Income Tax Appellate Tribunal – Indore
The Acit, 2(1), Bhopal vs M/S Moenus Textile Pvt. Ltd., … on 30 November, 2021 आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER
AND
SHRI MANISH BORAD, ACCOUNTANT MEMBER
VIRTUAL HEARING
ITA No.821/Ind/2018
Assessment Year: 2009-10
DCIT 1(1)
Bhopal
PAN:AAECM5482F : Appellant
V/s
M/s. Moenus Textile Private Ltd.
Raisen : Respondent
Revenue by Shri Harshit Bari, AR
Respondent by Shri S.S. Deshpande, CA
Date of Hearing 28.09.2021
Date of Pronouncement 30.11. 2021
ORDER
PER MANISH BORAD, A.M.:
The above captioned appeal filed at the instance of the
Revenue for Assessment Year 2009-10 is directed against the order
of Ld. Commissioner of Income Tax(Appeals) (in short ‘Ld. CIT],
Bhopal dated 05.07.2018 which is arising out of the order u/s
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
143(3) of the Income Tax Act 1961(In short the ‘Act’) dated
29.12.2011 framed by ITO-2(3), Bhopal.
2. Brief facts of the case as culled out from the records are that the
assessee is a Private Limited Company engaged in the business of
manufacturing of Cotton Yarn. Return of income for A.Y. 2009-10
filed on 25.07.2009 declaring loss of Rs. 2,87,95,413/-. Case
selected for scrutiny followed by serving of notices u/s 143(2) &
142(1) of the Act. ld. AO called for various details. Submissions
were made by the assessee. However, Ld. AO was not satisfied with
some information filed by the assessee and completed the
assessment making various additions at Rs. 1,68,16,749/- and
assessing the loss at Rs.1,19,78,664/- in the following manner:
Total Loss (-) Rs.2,87,95,413/-
Add: Addition u/s 68 on A/c of share
application money Rs.1,31,50,000/-
Add: Disallowance out of Commission
Expenses Rs.19,70,099/-
Add: Disallowance of legal and professional exp. Rs.16,08,000/-
Add: Interest proportionately disallowed Rs.88,650/-
Total Loss Assessed Rs.1,19,78,664/-
3. Aggrieved assessee preferred an appeal before the Ld. CIT(A) and
partly allowed.
2
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
4. Now revenue is in appeal before this Tribunal raising following
grounds of appeal:
“On the facts and in the circumstances of the case, the CIT(A) has erred in
:
1. Whether on the facts and in the circumstances of the case the Ld.
CIT(A) was justified in deleting addition of Rs.1,3150,000/- u/s 68 of
the Income Tax Act 1961 on account of share capital received by
holding that identity, creditworthiness and genuineness of the
transaction is established.
2. Whether on the facts and in the circumstances of the case the Ld.
CIT(A) was justified in deleting the addition of Rs.19,70,098/- by
holding that the addition is based on mere presumptions and
surmises.
3. Whether on the facts and in the circumstances of the case the ld.
CIT(A) was justified in deleting the addition of rs.16,08,000/- by
holding that based on various evidences, the disallowances cannot be
termed as justified.
5. Ld. Departmental Representative (DR) supported the order of ld.
AO and also placed on record the remand report dated 23.08.2019.
6. Per contra Ld. counsel for the assessee apart from strongly
relying on the finding of Ld. CIT(A) also referred relevant documents
and details filed in the paper book dated 05.07.2019 containing 164
pages.
7. We have heard rival contentions carefully perused the records
placed before us.
Apropos to Ground no.1 raised by the revenue, we find that it
relates to the addition of Rs.1,31,50,000/- made by the ld. AO u/s
3
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
68 of the Act for the unexplained share application money received
from following three persons:-
1. Shri Jayant N. Patel Rs.88,50,000/-
2. Smt. Anju Baijal Rs.3,00,000/-
3. Smt. Snehlata Rupranka Rs.40,00,000/-
7.1 We notice that the assessee filed various details before Ld. AO
as well as Ld. CIT(A) to prove identity of the share applicants,
genuineness of the transaction and creditworthiness of the share
applicants who gave alleged amount to the assessee company. Ld.
CIT(A) deleted the impugned addition observing as follows:
8.4 In respect of share application money of Rs. 88,50,000/-
received from Shri Jayvant N Patel, it is observed that the
appellant has filed copy of passport which proves the identity
of Shri Jayvant N Patel. Regarding creditworthiness, the
certificate of accountant practicing in UK which certified that
Shri Jayvant N Patel was having net worth in excess of 1.50
million British Pound and the bank statement of Shri Jayvant N
Patel which reflects other transactions also besides the
transaction under question, establishes the creditworthiness of
Shri Jayvant N Patel. Regarding the genuineness of
transaction, it is observed that the money was routed through
banking channel and Shri Jayvant N Patel has confirmed the
transaction. The amount was received through account payee
cheques, drawn on NRI (External) Account (NRE account)
No.0055001076090 with ICICI Bank, M.P. Nagar, Bhopal.
8.5 Regarding, share application money of Rs. 40,00,000/-
received from an Indian resident Mrs. Snehlata Rupramka, it is
observed that confirmation along with PAN was produced before
the AO. Copy of bank account was also produced before the
A.O. During appeal, copy of return of this person has been filed.
It is observed that Smt. Snehlata Rupramka has shown total
income of over Rs. 15,00,000/- in A.Y. 2009-10. Further, it is
also seen from her bank account that Smt. Snehlata was
maintaining huge balance in the bank account from which the
4
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
share application money has been given. Furthermore, there is
no cash deposit in the bank account and there are frequent
transactions other than the transaction in question during the
period under consideration. Regarding the genuineness of
transaction, it is observed that the money was routed through
banking channel and the applicant has confirmed the
transaction. In view of these facts, the identity and
creditworthiness of this person and genuineness of the
transaction stands proved.
8.6 In respect of share application money of Rs. 3,00,000/-
received from received from Smt. Anjali Baijal, it is observed that
the appellant has filed confirmation and copy of passport which
proves the identity of Smt. Baijal. Regarding creditworthiness,
the certificate of Financial Advisors practicing in UK has been
filed which states that husband of Mrs Anjali Baijal is a retired
surgeon, who has spent his entire life with the National Health
Services, UK and that the combined net worth of both husband
and wife is more than five hundred thousand pounds. It has also
been certified that the money sent to her Indian NRE account
was fully repatriable. The statement of the NRE account of Mrs.
Anjali Baijal shows continuous transactions other than the
transaction in question. Regarding the genuineness of
transaction, it is observed that the money was routed through
banking channel and the transaction has been confirmed by
Smt. Baijal. Therefore, the identity and creditworthiness of this
person and genuineness of the transaction also stands proved.
8.7 Copies of order sheet of assessment record has been filed
by the appellant. It is observed that no specific query was raised
by the A.D. in this regard nor any specific evidence was sought
during the assessment.
8.8 In view of the above, the onus cast upon the appellant ix] s
68 of the Act has been fully discharged. The identity and
creditworthiness of these share applicants and genuineness of
the transaction has been established.
8.9 It is observed that similar addition in respect of share capital
received from some persons including Shri Jayvant N Patel was
made in A.Y. 2007-08. The Hon’ble ITAT in its order dated
02.07.2012 in ITA No. 185/Ind/2012 set aside the matter to the
file of the A.O. for deciding the matter afresh. A copy of the ITAT
order has been filed. It is further seen that in compliance of the
ITAT order, the A.O. finalized assessment ii]» 143(3) r.w.s. 254 of
the Act vide order dated 24.03.2014. In the said assessment,
the A.O. accepted the share capital received from all persons
including Shri Patel and no addition was made. A copy of the
order has been filed.
5
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
8.10 Further, the appellant has filed copies of CIT(A)-2, Bhopal’s
order and ITAT order in the case of M/s Sunegra Foods Pvt. Ltd.,
Bhopal which shows that the addition made in that case in
respect of the same share applicant i.e. Smt. Anjali Baijal has
been deleted by the Ld. CIT(A)-2, Bhopal vide his order dated
20.03.2012 in Appeal No. CIT(A)-II/BPL/IT-121/2009-10. The
order of the CIT(A) has been upheld by Hon’ble I TAT , Indore
vide order dated 18.06.2013 in ITA No. 413/Ind/2012. A
perusal of the orders of CIT(A) and ITAT shows that the same
are based on the same evidences as submitted by the appellant
in this case.
8.11 In totality of facts and circumstances, it is concluded that
the appellant has established the identity and creditworthiness
of the three persons and genuineness of the transaction.
Therefore, the addition made by A.O. is not sustainable. Further,
as in the identical circumstances, the A.O., after examination,
has accepted the share capital received from Shri Jayvant N
Patel and other persons in A.Y. 2007-08, the addition made in
assessment year under consideration becomes unjustified and
cannot be sustained. The addition of Rs. 1,31,50,000/- made
u/s 68 IS, therefore, deleted.
7.2. From perusal of the above finding as well as documents placed
on record in the paper book, we find that the share applicants
namely Shri Jayvant N. Patel & Smt. Anjali Baijal are non-resident
Indian having sufficient source of income. Share application money
has been given through NRE account. All relevant details including
Passport, proof of earing income outside India, bank statements,
support the finding of Ld. CIT(A). It is also evident from records that
the identity, genuineness and creditworthiness of both these share
applicants named Shri Jayvant N. Patel & Smt. Anjali Baijal also
came up for examination in the past before revenue authorities.
During the A.Y. 2007-08 also Jayvant N. Patel invested in equity
6
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
shares and addition was made for unexplained cash credit. The
matter traveled up to this Tribunal and vide ITANo.185/Ind/2012
dated 02.07.2012 issue was set aside to the ld. AO and in the set
aside proceedings Ld. AO accepted the share capital received from
various persons including Shri Jayvant N. Patel. Similarly in the
case of ACIT-3(1), vs. M/s. Sunegra Food Pvt. Ltd. this Tribunal vide
order dated 18.06.2013 in ITANo. 413/Ind/2012 adjudicated the
issue of unexplained share application money received from Smt.
Anjali Baijal and after examining details confirmed the finding of
Ld. CIT(A) accepting the identity, genuineness and creditworthiness
of Anjali Baijal.
7.3 As regards the share application money received from Mrs.
Snehlata Rupramka revenue has not disputed the fact that the
assessee had filed the confirmation along with PAN No. and bank
account details which in itself supports that there is sufficient bank
balance in her account and she reasonably declares good income in
its income tax return which supports the amount received from her.
In view of the observation made hereinabove as well as the facts
and circumstances of the case we find that Ld.CIT(A) has rightly
deleted the addition for unexplained share application money in
light of the relevant fact and material which remains
7
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
uncontroverted by the Ld. DR. We, thus confirm the finding of Ld.
CIT(A) deleting addition made by the ld. AO u/s 68 of the Act.
Ground No.1 raised by the revenue stands dismiss.
8. Apropos to ground no.2 which relates to addition of
Rs.19,70,098/- made by the ld. AO u/s 40a(ia) of the Act for non-
deduction of tax at source, the brief facts relating to this issue are
summarized in para 9.1 of the impugned order and the same reads
as follows:
9.1 The A.O. observed from the perusal of manufacturing &
other expenses debited in the Profit & Loss account that the
appellant had claimed commission & discount expenses of Rs.
52,26,858/- and there was increase of more than 59% as
compared to increase of 10% in sales from last year. The
appellant explained that as per practice prevalent in the textile
industry, they had to pay commission to various agents for
procurement of raw materials. Likewise, they had to pay
commission to agents for procuring sales. Details of these
commissions were furnished which showed that details of only
Rs. 26,18,864/ – was provided. On being confronted, the
appellant submitted that expenditure on commission and
discount paid during the year amounted to Rs. 52,26,858/-.
Details of discount allowed on sales amounting of
Rs.26,07,995/- were furnished. The A.O. noted that the
appellant had merely furnished the list giving name of parties
and amount totaling Rs. 26,07,995/- of discount given and
neither full address nor details of sales made in respect of
discount was furnished. The A.O. noted the appellant had tried
to disguise the payment of 26,70,994/- as discount. As TDS
had been deducted on commission payment of Rs.32,56,760/-
only out of the total payment of Rs.52,26,858/and no TDS was
deducted on the balance amount of Rs. 19,79,098/-,
disallowance ss]« 40(ia) was made.
8
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
8.1 We further find that before the ld. CIT(A) assessee made
following submissions:
“It is worth mentioning here that during the year under
consideration the total manufacturing and other expenses include
Rs. 52,26, 858/ – on account of commission and discount (your
good self may kindly refer to the schedule 7 annexed to the P&L
and Balance Sheet of the assessee for the year under
consideration). The detail of commission and discount is as under:
Serial No. Particulars Amount Amount(Rs. )
(Rs.) 2618864
1 Commission and brokerage on sales
262903 .00 .
2 Discount on sales
5.45
– 259999
3 Less: Amount Written back
Advertisement and 29040. 4.67
4 8000.00
publicity 52268
Total
58.67
The Ld AD while disallowing the Rs.19, 70,098/ – stating that the
balance commission paid by the assessee company is
contradictory by its nature as the Ld AO has not brought any fact
on record that all the amount shown under the head
“commiseion & Discount Expenses” amounting to Rs.
52,26,858/ – does not includes any amount of discount but to
represents commission amount only. And for this assumption he
has taken TDS amount as base which the assessee has deducted
and deposited to the Government account by backward
calculating the gross amount. In fact the Ld AD failed to
understand that the discount is the integral part of business
which is needed to be allowed as per custom of business and no
tax is liable to deduct on such discount.
Your honor, while carefully reading the order passed by the Ld
AD, it is found that he, himself mentioned that the assessee has
submitted the detail of Rs. 52,26,858/- of Commission and
Discount on 08.11.2011, therefore question of any confrontation
does not arise. Further, had the Ld AD been carefully go
through the submission of the assessee in respect of detail of
discount, he himself found that address of most of the parties to
whom discount has been given is already there in detail
submitted, however any further detail such as detail of sales to
them/ complete address of all these parties etc. was required the
Ld AO may ask the same during the course of assessment
proceedings the same may be provided. Further, merely taking the
ground that given name of parties and amount totaling of Rs.
2607995 of discount given shall not be the basis of disallowing
9
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
the expenses, as the assessee never denied to produced any
further details as asked by the Ld AO in this regard.
Therefore disallowance of Rs. 1970098/- as made by the Ld AO
is completely based on his imaginations, assumptions and
presumptions and has been made ignoring the facts of the case
and need to be deleted.
For the above we have relied on the following pronouncements:
1.Dhakeshwari Cotton Mills vs. CIT( 1954)26 ITR 775, SC
2.Brijbhushan Lal Praddyuman Kumar vs. CIT (1978)115 ITR
524, SC
3. Banshidhar Onkarmal vs. CIT (1953) 23 ITR353, HC
Orissa
4. Commissioner of Income Tax Vs. JDS ApperalsPvt. Limited
Source (2015) 273 CTR (Del) 1 : (2015) 113 DTR (Del) 137 :
(2015) 370 ITR 454 (Del) I HIGH COURT OF DELHI”
8.2 We further find that the ld. CIT(A) after considering submissions
made by the assessee deleted the addition observing as follows:
9.3 It is observed from schedule 7 annexed to the audited Final
Accounts that during the year under consideration the total
manufacturing and other expenses included Rs.52,26,858/ – on
account of Commission and Discount. The details furnished to
the A.O. showed that Commission and brokerage on sales was
Rs 26,18,864/- and Discount on sales was Rs 25,99,994/-. The
AO while disallowing the amount of Rs.19,70,098/- drew an
inference that the amount shown under the head “commission
& Discount Expenses” amounting to Rs. 52,26,858/- did not
include any amount of discount but represented commission
only. This assumption was based on the TDS amount which the
appellant had deducted. At page 3 of his order, the A.O. has
himself mentioned that the appellant had submitted the details
of Rs.52,26,858/ – of Commission and Discount on 08.11.2011.
Further, from the submission filed before the A.O., it is observed
that in respect of details of discount the address of most of the
parties to whom discount had been given was already there.
Further, from copy of order sheet maintained by the A.O. it is
observed that no further detail such as detail of sales / complete
address of all these parties etc. was ever asked by the A.O.
10
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
During appeal, the AR submitted summary of ‘commission and
discount’ along with the ledger copy of discount on sale. Copy of
Ledger account of all the parties to whom discount had been
allowed on sale has been filed which shows complete name and
address of the parties to whom discount has been allowed. The
accounts show that the discount has been allowed in normal
course of business. It is also seen that the AO failed to recognize
that the discount is an integral part of business which needs to
be allowed as per custom of business and no tax is liable to be
deducted on such discount.
9.4 In view of above, the disallowance of Rs. 19,70,098/-
made by the AO is found to be based on mere presumptions
and surmises. In the facts of the case, the disallowance is
found to be unjustified and is therefore, deleted.
8.3 From perusal of the above finding and the details filed before us
we note that sum of Rs. 52,26,858/- was shown in the financial
statements as expenditure towards commission and discount. In
this figure commission and brokerage on sales was Rs.26,18,864/-
and discount on sales was Rs.25,99,994/-. We also find that
assessee has filed complete details of discount and sales with name
and address and has been consistently giving such type of discount
on sales is the regular course of business. There is no dispute with
regard to the claim of commission of Rs. 26,18,864/-. Under these
given facts and circumstances, we find that the addition made by
the ld. AO at Rs.19,70,098/- was merely on surmises and
conjectures and was not supported by any material fact or evidence.
Thus, there seems no reason to interfere in the finding of Ld. CIT(A)
11
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
deleted the addition of Rs. 19,70,099/- u/s 40(a)(ia) of the Act.
Accordingly, sround no.2 raised by the revenue stands dismiss.
9. Apropos to ground no.3 relating to disallowance of legal and
professional expenses of Rs.16,08,000/- which have been deleted
by the ld. CIT(A) and revenue has challenged this finding, we note
that brief facts relating to this issue are discussed by the Ld. CIT(A)
in para 10.1 of the impugned order which reads as follows:-
10.1 The A.O. observed that legal & professional expenses of
Rs. 22,97,095/- were debited to P&L A/c as against Rs.
15,42,092/ – in the previous year. On being asked, the details
were furnished by the appellant. In respect of 6 persons
aggregating to Rs 16,08,000/-, the AO found that the appellant
had not furnished the purpose of payment to these persons. No
copies of contracts with these parties were furnished. Neither
PAN nor addresses are given. The A.a. concluded that the
appellant could not substantiate the expenditure. Therefore,
legal and professional expenses of Rs. 16,08,000/- were
disallowed.
9.1 We further find before Ld. CIT(A) assessee made detailed
submissions along with details of income Tax Return of the
professionals who offered the alleged amount to tax and the same
has been reproduced in the impugned order which reads as follows:
“The details required by the Ld AO was submitted during the
proceedings of the assessment to the extent demanded by him.
Further details were not submitted to him as they were not asked
by the Ld AD. He did not seek any further clarifications and
disallowed 1608000/ – out of the legal and professional expenses.
12
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
Sir in this regard we would like to submit that, the appellant has
produce all the books of accounts and no deficiencies has been
found by the Ld AO specially where the liability of deduction of
tax on various expenditures incurred by the assessee during the
year, this has been proved by this fact that the Ld AO has
disallowed expenditure by applying section 40a(ia) of the act in
the same assessment order in other head of account. Therefore it
is obvious that the applicability of this section has also been
seen during the assessment proceedings where payment of legal
and professional charges is concerned. Further while disallowing
these expenses the Ld AO is also not invoking the section 40a(ia)
which otherwise proves that the assessee has complied all the
mandatory provision of the act. Therefore, the Ld AO’s contention
that PAN was not produced by the assessee to these party does
not hold good. Similarly the Ld AO’s contention that no written
agreement with parties were not produced also not has much
importance where lot of work is done without written
agreements. However the same might have been produced during
assessment proceeding, if the same would have asked for.
However, the complete information of addresses of the above
mentioned six professional along with the copy of
acknowledgement of their IT returns for the A. Y. 2009-10, copy of
TDS certificates are furnished herewith. It is worth mentioning to
note that assessee has deducted the Tax at source as per mandate
given by the IT Act 1961 of these six professionals.
Further, the increment in a particular expenditure shall never be
the basis of disallowance until and unless it has not been proved
that the same has not been incurred for the purpose of business.
The Ld AO has not brought any fact on record that the
expenditure has not been incurred for the purpose of business.
We are relying on following judgment in this regard:
• S.A. Builders Limited vs. CIT: 288 ITR 1 (SC)
• CIT vs. Malayalam Plantations Limited: 53 ITR 140 (SC)
•CIT v. Birla Cotton Spg. And Wvg. Mills Ltd., 82 ITR 166 (SC)
•Madhav Prasad Jatia v. CIT U’P: 1181TR 200 (SC).
•CIT V. Bharti Televentures Ltd: 331 ITR 502 (Del HC)
•CIT v. Rockman Cycle Industries Ltd., 331 ITR 401 (P&H HC)
(FB)
• Hero Cycles (P) Ltd vs Commissioner of Income-tax (Central)
Ludhiana [(2015) 63 taxmann.com 308(SC)]”
13
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
9.2 We further find that ld. CIT(A) after appreciating the facts of the
issue relating to legal and professional charges, commercial
expediency and the settled legal principles deleted the disallowance
of legal and professional charges of Rs.16,08,000/- observing as
follows:
10.3 It is observed that the details required by the AO were
submitted during the assessment proceedings to the extent
asked. From the order sheet maintained by the A.O. and
produced by the appellant, it is observed that further details on
which the addition is based were never asked by the AO. It is
also observed that the appellant had produced books of
accounts before the A.O. and no deficiencies have been found
therein by the AO. In the circumstances, the A.O.’s finding that
PAN was not produced by the appellant is not found to be
reasonable. Further, the AO’s reason that no written agreement
with parties was produced is not material as such work in
many cases is got done without written agreements. In any
case such detail was never asked by the A.O. Further, another
basis of disallowance is that there has been increase in
expenditure in comparison to previous year. The A.O. has not
has not brought any fact on record to prove that the incremental
expenditure has not been incurred for the purpose of business.
10.4 During appeal, complete information of addresses of the
said six professionals along with the copy of acknowledgement
of their IT returns for the A.Y. 2009-10 and copies of relevant
TDS certificates have been filed. Further, copies of letters issued
by the appellant company to these professionals have been
filed which shows that they were engaged as Financial Advisor
/ Financial Controller / HR Consultant/ Marketting
Advisor/Medical Officer /Placement Services Consultant on
retainer ship basis. It is observed that the letter of engagement
do constitute as contract between the appellant company and
such professionals. It is further observed that the appellant has
duly deducted the TDS as per legal requirement. Furthermore, it
is observed that all these persons have filed their return of
income and declared the income received from the appellant in
their return of income. In the circumstances, there appears to be
no reason to doubt the genuineness of the payment without any
evidence to the contrary.
10.5 In this case, the A.O. has not brought any material on
record to substantiate that expenditure was not incurred for the
purpose of business. It is settled law that the A.O. cannot put
14
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
itself in the arm-chair of the businessman to decide how much
is reasonable expenditure having regard to the circumstances of
the case. The A.O. must not look at the matter from his own
view point but that of a prudent businessman.
10.6 The Hon’ble Supreme Court in the case of S.A. Builders
Limited vs. CIT, 288 ITR 1, held that:
” … once it is established that there was nexus between the
expenditure and the purpose of the business (which need not
necessarily be the business of the assessee itself], the Revenue
cannot justifiably claim to put itself in the arm-chair of the
businessman or in the position of the board of directors and
assume the role to decide how much is reasonable expenditure
having regard to the circumstances of the case. No businessman
can be compelled to maximize his profit. The income-tax authorities
must put themselves in the shoes of the assessee and see how a
prudent businessman would act. The authorities must not look at
the matter from their own view
point but that of a prudent businessman ”
10.7 In the case of Hero Cycles (P) Ltd vs Commissioner of Income-
tax (Central) Ludhiana [(2015) 63 taxmann.com 308(SC)],
the Hon’ble Supreme Court has again upheld the primary right
of any businessman/ organization to plan and conduct his/its
business, thus negating any attempts on the part of the revenue
to step into the shoes of an businessman and sit in judgment on
business decisions, particularly with regard to judging the
reasonableness of any expenditure and the commercial
prudence or correctness of any decision.
10.8 In view of the totality of facts and circumstances as
complete information of addresses of the said six professionals
along with the copy of their IT returns, copies of TDS certificates
showing due deduction of TDS and letters of engagement has
been filed, the disallowance cannot be termed as justified. The
addition is therefore, deleted.
10.9 This ground of appeal is allowed.
9.3 From perusal of the above finding as well as the documents filed
before us, we find that the legal and professional charges have been
claimed which have increased during the year as compared to the
preceding year. The amount in dispute at Rs.16,08,000/- which has
been given to six professional. All the details of the professional
15
Moenus Textile P. Ltd.
ITA No.821/Ind/2018
services provided by these six professional have been filed before
us. Tax has been deducted at source on prevailing rates of TDS.
The alleged amount received by six professional have been offered to
tax in their respective return of income. Under these facts and
circumstances of the case there remains no reason to question the
genuineness of the expenditure claimed by the assessee and ld.
CIT(A) has rightly appreciated the fact of this issue and deleted the
disallowance of Rs.16,08,000/- for which no interference is called
for. Thus, ground no.3 raised by the revenue stands dismiss.
10. In the result, appeal of the revenue in
ITANo.821/Ind/2018 is dismissed.
The order pronounced as per Rule 34 of ITAT Rules, 1963
on 30.11.2021.
Sd/- Sd/-
(MAHAVIR PRASAD) (MANISH BORAD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
दनांक /Dated : 30.11.2021
Patel/PS
Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/
DR, ITAT, Indore/Guard file.
By Order,
Asstt.Registrar, I.T.A.T., Indore
16
Comments