 14A of the Act, the AO has not pointed out any mistake in the calculation made by the assessee. Accordingly, the impugned disallowance made by the AO and sustained by the ld. CIT(A) is deleted.
13 ITA Nos. 4987 to 4989 & 5616/Del/2013A. K. Services Pvt. Ltd.
14. In the assessment years 2007-08 and 2008-09, the issue is similar as was involved for the assessment year 2006-07. Therefore, our findings given in the former part of this order for the assessment year 2006-07, shall apply mutatis mutandis for the assessment years 2007-08 & 2008-09.
15. In the departmental appeal for the assessment year 2008- 09following grounds have been raised:
"1. On the facts and in the circumstances of the case, the CIT(A) has erred in restricting the disallowance under section 14A, r.w. Rule 8D from Rs. 32,62,058/- to Rs. 3,82,586/- by adopting the procedure not prescribed in Rule 8D of Income Tax Rules, 1962.
2. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the disallowance of Rs.52.87,621/- being bogus business promotion expenses claimed.
3. The order of the CIT(A) is erroneous and is not tenable on facts and in law.
4. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal."
16. The issue raised in Ground No. 1 is similar to the issue agitated in the assessee's appeal. Therefore, our findings given in the former part of this order shall apply mutatis mutandis. Accordingly, we do not see merit in this ground of the departmental appeal.
14 ITA Nos. 4987 to 4989 & 5616/Del/2013A. K. Services Pvt. Ltd.
17. As regards to the Ground No. 2 relating to deletion of disallowance of business expenses, the facts in brief are that the AO during the course of assessment proceedings asked the assessee to substantiate the reasonableness, genuineness and commercial expediency of the business promotion expenses claimed at Rs.52,87,621/- incurred through credit cards of Directors. The assessee submitted that the assessee company was dealing in debt securities and had very wide client base of approximately more than 2000 clients spread across India. The assessee also furnished bills of credit cards above Rs.10,000. The AO after considering the submissions of the assessee observed that most of the bills were related to personal expenses of the directors. He, therefore, disallowed the entire claim made by the assessee for business promotion amounting to Rs.52,87,621/-.
18. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted that the entire expenditure was fully vouched & verifiable and that the AO had not specified even a single voucher which according to him pertained to the personal expenses of the director.
19. The ld. CIT(A) pointed out that in the first inning the disallowance made by the AO was deleted by the then ld. CIT(A) vide order dated 31.05.2010 by observing as under:
15 ITA Nos. 4987 to 4989 & 5616/Del/2013A. K. Services Pvt. Ltd.
"8) The A.R contended that the disallowance as made by the A.O is wholly arbitrary, unjustified and untenable in law. He submitted that the learned Assessing Officer himself had allowed business promotion expenses to the assessee in all the earlier years except for making disallowance on account of gold gifts of Rs.3,92,594/- in assessment year 2006-07 and 2007-08. He filed a comparative chart to show that the total business promotion expenses in the immediately preceding year were to the tune of Rs. 38.16 lacs out of which the A.O had disallowed only expenditure of Rs. 3,92,594/-. The A.R contented that in the instant year the Ld. A.O. has made a disallowance of the whole of the amount of the business promotion expenses without pointing out any valid basis for doing so. The A.R. has filed the details of business promotion expenses along with copies of the bills thereof from pages 31 to 202 of the paper book filed in appeal proceedings and submitted that the entire expenditure had been incurred wholly and exclusively for the purposes of business. The A.R. further contented that the learned Assessing Officer after verification of all these details has not pointed out even a single expenditure which could said to be personal in nature and the disallowance made by him was only adhoc in nature without pointing out any specific discrepancy in the claim of the assessee. The A.R. contended that the impugned disallowance had made by the A. O. by merely holding that the expenditure was personal in nature without specifying the basis for making such an observation. He thus prayed that the disallowance made by the A.O. deserves to be deleted on this ground itself.
(2) I have examined the submission of the assessee and the details of business promotion expenses as filed by the assessee along with the copies of the bills and vouchers. It 16 ITA Nos. 4987 to 4989 & 5616/Del/2013 A. K. Services Pvt. Ltd.
is found that the entire expenditure is fully vouched and verifiable. Inspite of the fact that all the bills of these expenses have been furnished by the assessee before the A.O., who has examined the same, the learned Assessing Officer has failed to specify even a single voucher, which according to him pertains to the personal expenses of the directors. It is further seen that the nature of the business of the assessee is such that it has nearly 2000 business constituents all over India and it has to necessarily incur business promotion expenses to maintain cordial relations with them. The nature of the expenses show that the same have been incurred for entertainment of clients or for purchasing small gifts for the clients. Similar expenses incurred by the assessee in the earlier years are found to have been allowed by the same A.O while making assessments u/s 153A of the Act. It is seen that in the immediately preceding year the assessee has incurred total business promotion expenses of Rs. 38.16 lacs which has been duly allowed by the A.O. except for making a disallowance of Rs. 3,92,594/-. It is also found from the perusal of the assessment orders in the case of the assessee for A.Y. 2006-07 and 2007-08 that the A.O. himself has observed that the expenses on entertainment, gifts of silver items, costly gadgets etc. is genuine business expenditure of the assessee. In my considered view, once similar expenses have been found to have been incurred for the purpose of business in the earlier years, even these expenses incurred in the instant year are also wholly and exclusively for the purpose of business. In the absence of any other contrary material on record and in the absence of any specific expenditure having been pointed out being personal in nature, the disallowance as made by the A. O. by disallowing the total amount cannot be sustained and is deleted."
17 ITA Nos. 4987 to 4989 & 5616/Del/2013A. K. Services Pvt. Ltd.
20. Thereafter the assessee preferred an appeal to the ITAT wherein vide order dated 14.10.2011 this issue was set aside with the direction to decide afresh in accordance with law, after affording due and adequate opportunity of hearing to the AO alongside the assessee. The ld. CIT(A) in compliance to the direction of the ITAT gave opportunity of being heard to the AO as well as the assessee. The AO made the written submission based on the assessment order, the ld. CIT(A) observed that the then ld. CIT(A) gave the findings which were based on logical reasoning and appreciation of the facts on record and that the AO had failed to specify any particular voucher which according to him pertained to the personal expenses of the directors. He also observed that the AO himself had accepted the expenses in the earlier assessment years wherein he duly allowed certain business promotion expenses. The ld. CIT(A) accordingly deleted the addition made by the AO.
21. Now the department is in appeal. The ld. DR strongly supported the order of the AO and reiterated the observation made therein.
22. In his rival submissions the ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that an identical issue having similar facts has already been decided in favour of the assessee by the ITAT Delhi Bench 'A', New Delhi in ITA No. 1142/Del/2014 for the assessment 18 ITA Nos. 4987 to 4989 & 5616/Del/2013 A. K. Services Pvt. Ltd.
year 2009-10 vide order dated 10.02.2016 in assessee's own case (copy of the said order was furnished which is placed on record).
23. We have considered the submissions of both the parties and carefully gone through the material available on the record. It is noticed that an identical issue having similar facts was a subject matter of the departmental appeal in assessee's own case for the assessment year 2009-10 in ITA No. 1142/Del/2014 wherein vide order dated 10.02.2016, the issue raised by the department was decided against the department by observing in para 12 of the order dated 10.02.2016 which read as under:
"12. From the above, we find that assessee has submitted before the AO that there are about 2000 business constituents spread all over India and in order to generate business and maintaining cordial relations with them the directors of the company have to meet and interact with them regularly. For such client meetings in different hotels etc. the directors have incurred expenses on food and other items which are necessary expenses required for the purpose of the appellant's business. We further find that the AO has not brought on record any material to the effect that the expenditure related to personal expenses of the Directors. He has not probed further if he had got any doubts on the matter. He has not mentioned what sorts of details were called for and what was not provided to him. Therefore, we find considerable cogency in the submissions of the assessee its submissions cannot be brushed aside unless it can be shown that any particular expenditure has been incurred for the personal benefit of any of the directors. Even then, assessee being a 19 ITA Nos. 4987 to 4989 & 5616/Del/2013 A. K. Services Pvt. Ltd.
company such expenditure of the director cannot be disallowed in the hands of the company. It was also noted that assessee has generated a sizeable income of Rs. 4,22,04,724/- during the year the expenditure by way of business promotion also appears to be reasonable. Therefore, disallowance of Rs. 15,35,666/- was rightly deleted by the Ld. CIT(A). In the background of the aforesaid detailed discussions, we are of the view that Ld. CIT(A) has passed a well reasoned order which does not need any interference on our part, hence, we uphold the same. Accordingly, the ground no. 2 raised by the Revenue is dismissed."
24. So respectfully following the aforesaid referred to order dated 10.02.2016 in assessee's own case for the assessment year 2009-10 in ITA No. 1142/Del/2014, we do not see any merit in this ground of the departmental appeal.
25. In the result, the appeals of the assessee are allowed whereas the appeal of the department is dismissed.
(Order Pronounced in the Court on 20/03/2017) Sd/- Sd/-
(Sudhanshu Srivastava) (N. K. Saini)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 20/03/2017
*Subodh*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5.DR: ITAT
ASSISTANT REGISTRAR