M/s Chunder Khatore & Associates, Kolkata V. Income Tax Officer, Ward - 54(1), Kolkata, Kolkata

ITA 2489/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4660 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 25-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K
• Assessee Lawyers: S M SURANA
• Section: 143(3); 194C; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 2489 / KOL / 2013 ASSESSMENT YEAR :2007-08 M/S CHUNDER KHATORE & ASSOCIATES, 10A, BRITISH INDIAFN STREET, ESPLANADE, KOLKATA-700069 [ PAN NO.AACFC 2397 N ] V/S . INCOME TAX OFFICER, WARD-54(1), KOLKATA, 3, GOVERNMENT PLACE, KOLKAT-700 001 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI S.M.SURANA, ADVOCATE /BY RESPONDENT SHRI A.K.PANDE, JCIT-DR /DATE OF HEARING 23-05-2016 /DATE OF PRONOUNCEMENT 17-06-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-XXXVI, KOLKATA DATED 12.08.201 3. ASSESSMENT WAS FRAMED BY ITO WARD-54(1), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 31.12.2009 FOR ASSESSMENT YEAR 2007-08. THE GROUNDS RAISED BY THE ASSESSEE PER ITS APPEAL ARE AS UNDER:- 1. FOR THAT THE ORDER OF THE LD. CIT(A) IS ARBITRA RY, ILLEGAL AND BAD IN LAW. 2. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.1257,040/- BEING THE PAYMENT MADE FOR HIRING CHA RGES IN CONNECTION WITH THE COMPLETION OF SPECIFIED WORK WHERE SERVICE S FOR PHYSICAL ITA NO.2489/KOL/2013 A.Y.2007-08 M/S CHUNDER KHATORE & ASSOCIATES V. ITO, WD-54( 1) KOL. PA GE 2 VERIFICATION OF ASSETS ALONG WITH LOCATION THEREOF, THE CLOSING STOCK, DIFFERENT STATUTORY REGISTERS AND BOOKS AND VARIOUS OTHER RELATED JOBS WAS TO BE CARRIED OUT FOR A NUMBER OF CLIENTS FOR W HICH THERE WERE RECEIPTS OF OVER RS.46 LAKHS. 3. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.12,57,040/- WHEN THE PAYMENT MADE FOR THE SERVIC ES TAKEN WAS QUIT4 REASONABLE CONSIDERING THE NATURE OF WORK. 4. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.9,71,000/- PAID TO 20 PERSONS WHEN THE DETAILS O F PARTIES INCLUDING THEIR ASSESSMENT PARTICULARS WERE FIELD, ALL OF THE M DISCLOSED THE RECEIPTS IN THEIR RETURNS AND THEREFORE GENUINITY O F THE CLAIM AND IDENTITY OF THE PARTIES CANNOT BE DISPUTED AND FURTHER THE S ERVICES RENDERED WERE PROVED WITH REFERENCE TO THE NATURE OF WORK DO NE BY THEM. 5. FOR THAT THE LD. CIT(A) ERRED IN DISALLOWING THE REMAINING SUM OF RS.2,86,040/- ( RS.12,57,040 9,71,000/ -) WITHOUT ANY FINDING THAT THE SAID PAYMENT WAS NOT GENUINE. 6. FOR THAT THE LD. CIT(A) ERRED IN DISALLOWING THE PAYMENT OF HIRING CHARGES TO 7 PARTIES AMOUNTING TO RS.2,33,652/- WIT HOUT ANY ADVERSE FINDING WHEN 7 PARTIES APPEARED BEFORE THE LD. CIT( A) AND ACCEPTED HAVING RECEIVE THE HIRING CHARGES. 7. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF 10% OF THE POCKET EXPENSES WHEN THERE WAS NO CLAIM AS SUCH BUT ONLY FOR THE PURPOSE OF ACCOUNTING THE REIMBURSEMENT OF THE EXPE NSES OF RS.8,39,858/- WAS SHOWN IN BOTH THE SIDES OF THE IN COME AND EXPENDITURE ACCOUNT. 8. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER OF THE CIT(A) BE MODIFIED AND THE ASSESSEE BE GIVEN THE RE LIEF PRAYED FOR. SHRI S.M.SURANA, LD. AUTHORIZED REPRESENTATIVE APPE ARED ON BEHALF OF ASSESSEE AND SHRI A.K.PANDE, LD. DEPARTMENTAL REPRE SENTATIVE APPEARED ON BEHALF OF REVENUE. 2. GROUND NO.1 TO 6 IN THIS APPEAL OF ASSESSEE ARE COMMON AND INTER- CONNECTED, WE CLUBBED TOGETHER AND PASS CONSOLIDATE D ORDER FOR THE SAKE OF CONVENIENCE. THE ISSUE RAISED IS THAT LD. CIT(A) ER RED IN CONFIRMING THE ORDER OF ASSESSING OFFICER BY DISALLOWING A SUM OF 12,57,040/- ON ACCOUNT OF TWO ITA NO.2489/KOL/2013 A.Y.2007-08 M/S CHUNDER KHATORE & ASSOCIATES V. ITO, WD-54( 1) KOL. PA GE 3 REASONS I.E. NON DEDUCTION OF TAX AT SOURCE (TDS FO R SHORT) U/S 194J OF THE ACT AND GENUINENESS OF EXPENSES. FACTS IN BRIEF ARE THAT ASSESSEE A PARTNERSHIP FIRM OF CHARTERED ACCOUNTANTS AND RENDE RING PROFESSIONAL SERVICES. DURING THE YEAR UNDER CONSIDERATION, ASSE SSEE CLAIMED AN EXPENSE OF 15,12,750/- UNDER THE HEAD CONSULTANCY & ACCOUNTI NG CHARGES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED T HAT EXPENSES CONSULTANCY & ACCOUNTANCY CHARGES WERE SUBJECT TO THE PROVISION OF TDS. ACCORDINGLY, HE SOUGHT CLARIFICATION REGARDING THE TDS PROVISION AND REQUESTED TO PRODUCE THE BILLS, VOUCHERS IN SUPPORT OF ITS EXPENDITURE. HOWEVER, ASSESSEE FAILED TO FURNISH THE SAME AND CL AIMED THAT THE EXPENSE SHOWN UNDER THE HEAD CONSULTANCY & ACCOUNTANCY CHA RGES ARE FACTUALLY SHOWN UNDER THE WRONG HEAD BUT IT SHOULD BE UNDER T HE HEAD HIRING CHARGES. IT WAS SUBMITTED THAT CERTAIN PERSONS WERE HIRED FO R PHYSICAL VERIFICATION STOCK AND FIXED ASSETS OF THE CLIENTS. AS SUCH NO PROFESS IONAL/ TECHNICAL SERVICES WERE INVOLVED IN THE ACTIVITY OF PHYSICAL VERIFICAT ION. THEREFORE, THE PROVISION OF SEC. 194C IS ATTRACTED IN PLACE OF SEC. 194J OF THE ACT. HOWEVER, AO OBSERVED THAT FOR THE PHYSICAL VERIFICATION OF THE CLIENTS BUSINESS, PERSON HAVING REQUISITES EXPERT KNOWLEDGE ARE REQUIRED. TH EREFORE THE ASSESSEE HAS DEFAULTED IN NOT DEDUCTING TDS 194J OF THE ACT. ACC ORDINGLY, AO HAS DISALLOWED A SUM OF 12,51,040/- ON ACCOUNT OF NON DEDUCTION OF TDS AND NON PRODUCTION OF DOCUMENTARY EVIDENCE AND ACCORDIN GLY ADDED THE SAME TO THE TOTAL INCOME OF ASSESSEE. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHEREAS ASSESSEE SUBMITTED THAT THE PROVISION OF SEC. 194J OF THE ACT APPLIES FOR THE EXPENSE OF PROFESSIONAL SERVICES AND TECHNICAL SERV ICES. THEREFORE THE PROVISIONS TO SEC. 194J ARE ATTRACTED ONLY IN CASE WHERE THE SERVICES ARE RENDERED BY A PERSON OF PROFESSIONALLY EDUCATED IN A PARTICULAR DISCIPLINE. IN THE INSTANT CASE, PAYMENTS ARE MADE TO LADIES AND GENTLEMEN WHO ARE NOT MUCH EDUCATED AND HAVE BEEN HIRED TO CONDUCT CLERIC AL WORKINGS LIKE COUNTING, RECORDING ETC. OF STOCK, COUNTING OF FIXE D ASSETS, LABELLING ETC. SUCH ITA NO.2489/KOL/2013 A.Y.2007-08 M/S CHUNDER KHATORE & ASSOCIATES V. ITO, WD-54( 1) KOL. PA GE 4 CLERICAL WORK REQUIRES NO SPECIFIC PROFESSIONAL SKI LL. BESIDES ABOVE, ASSESSEE SUBMITTED THAT THE PEOPLE WERE OUTSOURCED ONLY FOR LIMITED PURPOSE OF PHYSICAL VERIFICATION ACTIVITY OF THE CLIENTS BUSINESS AND THESE PEOPLE DO NOT WORK FOR A LONG TIME. THEY WERE HIRED FOR A SPAN OF 2/3 MONTHS . SOME PEOPLE WERE HIRED ASSIGNMENT-WISE AND THEY LEAVE THE FIRM ONCE THE AS SIGNMENT IS COMPLETE. THEREFORE, IT IS NOT POSSIBLE TO COLLECT THE REQUIR ED INFORMATION ABOUT THE PEOPLE TO WHOM THE CHARGES WERE PAID. IT IS ALSO TO NOTE THAT HIRED PEOPLE WERE NON-TECHNICAL BUT ALL OF THEM WERE WORKING UND ER THE SUPERVISION OF A TECHNICAL PERSON. ACCORDINGLY, THE CONTENTION OF AS SESSEE IS THAT WORK CANNOT BE RENDERED BY THE NON-TECHNICAL PERSON IS NOT VALI D. IN PROVING THE GENUINENESS OF THE EXPENCES, ASSESSEE HAD SUBMITTED WRITTEN SUBMISSION AND RELEVANT EXTRACT IS REPRODUCED BELOW:- 3.4 THE A/R OF THE APPELLANT FILED HIS WRITTEN SUB MISSION, THE RELEVANT PORTION OF WHICH IS REPRODUCED HEREIN BELOW:- 1. IT IS HUMBLY SUBMITTED THAT THE APPELLANT FIRM IS A CHARTERED ACCOUNTANTS FIRM RENDERING PROFESSIONAL SERVICES. T HE APPELLANT FIRM HAD RENDERED SERVICE IN THE NATURE OF TAKING P HYSICAL VERIFICATION OF STOCK, OF CLIENTS FIXED ASSETS ETC. , DURING THE YEAR AND HAD ENGAGED THE SERVICES OF VARIOUS PERSONNEL T O WHOM HIRING PERSONNEL CHARGES OF RS.12,57,040/- HAVE BEE N PAID. THE AMOUNT HAS BEEN PAID FOR CONTRACTING / HIRING PEOPL E FOR EFFECTIVELY CARRYING OUT THE PROFESSIONAL SERVICES. THE LD. ASSESSING OFFICER HAD DISALLOWED THE EXPENS ES U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT TDS U/S. 194J OF INCOME TAX ACT, 1961 HAS NOT BEEN DEDUCTED. IT IS HUMBLY SUBMITTED IN THIS REGARD THAT THE CONSULTANCY CHARG ES ARE IN THE NATURE OF HIRING CHARGES PAID FOR HIRING NON QUALIF IED PERSONNEL. SECTION 194J READS AS FOLLOWS: 194J.(1) ANY PERSON, NOT BEING AN INDIVIDUAL OR A H INDU UNDIVIDED FAMILY, WHO I RESPONSIBLE FOR PAYING TO A RESIDENT ANY SUM BY WAY OF (A) FES FOR PROFESSIONAL SERVICES, OR (B) FEES FOR TECHNICAL SERVICES .. . . .. . SHALL, AT THE TIME OF CREDIT OF SUCH SUM DEDUCT AN AMOUNT EQUAL TO TEN PER CENT OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN: ITA NO.2489/KOL/2013 A.Y.2007-08 M/S CHUNDER KHATORE & ASSOCIATES V. ITO, WD-54( 1) KOL. PA GE 5 EXPLANATION . FOR THE PURPOSES OF THIS SECTION,- (A) PROFESSIONAL SERVICES MANS SERVICES RENDERED BY A PERSON IN THE CURSE OF CARRYING ON LEGAL, MEDICAL, ENGINEE RING OR ARCHITECTURAL PROFESSION OR THE PROFESSION OF ACCOU NTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR ADV ERTISING OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD F OR THE PURPOSES OF SECTION 44AA OR OF THIS SECTION. THUS, SECTION 194J IS ATTRACTED ONLY IN CASES WHERE THE SERVICES ARE RENDERED BY A PROFESSIONAL EDUCATED IN A PARTICULAR DISCIPLINE. IN THE PRESENT CASE, AS RIGHTLY POINTED OUT BY THE AO, THE PAYMENTS ARE MADE TO LADIES AND GENTLEMEN WHO ARE NOT MUCH EDUCATED A ND HAVE BEEN HIRED TO CONDUCT CLERICAL WORKINGS LIKE COUNTING, R ECORDING ETC OF STOCK, COUNTING OF FIXED ASSETS, LABELING ETC. SUCH, CLERI CAL WORK REQUIRES NO SPECIFIC PROFESSIONAL SKILL. HOWEVER, LD. CIT(A) DISREGARDED THE PLEA TAKEN BY A SSESSEE THAT PAYMENTS WERE MADE TO CLERICAL ASSISTANCE AND MANY OF THEM W ORKED AS STUDENT OF CA / CS / ICWA WHICH IS CLEARLY OF THE NATURE OF FEES OF PROFESSIONAL SERVICES AND THEREFORE ATTRACTS THE PROVISION OF SEC.194J OF THE ACT. 3.1 LD. CIT(A) ALSO DOUBTED THE GENUINENESS OF THE EXPENDITURE CLAIMED BY ASSESSEE ON THE GROUND THAT THE ALLEGED PERSONS TO WHOM PAYMENTS WERE MADE DID NOT APPEAR IN RESPONSE TO SUMMON ISSUED TO THEM. IN MANY OCCASION, SUMMONS ISSUED CAME BACK AS UN-SERVED. LD . CIT(A) ALSO REJECTED THE DOCUMENTS SUBMITTED BY THE ASSESSEE AT THE TIME OF HEARING ON THE GROUND THAT DOCUMENTS SUBMITTED ARE NOT RELIABLE AN D HE CONFIRMED THE ACTION OF AO. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 4. BEFORE US LD. AR SUBMITTED THAT PAYMENTS WERE NO T MADE TO PEOPLE WHO ARE TECHNICALLY QUALIFIED AS REQUIRED U/S 44AA OF THE ACT. THE PAYMENTS TO THE PERSONS ARE COVERED U/S. 194C OF THE ACT AND IN EACH CASE THE PAYMENT IS BELOW 50,000/- PER PERSON FOR THE ENTIRE YEAR. SO ASSESS EE IS OUT OF THE ITA NO.2489/KOL/2013 A.Y.2007-08 M/S CHUNDER KHATORE & ASSOCIATES V. ITO, WD-54( 1) KOL. PA GE 6 PURVIEW OF TDS PROVISION AS SPECIFIED U/S. 194C OF THE ACT. FURTHER, LD AR STATED THAT ASSESSEE HAS SUBMITTED THE COPIES OF IT RETURNS ALONG WITH PAN OF VARIOUS PERSONS, THE DETAILS OF THE CLIENTS FOR WHI CH PHYSICAL VERIFICATION OF THE STOCK / FIXED ASSETS WERE CARRIED OUT WHICH IS PLAC ED ON RECORD. HE REQUESTED THE BENCH TO DECIDE THE ISSUE ON MERIT. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF A UTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE AFORESAID DISCUSSION, WE FIND THAT ASSESSEE HAS INCURRED THE EXPENSES BY HIRING THE 30 PEOPLE FOR T HE ACTIVITY OF PHYSICAL VERIFICATION OF FIXED ASSETS AND STOCK OF THE CLIEN T. THE AO TREATED THE PAYMENT TO THE SAID PERSONS AS PROFESSIONAL CHARGES AND DIS ALLOWED THE SAME ON ACCOUNT OF NON-COMPLIANCE OF THE PROVISIONS OF SECT ION 194J OF THE ACT. THE AO ALSO DISALLOWED THE SAME DUE TO NON PRODUCTION O F THE SUPPORTING DOCUMENTS. HOWEVER WE FIND FROM THE ORDER OF LD. CI T(A) PAYMENTS WERE MADE TO 30 PERSONS AND OUT OF 30 PERSONS 17 PERSONS HAD SUBMITTED DOCUMENTS; 4 PERSONS HAD APPEARED BEFORE ASSESSING OFFICER AND 7 PERSONS HAD APPEARED BEFORE LD. CIT(A). SO THE TOTAL 28 PER SONS OUT OF 30 PERSONS HAVE MADE REPRESENTATION BEFORE INCOME TAX AUTHORIT IES. THEREFORE, THE GENUINENESS OF THE PARTIES FOR HAVING THE TRANSACTI ONS CANNOT BE DOUBTED. THE POSSIBILITY OF NON-SUBMISSION OF SUPPORTING DOCUMEN TS IN TWO/ THREE CASES CANNOT BE RULED OUT AND THAT CANNOT BE THE BASIS FO R MAKING THE DISALLOWANCE. BESIDES THE ABOVE WE FIND THAT THE OBSERVATION OF T HE LD. CIT(A) THAT THE PAYMENT WAS MADE INTER-ALIA TO THE STUDENTS PURSUIN G CA/CS/ICWA PROFESSIONAL COURSES THEREFORE PROVISIONS OF SECTIO N 194J IS APPLICABLE, IN OUR VIEW IS NOT TENABLE. IT IS BECAUSE THAT THOSE ARE T HE STUDENTS PURSUING THE PROFESSIONAL COURSE AND THEY HAVE NOT ACTUALLY ATTA INED THE PROFESSIONAL DEGREE BY GETTING THEMSELVES ADMITTED IN THE PROFES SIONAL COURSE. THE EXPLANATION TO SECTION 194J DEFINES ' PROFESSIONAL SERVICES '. ' PROFESSIONAL SERVICES ' MEANS SERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON ITA NO.2489/KOL/2013 A.Y.2007-08 M/S CHUNDER KHATORE & ASSOCIATES V. ITO, WD-54( 1) KOL. PA GE 7 LEGAL, MEDICAL, ENGINEERING OR ARCHITECTURAL PROFES SION OR THE PROFESSION OF ACCOUNTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DE CORATION OR ADVERTISING OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD F OR THE PURPOSES OF SECTION 44AA OR OF THIS SECTION. NOTIFIED PROFESSIONS UNDER SECTION 44AA ARE IN TERM S NOTIFICATION NO. S.O. 17(E), DATED 12TH JANUARY, 19 77 ISSUED UNDER SECTION 44AA PRESCRIBED THE FOLLOWING PROFESSIONS : (A) THE PROFESSION OF AUTHORISED REPRESENTATIVE 'AUTHORISED REPRESENTATIVE' MEANS A PERSON, WHO REP RESENTS ANY OTHER PERSON, ON PAYMENT OF ANY FEE OR REMUNERATION, BEFO RE ANY TRIBUNAL OR AUTHORITY CONSTITUTED OR APPOINTED BY OR UNDER ANY LAW FOR THE TIME BEING IN FORCE, BUT DOES NOT INCLUDE AN EMPLOYEE OF THE PERS ON SO REPRESENTED OR A PERSON CARRYING ON LEGAL PROFESSION OR A PERSON CAR RYING ON THE PROFESSION OF ACCOUNTANCY. (B) THE PROFESSION OF FILM ARTIST : 'FILM ARTIST' MEANS ANY PERSON ENGAGED IN HIS PROFESSIONAL CAPACITY IN THE PRODUCTION OF A CINEMATOGRAPH FILM, WHETHER PRODUCE D BY HIM OR BY ANY OTHER PERSONS AS (I) AN ACTOR; (II) A CAMERAMAN; (III) A DIRECTOR, INCLUDING AN ASSISTANT DIRECTOR; (IV) A MUSIC DIRECTOR, INCLUDING AN ASSIS TANT MUSIC DIRECTOR; (V) AN ART DIRECTOR, INCLUDING AN ASSISTANT ART DIRECTOR; (VI) A DANCE DIRECTOR, INCLUDING AN ASSISTANT DANCE DIRECTOR; (VII) AN EDITOR; (VIII) A SINGER; (IX) A LYRICIST; (X) A STORY WRITER; (XI) A SCREEN PLAY WRITER; (XII) A DIALOGUE WRITER; AND (XIII) A DRESS DESIGNER. THE NOTIFICATION NUMBER S.O. 2675 DATED 25TH SEPTEM BER, 1992 UNDER SECTION 44AA PRESCRIBED PROFESSION OF COMPANY SECRETARY. PROFESSION DEFINED UNDER SECTION 2(36) SECTION 2(36) DEFINES ' PROFESSION ' INCLUDES VOCATION. BUT THIS DEFINITION CANNOT BE USED FOR SECTION 194J BECAUSE THE EXPLANA TION TO SECTION 194J SPECIFICALLY DEFINED ' PROFESSIONAL SERVICES ' FOR PURPOSE OF SECTION 194J. ITA NO.2489/KOL/2013 A.Y.2007-08 M/S CHUNDER KHATORE & ASSOCIATES V. ITO, WD-54( 1) KOL. PA GE 8 TECHNICAL SERVICES 'FEES FOR TECHNICAL SERVICES ' IS DEFINED IN EXPLANATION (B) TO SECTION 194J. IT STATES THAT 'FEES FOR TECHNICAL SERVICES ' SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VI) OF SUB-SECTION (1) OF SECTION 9. THE EXPLANATION 2 TO CLAUSE (VI) OF SUB-SECTION (1) OF SECTION 9 STATES THAT 'FEES FOR TECHNICAL SERVICES ' MEANS ANY CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGER IAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR A NY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEA D 'SALARIES'. IN VIEW OF ABOVE, WE FIND THAT THE AFORESAID EXPEND ITURE CLAIMED BY THE ASSESSEE UNDER THE HEAD CONSULTANCY & ACCOUNTING CH ARGES DOES NOT REPRESENT THE PROFESSIONAL SERVICES AS EXPLAINED UN DER SECTION 194J OF THE ACT. MERELY THE ASSESSEE HAS CLAIMED THE NOMENCLATU RE UNDER THE HEAD CONSULTANCY WILL NOT AMOUNT TO PROFESSIONAL SERVICE S. NO DOUBT THE SERVICES GIVEN BY THE CA FIRM TO ITS CLIENTS IN THE INSTANT CASE AMOUNTS TO PROFESSIONAL SERVICES BUT THE SERVICES AVAILED BY THE FIRM FROM OUTSIDE FOR THE PHYSICAL VERIFICATION OF STOCK DO NOT AMOUNT TO PROFESSIONAL SERVICES. HENCE THE PAYMENTS MADE ARE COVERED UNDER THE PROVISIONS OF S ECTION 194C OF THE ACT. WE ALSO FURTHER FIND THAT IN NONE OF THE CASE, THE PAYMENT HAS EXCEEDED RS.50,000/-, WE ALSO FIND THAT 28 PERSONS HAD MADE REPRESENTATION BEFORE INCOME TAX AUTHORITY AND THE LD. AR HAS SUBMITTED T HE COPIES OF INCOME TAX RETURNS ALONG WITH PAN OF VARIOUS PERSONS. WE ACCOR DINGLY, CONSIDERING THE TOTALITY OF THE FACTS OF THE PRESENT CASE, WE ARE I NCLINED TO REVERSE THE ORDERS OF AUTHORITIES BELOW. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. ASSESSING OFFICER IS DIRECTED ACCORDINGLY. ITA NO.2489/KOL/2013 A.Y.2007-08 M/S CHUNDER KHATORE & ASSOCIATES V. ITO, WD-54( 1) KOL. PA GE 9 6. COMING TO NEXT ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OUT OF OFFICE EXPENSE INCURRED BY ASSESSEE TO THE EXTENT OF 10% OF 8,39,858/-. DURING THE YEAR ASSESSEE HAS CLAIMED REIMBURSEMENT EXPENSE FOR AN AMOUNT OF 8,39,858/- BY CREDITING IN ITS PROFIT AND LOSS ACCO UNT. THIS REIMBURSEMENT EXPENSE WAS CLAIMED BY ASSESSEE FROM ITS CLIENTS ON ACTUAL BASIS OF THE EXPENDITURE INCURRED. AGAINST THE RECEIPT OF SUCH R EIMBURSEMENT EXPENSES AND ASSESSEE HAS CLAIMED EXPENSES OF 8,39,858/- EXACTLY SAME AMOUNT BY DEBITING THE PROFIT AND LOSS A/C. ON VERIFICATION OF EXPENSE CLAIMED BY ASSESSEE, THE AO FOUND THAT IN SOME CASES SELF-MADE VOUCHERS WERE AVAILABLE AND IN SOME CASES THERE WAS NO VOUCHER IN SUPPORT OF EXPENSES CLAIMED BY ASSESSEE. ACCORDINGLY, AO OPINED THAT TH E POSSIBILITY OF PERSONAL EXPENSE CANNOT BE RULED OUT THEREFORE 20% OF RS.8,3 9,858/- WHICH COMES TO RS.1,67,972/- WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF ASSESSEE. 7. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO HAS REDUCED THE DISALLOWANCE MADE BY AO FROM 20% TO 10% . BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE FIND THAT ASSESSEE HAS SH OWN REIMBURSEMENT OF EXPENSE FOR AN AMOUNT OF 8,39,858/- EXACTLY AS AGAINST THE RECEIPT OF RS. 8,39,858.00. THE AO DURING THE ASSESSMENT PROCEEDIN G OBSERVED THAT IN SUPPORT OF THE EXPENDITURE SELF-MADE VOUCHERS WERE AVAILABLE AND IN SOME CASES THERE WAS NO VOUCHER AVAILABLE. THE AO ACCORD INGLY OPINED THAT PERSONAL EXPENSE CANNOT BE RULED OUT AND HE MADE TH E ADDITION @ 20% AT 8,39,858/- WHICH WAS REDUCED BY LD. CIT(A) AT 10%. FROM THE FACTS OF THE ITA NO.2489/KOL/2013 A.Y.2007-08 M/S CHUNDER KHATORE & ASSOCIATES V. ITO, WD-54( 1) KOL. PA GE 10 CASE, WE FIND THAT AO HAS NOT BROUGHT OUT ANY SPECI FIC GROUND SO AS TO DISALLOWING THE EXPENSE AS CLAIMED IN ASSESSEES PR OFIT AND LOSS A/C. HE HAS DISALLOWED THE EXPENSES ON AD HOC BASIS WITHOUT APPRECIATING THE FACT THAT INCOME SHOWN BY ASSESSEE IN THE FORM OF REIMBURSEME NT OF EXPENSE AND EXPENDITURE CLAIMED IN THE FORM OF REIMBURSEMENT EX PENSES ARE EQUAL. THEREFORE, IN OUR CONSIDERED VIEW, THE QUESTION OF HAVING ANY INCOME OUT OF REIMBURSEMENT OF EXPENSE DOES NOT ARISE. THEREFORE, WE ARE INCLINED TO REVERSE THE ORDERS OF AUTHORITIES BELOW AND ISSUE R AISED BY ASSESSEE IS ALLOWED. AO IS DIRECTED ACCORDINGLY. 9. LAST ISSUE OF ASSESSEES APPEAL IN GROUND NO.8 I S GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 10. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 17/ 06/2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 17 / 06 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S CHUNDER KHATORE & ASSOCIATES, 10A, B RITISH INDIAFN STREET, ESPLANADE, KOLKA TA-700 069 2. /RESPONDENT-ITO, WARD-54(1), 3, GOVT. PLACE, KOLKAT A-700001 3. ) *+, , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5.01233*+, , *+ , / DR, ITAT, KOLKATA 6.26789 / GUARD FILE. BY ORDER/ ,, /TRUE COPY/ / , *+ ,