DCIT, New Delhi V. M/s. Grintex India Ltd., Gurgaon

ITA 4622/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1488 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 30-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VED JAIN ADV SHRI ASHISH GOYAL
• Keywords: Gift; Additional evidence; Corroborative evidences; TDS
• Section: 40A(3); 142(1); 37(1); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: BENCH C, NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO. 4622/DEL/2016 AY: 2012-13 DCIT CIRCLE- 10(2) NEW DELHI VS. GRINTEX INDIA LTD. 7 TH FLOOR, LEFT WING, JMD PACIFIC SQUARE, SECTOR- 15, PART- II GURGAON, PIN- 122001 PAN NO: AAACG3456F APPELLANT RESPONDENT REVENUE BY : SHRI AMIT KATOCH, SR. DR ASSESSEE BY : SHRI VED JAIN, ADV. SHRI ASHISH GOYAL, C.A. DATE OF HEARING : 28/05/2019 DATE OF PRONOUNCEMENT : 10/06/2019 ORDER PER SUCHITRA KAMBLE, JUDICIAL MEMBER THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 08/06/2016 PASSED BY CIT(A)-4, NEW DELHI FOR ASSESSMENT YEAR 2012-13. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.37,71,846/- MADE ON ACCOUNT OF BUSINESS PROMOTION EXPENSES, IGNORING THE FACT THAT THE ASSESSEES COM PANY DOES NOT SUBSTANTIATE THE SAME WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE COMPANY. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1.17,939/- MADE U/S 40A(3) IGNORING THE FACT THAT THE PAYMENTS ARE MADE IN CASH IN EXCESS OF RS. 20,000/. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE & IN LAW, THE LD. CIT(A) ERRED ITA NO. 4622/DEL/2016. GRINTEX INDIA LTD. IN DELETING THE ADDITION OF RS.11,03,000/- MADE ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES IGNORING THE FACT THAT SEPARATE AUDITING FE ES HAS BEEN PAID BY THE ASSESSEE COMPANY. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.L6,00,000/- MADE ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES IGNORING THE FACT THAT THERE IS NO WRITTEN AGREEMENT WITH THE SISTER CONCERN FROM WHOM THE COMPANY TAKES SERVICES. 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 13,41,982/- MADE ON ACCOUNT OF OFFICE EXPENSES IGNORING THE FACT THAT THE SAME ARE NOT USED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE COMPANY. 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 38,91,474/- MADE ON ACCOUNT OF TRAVELLING AND CONVEYANCE EXPENSES IGNORING THE FACT THAT THE SAME IS USED BY THE DIRECTOR FOR HIS PERSONAL PURPOSES. 7. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 3,07,102/- MADE ON ACCOUNT OF REPAIR AND MAINTENANCE EXPENSES IGNORING THE FACT THAT THE SAM E WERE NOT USED BY THE ASSESSEE COMPANY FOR ITS BUSINESS ACTIVITY. 8. THE APPELLANT CRAVES LEAVE, TO ADD, ALTER OR AME ND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 3. DURING THE RELEVANT ASSESSMENT YEAR UNDER CONSID ERATION, THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF CONTRACT AND CONSULTANCY. ASSESSEE FILED RETURN OF INCOME/LOSS DECLARING AN INCOME OF RS. 1,32,49,680/- ON 25.09.2012. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 WAS ISSUED ON 23.09.201 3. AGAIN NOTICE U/S 142(1) ALONG WITH QUESTIONNAIRE WAS ISSUED ON 24.11 .2014. IN RESPONSE TO NOTICES, C.A./AUTHORIZED REPRESENTATIVES APPEARED F ROM TIME TO TIME AND FILED THE REQUISITE DETAILS AS WELL AS BOOKS OF ACCOUNTS WHICH WERE TAKEN ON RECORD AND CHECKED BY THE ASSESSING OFFICER. THE ASSESSIN G OFFICER VIDE ORDER DATED 31.03.2015 MADE VARIOUS ADDITIONS/DISALLOWANCES AND ASSESSED TOTAL INCOME AT RS. 8,44,66,430/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE AP PEAL OF THE ASSESSEE. ITA NO. 4622/DEL/2016. GRINTEX INDIA LTD. 5. AS REGARDS TO GROUND NO. 1 RELATING TO ADDITION OF RS. 37,71,846/- MADE ON ACCOUNT OF BUSINESS PROMOTION EXPENSES, THE LD. DR SUBMITTED THAT THE CIT(A) IGNORED THE FACT THAT THE ASSESSEE COMPANY D OES NOT SUBSTANTIATE THE SAID EXPENSES WAS INCURRED WHOLLY AND EXCLUSIVELY F OR THE PURPOSE OF THE COMPANY. THE LD. DR FURTHER RELIED UPON THE ASSESSM ENT ORDER. AS REGARDS GROUND NO. 2 RELATING TO ADDITION OF RS. 1,17,939/- MADE U/S 40A(3), THE LD. DR SUBMITTED THAT THE CIT(A) ERRED IN DELETING THE SAME BY IGNORING THE FACT THAT THE PAYMENTS ARE MADE IN CASH IN EXCESS OF RS. 20,000/-. AS REGARDS TO GROUND NO. 3 RELATING TO ADDITION OF RS. 11,03,000/ - MADE ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES, THE LD. DR SUBMITTED THAT SEPARATE AUDITING FEES WAS PAID BY THE ASSESSEE COMPANY AND THEREFORE THE ASSE SSING OFFICER RIGHTLY MADE THIS ADDITION. AS REGARDS TO GROUND NO. 4 RELATING TO ADDITION OF RS. 16,00,000/- MADE ON ACCOUNT OF LEGAL AND PROFESSION AL CHARGES, THE LD. DR SUBMITTED THAT THE CIT(A) ERRED IN FACT THAT THERE IS NO WRITTEN AGREEMENT WITH THE SISTER CONCERN FROM WHOM THE COMPANY TAKES SERV ICES. AS REGARDS TO GROUND NO. 5 RELATING TO ADDITION OF RS. 13,41,982/ - MADE ON ACCOUNT OF OFFICE EXPENSES, THE LD. DR SUBMITTED THAT THE SAME ARE NO T USED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE COMP ANY. AS REGARDS TO GROUND NO. 6 RELATING TO ADDITION OF RS. 38,91,474/- MADE ON ACCOUNT OF TRAVELLING AND CONVEYANCE EXPENSES, THE LD. DR SUBMITTED THAT THE CIT(A) IGNORED THE FACT THAT THE SAME IS USED BY THE DIRECTOR FOR HIS PERSO NAL PURPOSES. AS REGARDS TO GROUND NO. 7 RELATING TO ADDITION OF RS. 3,07,102/- MADE ON ACCOUNT OF REPAIR AND MAINTENANCE EXPENSES, THE LD. DR SUBMITTED THAT THE CIT(A) IGNORED THE FACT THAT THE SAME WERE NOT USED BY THE ASSESSEE CO MPANY FOR ITS BUSINESS ACTIVITY. 6. THE LD. AR SUBMITTED THAT ALL THESE ADDITIONS WE RE MADE BY THE ASSESSING OFFICER ON AD-HOC BASIS AND CIT(A) HAS RI GHTLY DELETED THESE ADDITIONS. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS TO GROUND NO. 1, TH E CIT(A) HELD AS UNDER: ITA NO. 4622/DEL/2016. GRINTEX INDIA LTD. 13.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, WRI TTEN SUBMISSIONS, PAPER BOOK AND REMAND REPORT OF THE AO. THE APPELLA NT HAS CLAIMED EXPENDITURE OF RS. 26,40,292/- UNDER THE HEAD BUSIN ESS PROMOTION IN SUPPORT OF WHICH THE APPELLANT SUBMITTED THE COPY OF BILLS AND VOUCHERS MAINTAINED. THE AO IN THE ASSESSMENT ORDER FOUND THAT MOST OF T HE EXPENSES UNDER THE HEAD BUSINESS PROMOTION ARE UTILIZED BY THE DIRECTO R OF THE COMPANY FOR ITS PERSONAL PURPOSES. IN VIEW OF THE SAME, THE AO DISA LLOWED THE 70% OF THE ABOVE EXPENDITURE. IN THE WRITTEN SUBMISSIONS THE A PPELLANT HAS CONTENDED THAT BUSINESS EXPEDIENCY OF THE EXPENDITURE CANNOT BE QUESTIONED BY THE AO SITTING IN THE CHAIR OF BUSINESSMAN. I HAVE EXAMINE D THE DETAILS SUBMITTED BY THE APPELLANT. IT IS SEEN THAT THE EXPENSES INCURRE D BY THE APPELLANT ARE MAINLY ON ACCOUNT OF HOTEL PAYMENTS AND GIFT PURCHA SED FOR DISTRIBUTION ON FESTIVALS. IT IS OBSERVED THAT THE AO IN THE ASSESS MENT ORDER HAS NOT BEEN ABLE TO POINT OUT ANY SPECIFIC DEFECT IN THE DOCUMENTARY EVIDENCE IN THE FORM OF BILLS AND VOUCHERS SUBMITTED BY THE APPELLANT. FURTHER TH E ADDITION HAS BEEN MADE ON AD-HOC BASIS WHICH IS NOT SUSTAINABLE UNDER THE PROVISIONS OF THE ACT. IN VIEW OF THE SAME, THE AO WAS NOT JUSTIFIED IN T REATING THE EXPENDITURE AS PERSONAL IN NATURE AS HE HAS NOT BEEN ABLE TO BRING ANY EVIDENCE ON RECORD WHICH COULD PROVE HIS ALLEGATIONS. FURTHER, I AGREE WITH THE CONTENTION OF THE APPELLANT THAT THESE EXPENSES ARE REQUIRED TO BE IN CURRED TO BUILD STRONG RELATIONSHIP WITH THE EMPLOYEES, VENDORS AND CLIENT S OF THE APPELLANT COMPANY THE SUBMISSION OF THE APPELLANT ON THIS ISS UE WAS ALSO FORWARDED TO THE AO. THE REMAND REPORT OF THE AO IS SILENT ON TH IS ISSUE AND SUBMISSION MADE BY THE APPELLANT IN THIS REGARD. HE HAS NOT CO NTROVERTED ABOVE FACTS. SINCE, THESE EXPENSES HAVE BEEN INCURRED WHOLLY OF THE PURPOSE OF THE COMPANY; THE SAME IS AN ALLOWABLE EXPENDITURE UNDER SECTION 37(1) OF THE ACT. THE AO IS DIRECTED TO DELETE THE AD-DISALLOWANCE OF RS. 26,40,292/-. THE ASSESSING OFFICER MERELY DOUBTED NATURE OF TWO EXPENSE VOUCHERS INCURRED ON ACCOUNT OF PURCHASE OF DIAMOND SET AND WATCHES, AGGREGATE OF WHICH COMES TO RS. 8,82,684/-, CAME TO A CONCLUSION THAT THE EN TIRE EXPENDITURE WAS NOT WHOLLY INCURRED FOR BUSINESS PURPOSES. THUS THE ASS ESSING OFFICER MADE THE DISALLOWANCE OF EXPENDITURE ON AD-HOC BASIS. THE CO NCEPT OF AD-HOC DISALLOWANCE HAS BEEN REPEATEDLY DETERRED BY THE HO NBLE HIGH COURT AND ADDITION MADE ON SUCH BASIS IS LIABLE TO BE SET ASI DE. THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. MS. SHEHNAZ HUSSAIN 267 IT R 572 (DEL) HELD THAT ADDITION MADE ON ESTIMATE AND HYPOTHETICAL GROUNDS WITHOUT ANY CONCRETE ITA NO. 4622/DEL/2016. GRINTEX INDIA LTD. MATERIAL OR EVIDENCE CANNOT BE SUSTAINED. THUS, THE CIT(A) HAS RIGHTLY DELETED THIS ADDITION WITH THE PROPER FINDINGS. THERE IS NO NEED TO INTERFERE WITH THE SAME. GROUND NO. 1 OF THE REVENUES APPEAL IS DISMI SSED. 8. AS REGARDS TO GROUND NO. 2, THE CIT(A) HELD AS U NDER: 14.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, WRI TTEN SUBMISSIONS, PAPER BOOK AND REMAND REPORT OF THE AO. THE AO HELD THAT THE APPELLANT HAD INCURRED THE EXPENDITURE OF RS. 5,75,916/- IN CONTR AVENTION OF PROVISIONS OF SECTION 40(3) OF THE ACT AND THE SAME WAS DISALLOWE D ACCORDINGLY. IN THIS REGARD, CONTENTION OF THE APPELLANT IS THAT THE AMO UNT REFLECTED IN THE ASSESSMENT ORDER IS THE AMOUNT OF EXPENDITURE AGAIN ST WHICH VARIOUS CASH PAYMENTS HAVE BEEN MADE AND NO SINGLE PAYMENT MADE IS EXCEEDING RS. 20000/-. FURTHER THE PAYMENTS MADE TO SHRI P BALAKR ISHNAN WERE ON ACCOUNT OF REIMBURSEMENTS MADE B TO VARIOUS EMPLOYEES OF TH E COMPANY AND NO SINGLE PAYMENT EXCEEDS RS.20,000/-. THE SUBMISSION OF THE APPELLANT ON THIS ISSUE WAS ALSO FORWARDED TO THE AO. THE REMAND REPO RT OF THE AO IS SILENT ON THIS ISSUE AND SUBMISSION MADE BY THE APPELLANT IN THIS REGARD. HE HAS NOT CONTROVERTED ABOVE FACTS. I HAVE EXAMINED THE ISSUE, THE CONTENTION OF THE A PPELLANT IS ACCEPTABLE TO THE EXTENT THAT THE CASH PAYMENTS TO MR. P BALAKRIS HNAN WERE ON ACCOUNT OF REIMBURSEMENTS TO VARIOUS EMPLOYEES FOR VARIOUS PET TY EXPENSES INCURRED BY THEM. AS REGARDS, THE OTHER EXPENSES THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM. THE AO IS DIRECTED TO DELET E THE DISALLOWANCE TO THE EXTENT OF RS. 1,17,939/-. THIS GROUND OF APPEAL IS PARTLY ALLOWED. IT IS PERTINENT TO MENTION THAT THE AMOUNT BOOKED BY THE ASSESSEE COMPANY IS IN THE FORM OF REIMBURSEMENT AND NOT THE PAYMENT TO THE OUTSIDE PARTY IN EXCESS OF RS. 20000. FROM THE RECORDS IT CAN BE SEEN THAT NO SINGLE EXPENDITURE INCURRED BY MR. P. BALA KRISHNAN IS IN EXCESS OF RS. 20000/-. ALL THESE FACTS WERE TAKEN INTO CONSIDERATION BY THE CI T(A) AND HAS RIGHTLY GIVEN THE FINDINGS BY DELETING THE DISALLOWANCE TO THE EX TENT OF RS. 1,17,939/-. THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CI T(A). GROUND NO. 2 OF THE REVENUES APPEAL IS DISMISSED. ITA NO. 4622/DEL/2016. GRINTEX INDIA LTD. 9. AS REGARDS TO GROUND NO. 3, THE CIT(A) HELD AS U NDER: 16.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, WRI TTEN SUBMISSIONS, PAPER BOOK AND REMAND REPORT OF THE AO. THE APPELLA NT HAS CLAIMED EXPENDITURE OF RS. 11,03,000/- UNDER THE HEAD LEGAL AND PROFESSIONAL CHARGES ON ACCOUNT OF SERVICES OF PROJECT CONSULTANCY RECEI VED FROM M/S AARMP & CO. DURING THE ASSESSMENT PROCEEDINGS, THE AO INQUIRED ABOUT THE PAYMENT MADE TO M/S AARMP & CO. AND OBSERVED THAT AUDIT SERVICES ARE BEING GIVEN BY M/S SATISH S AGARWAL AND CO. FOR WHICH SEPARATE EXPENDI TURE HAS BEEN CLAIMED. ACCORDINGLY, HE HELD THAT THE APPELLANT HAS NOT REC EIVED ANY SERVICES FROM M/S AARMP & CO. AND THE ABOVE EXPENDITURE ARE BOGUS . IN THIS REGARD, MY ATTENTION IS DRAWN TO THE REPLY DATED 10/02/2015 WH EREBY APPELLANT HAS SUBMITTED A CONFIRMATION FROM M/S AARMP & CO. WHERE IN IT HAS BEEN MENTIONED THAT THE FOLLOWING COMPLIANCE SERVICES HA VE BEEN RENDERED IN THE YEAR UNDER CONSIDERATION FOR WHICH THE AMOUNT OF RS . 11,03,000/- HAS BEEN CHARGED: I. LABOUR WELFARE FUND II. PROVIDENT FUND III. ESIC A/C IV. VALUE ADDED TAX V. SERVICE TAX VI. TAX DEDUCTION AT SOURCE VII. FINALIZATION OF ACCOUNTS IT HAS BEEN MENTIONED IN THE CONFIRMATION THAT THE AMOUNT OF RS. 11,03,000/- HAS BEEN INCLUDED IN THE INCOME OF THE RELEVANT FINANCI AL YEAR BY M/S AARMP & CO. AND PAYMENT FOR THE SAME HAS BEEN RECEIVED THROUGH BANK ING CHANNEL ONLY. IT HAS BEEN NOTED THAT THE TAX AT SOURCE HAS BEEN DEDUCTED @10% UNDER SECTION 194J ON ACCOUNT OF PROFESSIONAL SERVICES. THE SUBMISSION OF THE APP ELLANT ON THIS ISSUE WAS ALSO FORWARDED TO THE AO. THE REMAND REPORT OF THE AO IS SILENT ON THIS ISSUE AND SUBMISSION MADE BY THE APPELLANT IN THIS REGARD. HE HAS NOT CONTROVERTED ABOVE FACTS. SINCE, THESE EXPENSES HAVE BEEN INCURRED WHO LLY OF THE PURPOSE OF THE COMPANY, THE SAME IS AN ALLOWABLE EXPENDITURE UNDER SECTION 37(1) OF ACT. THE AO IS DIRECTED TO DELETE THE DISALLOWANCE OF RS. 11,03,00 0/-. THE ASSESSEE HAD DULY FURNISHED SUPPORTING EVIDENCE S IN THE FORM OF LEDGER, CONFIRMATION FROM OTHER PART, ETC. PAYMENTS WERE MA DE VIDE BANKING CHANNEL. TDS WAS DULY DEDUCTED ON THE SAID PAYMENTS. THE SAID RE CEIPTS WERE MADE PART OF ITS INCOME BY THE OTHER COMPANY. ALL THESE FACTS AND EV IDENCES WERE NOT CONTROVERTED BY THE ASSESSING OFFICER IN THE REMAND REPORT. THE ASS ESSEE ALSO CLARIFIED BEFORE THE REVENUE THAT THE SERVICES RECEIVED FROM SUCH PARTY WERE NOT ON ACCOUNT OF AUDITING ITA NO. 4622/DEL/2016. GRINTEX INDIA LTD. BUT ON ACCOUNT OF MONTHLY ACCOUNTING SERVICES AND A NNUAL COMPLIANCE SERVICES TO TAKE CARE OF STATUTORY FUNCTIONS AS MENTIONED IN TH E ORDER OF THE CIT(A). THUS, THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A ). GROUND NO. 3 OF THE REVENUES APPEAL IS DISMISSED. 10. AS REGARDS TO GROUND NO. 4, THE CIT(A) HELD AS UNDER: 18.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, WRI TTEN SUBMISSIONS, PAPER BOOK AND REMAND REPORT OF THE AO. THE APPELLANT CLA IMED THE EXPENSES OF RS. 7,00,000/- & 9,00,000/- ON ACCOUNT OF SERVICES REND ERED BY M/S GRINTEX RESEARCH ADVANCED TECHNOLOGIES PVT. LTD. AND M/S ND SATCOM G RINTEX COMMUNICATION LTD. AO DOUBTED THE EXPENDITURE AND ISSUED SUMMONS U/S 1 31 BUT NO COMPLIANCE WAS MADE BY BOTH OF THE PARTIES. ON THE BASIS OF THE AB OVE, THE AO MADE THE DISALLOWANCE OF RS. 16,00,000/- UNDER SECTION 40A(2 )(A). IN THIS REGARD, IT IS OBSERVED THAT THE APPELLANT HAS SUBMITTED CONFIRMAT ION FROM BOTH THE ABOVE MENTIONED PARTIES RESPECTIVELY. FURTHER, IT IS NOTI CED THAT REPLY FROM M/S GRINTEX RESEARCH ADVANCED TECHNOLOGIES PVT. LTD. DATED 26.0 3.2015 WAS RECEIVED BY THE AO ON 31/03/2015 I.E. AFTER THE COMPLETION OF ASSESSME NT PROCEEDINGS. IN THE SAID REPLY THE PARTY HAS CONFIRMED HAVE RENDERED SERVICES TO T HE APPELLANT AND RAISING THE INVOICE OF RS. 7,00,000/- FOR THE SAME. AS REGARDS, THE PROFESSIONAL CHARGES PAID TO M/S ND SATCOM GRINTEX COMMUNICATION LTD, THE APPELL ANT HAS FILED CONFIRMATION WHERE IN THE AMOUNT PROFESSIONAL FEES OF RS.9,00,00 0/-HAS BEEN CONFIRMED BY THE PARTY. IT HAS BEEN NOTED THAT THE TAX AT SOURCE HAS BEEN DEDUCTED @10% UNDER SECTION 194J ON ACCOUNT OF PROFESSIONAL SERVICES. THE SUBMI SSION OF THE APPELLANT ON THIS ISSUE WAS ALSO FORWARDED TO THE AO. THE REMAND REPO RT OF THE AO IS SILENT ON THIS ISSUE AND SUBMISSION MADE BY THE APPELLANT IN THIS REGARD. HE HAS NOT CONTROVERTED ABOVE FACTS. THE AO IN THE ASSESSMENT ORDER HAS DIS ALLOWED THE AMOUNT OF RS.16,00,000/- UNDER SECTION 40A(2)(A) BUT HE HAS N OT BEEN ABLE TO SUBSTANTIATE HIS ALLEGATION THAT HOW AMOUNT PAID BY THE APPELLANT WA S EXCESSIVE OR UNREASONABLE. SIMPLY BECAUSE THE TWO PARTIES HAD SISTER CONCERNS OF THE APPELLANT COMPANY DISALLOWANCE CANNOT BE MADE UNDER SECTION 40A(2)(A) . SINCE, THESE EXPENSES HAVE BEEN INCURRED WHOLLY OF THE PURPOSE OF THE COMPANY, THE SAME IS AN ALLOWABLE EXPENDITURE UNDER SECTION 37(1) OF ACT. THE AO IS D IRECTED TO DELETE THE DISALLOWANCE OF RS. 16,00,000/-. AT THE TIME OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED DETAILED REPLY WHEREIN DETAILED DESCRIPTION OF SERVICES PERFORMED BY THE S AID PARTIES HAS BEEN PROVIDED BY THE ASSESSEE. FROM THE RECORDS IT CAN BE SEEN THAT M/S GRINTEX RESEARCH ADVANCED TECHNOLOGIES PVT. LTD. HAS PROVIDED SERVICES TO THE COMPANY FOR IDENTIFYING FOREIGN UNIVERSITIES AND RESEARCH INSTITUTIONS WITH WHOM TH E COMPANY COULD POTENTIALLY ITA NO. 4622/DEL/2016. GRINTEX INDIA LTD. COLLABORATE WITH REGARDS TO RESEARCH AND DEVELOPMEN T FOR PROJECTS RELATED TO USER APPLICATIONS DEVELOPMENT IN THE DOMAIN OF DEFENCE, HOMELAND SECURITY, AVIATION AND SPACE AND AUGMENT ITS TECHNOLOGY EXPERTISE TO MEET CUSTOMER NEEDS INDIGENOUSLY THROUGH LOCAL MANUFACTURING. M/S ND SATCOM GRINTEX COMMUNICATION LTD. HAS PROVIDED SERVICES TO THE COMPANY RELATED TO PROPOSA LS WHICH INCLUDE SATELLITE COMMUNICATION COMPONENT FOR THE PROJECTS THE COMPAN Y PROPOSES TO TAKE UP WITH THE INDIAN NAVY, AIR FORCE, ARMY DSA, ISRO AND WITH SYS TEM INTEGRATORS SUCH AS BEL, ECIL, TATA, HCL, L&T ETC. THE PARTIES HAVE CONFIRME D THAT THE SERVICES WERE RENDERED AND RESPONDED TO NOTICE U/S 131 OF THE ACT. THEREFO RE, THE CIT(A) HAS RIGHTLY DELETED THIS ADDITION. THERE IS NO NEED TO INTERFERE WITH T HE FINDINGS OF THE CIT(A). GROUND NO. 4 OF THE REVENUES APPEAL IS DISMISSED. 11. AS REGARDS TO GROUND NO. 5, THE CIT(A) HELD AS UNDER: 19.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, WRI TTEN SUBMISSIONS, PAPER BOOK AND REMAND REPORT OF THE AO. THE APPELLANT HAS CLAIMED EXPENDITURE OF RS. 13,41,982/- UNDER THE HEAD OFFICE EXPENSES. THE AO HAD FOUND THAT CERTAIN EXPENDITURE ARE FOR PERSONAL PURPOSES AND NOT WHOLL Y AND EXCLUSIVELY FOR THE BUSINESS PURPOSES. ON THE BASIS OF THE ABOVE, THE A O MADE 70% OF THE ABOVE EXPENSES. IT HAS BEEN OBSERVED THAT THE APPELLANT H AS FILED LEDGER A/C OF OFFICE EXPENSES. ON PERUSAL OF THE SAID LEDGER A/C IT IS N OTICED THAT THE SAID EXPENSES ARE VARIOUS PETTY EXPENSES INCLUDING REIMBURSEMENT TO V ARIOUS EMPLOYEES INCURRED TO MEET THE DAY TO DAY NEED OF THE BUSINESS. THESE EXP ENSES HAVE BEEN INCURRED IN THE REGULAR COURSE OF BUSINESS AND DO NOT INVOLVE ANY E XPENDITURE OF PERSONAL NATURE. THE SUBMISSION OF THE APPELLANT ON THIS ISSUE WAS A LSO FORWARDED TO THE AO. THE REMAND REPORT OF THE AO IS SILENT ON THIS ISSUE AND SUBMISSION MADE BY THE APPELLANT IN THIS REGARD. HE HAS NOT CONTROVERTED A BOVE FACTS. SINCE, THESE EXPENSES HAVE BEEN INCURRED WHOLLY OF THE PURPOSE OF THE COM PANY, THE SAME IS AN ALLOWABLE EXPENDITURE UNDER SECTION 37(1) OF ACT. THE AO IS D IRECTED TO DELETE THE AD-HOC DISALLOWANCE OF RS. 13,41,982/-. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD AS TO WHICH EXPENSES WAS DISALLOWED WHILE PASSING THE ASSESSMENT ORDER. THE ASSESSING O FFICER MERELY ON THE BASIS OF CONJECTURES AND SURMISES MADE THE AD-HOC ADDITIONS WITHOUT BRINGING ANY SPECIFIC REASONS TO THAT EFFECT. THE CIT(A) HAS RIGHTLY DELE TED THIS ADDITION AND THERE IS NO NEED TO INTERFERE WITH THE FINDINGS. GROUND NO. 4 OF THE REVENUES APPEAL IS DISMISSED. ITA NO. 4622/DEL/2016. GRINTEX INDIA LTD. 12. AS REGARDS TO GROUND NO. 6, THE CIT(A) HELD AS UNDER: 24.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, WRI TTEN SUBMISSIONS, PAPER BOOK AND REMAND REPORT OF THE AO. THE APPELLANT HAD CLAIMED THE EXPENSES OF RS. 51,88,632/- ON ACCOUNT OF TRAVELLING AND CONVEYANCE . THE AO FOUND THAT MOST OF THE EXPENSES HAD BEEN INCURRED IN THE NAME OF THE DIREC TOR SH. HARIHARAN GAUTUM. ON THE BASIS OF THE ABOVE, THE AO MADE THE DISALLOWANC E OF 75% OF THE ABOVE EXPENSES. THE CONTENTION OF THE APPELLANT IN THIS REGARD IS T HAT THE DISALLOWANCE IS PURELY ADHOC IN NATURE AND NOT TENABLE IN LAW. IT HAS BEEN CONTENDED BY THE APPELLANT THAT THE EXPENSES HAS BEEN INCURRED ON THE TRAVEL OF THE EMPLOYEES OF THE COMPANY ONLY FOR THE PURPOSE OF ITS BUSINESS. THE PAYMENTS MADE BY MR. HARI HHARAN GAUTAM ARE NOT PERSONAL IN NATURE. THE SAME WERE ON BEHALF OF THE COMPANY AS HE IS THE SIGNING AUTHORITY OF THE COMPANY. THE APPELLANT HAS SUBMITTED COPY OF BILLS AND VOUC HERS MAINTAINED IN RESPECT OF SAID EXPENSES UNDER RULE 46A AS ADDITIONAL EVIDENCE S. THE SAME WERE ADMITTED AND SENT TO THE AO FOR HIS VERIFICATION AND REPORT. IN THE REMAND REPORT THE AO STATED TO HAVE VERIFIED THESE DOCUMENTARY EVIDENCES. HE HA S STATED THAT THE CLAIM OF THE APPELLANT SEEMS TO BE GENUINE. SINCE, THESE EXPENSE S HAVE BEEN INCURRED WHOLLY OF THE PURPOSES OF THE COMPANY; THE SAME IS AN ALLOWAB LE EXPENDITURE UNDER SECTION 37(1) OF ACT. THE AO IS DIRECTED TO DELETE THE DISA LLOWANCE OF RS. 38,91,474/-. IN THE REMAND REPORT ITSELF, THE ASSESSING OFFICER REMARKED THAT I HAVE EXAMINED THE BILLS AND VOUCHERS OF THE ASSESSEE COM PANY WHICH SEEMS TO BE GENUINE. . THUS, THE ASSESSING OFFICER HAS NOT DISPUTED TH E GENUINENESS OF THE EVIDENCES PRODUCED BEFORE THE CIT(A). THEREFORE, AFTER GOING THROUGH THE EVIDENCES AND REMAND REPORT, THE CIT(A) HAS ARRIVED AT A PROPER CONCLUSI ON OF DELETING THE SAID ADDITION. THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). GROUND NO. 6 OF THE REVENUES APPEAL IS DISMISSED. 13. IN RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JUNE, 2019 . SD/- SD/- (G.D. AGRAWAL) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER DATED: 10/06/2019 ITA NO. 4622/DEL/2016. GRINTEX INDIA LTD. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER