BANSAL CLASSES PVIVATE LTD., Kota V. JCIT, Kota

ITA 698/JPR/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1960 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 13-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VARINDRA MEHTA
• Assessee Lawyers: B V MAHESHWARI
• Keywords: Depreciation; Business expenditure; Earning of tax free income; Additional evidence; Valuation report; Competent authority; Commercial expediency; Revenue expenditure; Capital expenditure
• Section: 37(1); 80G; 12AA; 32; 37

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 698/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2010-11 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA CUKE VS. JCIT, RANGE-1, KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCB8403D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 738/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2010-11 ASSTT. COMMISSIONER OF INCOME- TAX, CIRCLE-1, KOTA CUKE VS. M/S BANSAL CLASSES PVT. LTD. 2-K, VIGYAN NAGAR KOTA (RAJ) LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCB8403D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 699/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2011-12 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA CUKE VS. JCIT, RANGE-1, KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCB8403D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ R ESPONDENT VK;DJ VIHY LA- @ ITA NO. 739/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2011-12 ASSTT. COMMISSIONER OF INCOME- TAX, CIRCLE-1, KOTA CUKE VS. M/S BANSAL CLASSES PVT. LTD. 2-K-5, VIGYAN NAGAR, KOTA(RAJ) ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 2 LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCB8403D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 435/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2012-13 M/S BANSAL CLASSES PVT. LTD., KOTA CUKE VS. ACIT, CIRCLE-1 KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCB8403D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 298/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2012-13 ACIT, CIRCLE-1 KOTA CUKE VS. M/S BANSAL CLASSES PVT. LTD. 2-K-17, VIGYAN NAGAR, KOTA(RAJ) LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCB8403D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 345/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2013-14 ACIT, CIRCLE-1 KOTA CUKE VS. M/S BANSAL CLASSES PVT. LTD. 2-K-15, VIGYAN NAGAR, KOTA(RAJ) LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCB8403D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA- @ ITA NO. 296/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2013-14 M/S BANSAL CLASSES PVT. LTD., KOTA CUKE VS. ACIT, CIRCLE-1 KOTA ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 3 LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCB8403D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI B.V.MAHESHWARI (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDRA MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 11/10/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 31/10/2017 VKNS'K@ ORDER PER: SHRI VIKRAM SINGH YADAV, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND T HE REVENUE DIRECTED AGAINST THE ORDERS PASSED BY LD. CIT(A), KOTA DATED 21.08.2014, 22.08.2014, 19.01.2016 & 03.02.2017 FOR A.Y. 2010-1 1, 2011-12, 2012- 13 & 2013-14 RESPECTIVELY. GIVEN THE SIMILARITY OF FACTS AND COMMON GROUNDS OF APPEAL INVOLVED IN ALL THESE CASES, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS C ONSOLIDATED ORDER. ITA NO. 698/JP/14 & 738/JP/14 2. FIRST, WE TAKE UP THE CROSS APPEALS FOR AY 2010- 11 WHEREIN RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER: ASSESSEES GROUNDS OF APPEAL (ITA NO. 698/JP/14) 1. THAT THE LD. CIT(A) GROSSLY ERRED IN NOT ALLO WING THE SOFTWARE EXPENSES OF RS. 99031.00 TREATING THEM AS CAPITAL E XPENDITURE. THE LD. AO DISALLOWED RS. 119429.00 OUT OF THIS AND THE LD. CI T SUSTAINED THE DISALLOWANCE OF RS. 99031.00. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 4 2. THAT THE LD. CIT(A) GROSSLY ERRED IN NOT DELETI NG THE ADDITION MADE BY LD. AO ON ACCOUNT OF CAUTION MONEY OF RS. 5,00,0 00/-. THE LD. AO MADE THE ADDITION OF CAUTION MONEY RS. 1668525/- OU T OF THAT LD. CIT(A) SUSTAINED THE ADDITION OF RS. 5,00,000/-. 3. THAT THE LD. CIT(A) GROSSLY ERRED IN SUSTAINED T HE ADDITION U/S 40A(2)(B) ON A/C OF SMT. ARTI BANSAL RS. 2,42,000/- . THE LD. AO MADE ADDITION OF RS. 7,94,000/- OUT OF THIS LD. CIT(A) S USTAINED RS. 2,42,000/-. REVENUES GROUNDS OF APPEAL (ITA NO. 738/JP/14) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN:- (I) DELETING THE ADDITION OF RS. 11,68,825/- OUT OF TOT AL ADDITION OF RS. 16,68,825/- MADE BY AO ON ACCOUNT OF REFUND OF CAUT ION MONEY. (II) DELETING THE ADDITION OF RS. 19,65,348/- MADE BY TH E AO ON ACCOUNT OF DEPRECIATION ON PLD UNIT BUILDING ON THE BASIS OF ADDITIONAL EVIDENCE ADMITTED IN VIOLATION OF RULE 46A. (III) DELETING THE ADDITION OF RS. 5,52,000/- OUT OF TOTA L ADDITION OF RS. 7,94,000/- MADE BY THE AO U/S 40A(2)(B) OUT OF SALA RY PAID; (IV) DELETING THE ADDITION OF RS. 4,90,07,505/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED BY ASS ESSEE U/S 80G. 3. IN ITS FIRST GROUND OF APPEAL, THE ASSESSEE HAS CHALLENGED THE ACTION OF LD. CIT(A) IN NOT ALLOWING THE SOFTWARE EXPENSES OF RS. 99,031/- AS REVENUE EXPENDITURE AND TREATING THEM AS CAPITAL EX PENDITURE. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE AS SESSEE HAS CLAIMED SOFTWARE LICENCES EXPENSES OF RS. 1,19,429/- WHICH HAS BEEN SHOWN UNDER THE HEAD MISCELLANEOUS EXPENSES. IN RESPONS E TO THE SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED COPY OF 3 BILLS BEFO RE THE ASSESSING ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 5 OFFICER AND SUBMITTED THAT THESE ARE SOFTWARE LICEN CES EXPENSES WHICH ARE PAID EVERY YEAR. HENCE, THE SAME WERE CLAIMED A S REVENUE EXPENDITURE AND NOT CAPITALIZED IN THE BOOKS OF ACC OUNT. THE ASSESSING OFFICER OBSERVED THAT THE REVERSE SIDE OF THE BILL DATED 18.2.2010 ISSUED BY MOMENTUM INFOCARE PVT LTD., IT IS MENTIONED THAT REQUIRED FOR OUR IT SECTION TO KEEP THEM UPDATE WITH THE LATEST TECHNOL OGY AND DEVELOPMENT TOOL REQUIRED FOR OUR INTERNAL SOFTWARE DEVELOPMENT FOR LAN AND WEBSITE RELATED APPLICATION AND ON THE BAS IS OF SAME, IT WAS HELD BY THE AO THAT THE ASSESSEE COMPANY HAS ACQUIR ED THE SOFTWARE. THE AMOUNT OF RS 1,19,429 WAS THEREFORE DISALLOWED AS REVENUE EXPENDITURE AND HELD TO BE CAPITAL IN NATURE WHICH SHOULD BE CAPITALIZED IN THE HANDS OF THE ASSESSEE. 5. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED TH AT THE SOFTWARE LICENCES EXPENSES ARE PAID TO 2 ENTITIES NAMELY M/S TAXSOFT MARKETING PVT LTD. AND M/S MOMENTUM INFOCARE PVT LTD. IT WAS SUBMITTED THAT TAXSOFT MARKETING PVT. LTD IS THE MAKER OF COMPUTAT ION SOFTWARE WHICH IS INSTALLED FOR FILING OF TDS RETURN AND ALLIED WORK AND FOR WHICH ANNUAL RENEWAL CHARGES ARE PAID EVERY YEAR BY THE ASSESSEE . REGARDING PAYMENT TO M/S MOMENTUM INFOCARE PVT LTD, IT WAS SU BMITTED THAT IT RELATES TO RENEWAL OF YEARLY LICENCE PACK SOFTWARE WHICH IS USED FOR INTERNAL OPERATING SYSTEM AND ITS FIREWALL PROTECTI ON AMOUNT AND IT IS PAID EVERY YEAR. IT WAS SUBMITTED THAT FOR USING ANY SO FTWARE OF THESE SOFTWARES FOR WHICH ANNUAL RENEWAL FEE IS PAID BY T HE ASSESSEE, IT CANNOT BE SAID THAT CAPITAL EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE AND WHICH HAS ANY ENDURING BENEFIT. THE LD.CIT(A) HAS GONE THROUGH THE DETAILS AND HELD THAT EXPENDITURE OF RS. 99,031/- R ELATE TO PURCHASE OF ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 6 SOFTWARE WHEREAS EXPENDITURE OF RS. 2,750/- AND RS. 17,648/- WAS RELATED TO USE OF SOFTWARE FOR ONE YEAR AND RENEWAL OF SOFTWARE RESPECTIVELY. ACCORDINGLY, THE EXPENDITURE OF RS. 2 0,398/- WAS HELD AS REVENUE IN NATURE AND ADDITION OF RS 99,031 WAS CON FIRMED. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 6. IT WAS SUBMITTED BY THE LD AR THAT THE COMPANY H AS INCURRED SOFTWARE EXPENDITURE OF RS. 1,19,429/-. THESE ARE THE EXPEND ITURE FOR TAKING SOFTWARE LICENCES FOR A YEAR. THE COMPANY IS ENGAGE D IN COACHING BUSINESS; IT HAS TO BUY SO MANY SOFTWARES AND EACH OF THESE SOFTWARES CANNOT BE USED FOR MORE THAN 1 YEAR. FURTHER, FOR R ENEWAL OF THE LICENCE ALSO, IT IS DONE EVERY YEAR. HENCE THESE EXPENDITUR E CANNOT BE CAPITALIZED. IT HAS NO ENDURING BENEFITS BECAUSE IT BECOMES OBSOLETE IN A YEAR OR RATHER BEFORE A YEAR ITSELF BECAUSE IN THE CHANGING ENVIRONMENT UPGRADED APPLICATIONS COME AND THE EARLIER ONE BECO MES OBSOLETE. OUT OF THE SAID EXPENDITURE OF RS. 1,19,429/- THE LEARN ED CIT(A) ALLOWED SMALL EXPENDITURE OF RS. 20,398/- AND IN RELATION T O THE FEES PAID TO MICROSOFT SOFTWARE DEVELOPERS OF RS. 99,031/- IT WA S STATED THAT THIS SOFTWARE WAS REQUIRED FOR OFFICIAL SOFTWARE FOR LAN AND WEBSITE RELATED APPLICATIONS. THIS IS THE REASON QUOTED BY THE LEAR NED CIT(A) AND THE EXPENDITURE WAS NOT ALLOWED. HE HAS STATED THAT THE EXPENDITURE IS RELATED TO PURCHASE OF CAPITAL GOODS WHEREAS IT WAS PURCHASED FOR WEBSITE RELATED APPLICATION FOR LAN AND BEING A SMA LL EXPENDITURE THE COMPANY HAS CLAIMED IN REVENUE EXPENDITURE WHICH OU GHT TO HAVE BEEN ALLOWED BY THE LEARNED CIT(A), BUT THE LEARNED CIT( A) HAS REPEATED THE THEORY OF THE LEARNED A.O WHO HAS NOT GONE INTO THE DETAILS AND THE SUSTAINED THE ADDITION. WE AGAIN SUBMIT THAT THIS S OFTWARE LICENCE ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 7 EXPENSES REQUIRE RENEWAL EVERY YEAR, HENCE IT HAS N OT ENDURING BENEFIT AND NO ASSETS HAVE BEEN CREATED. THEREFORE, THE EXP ENDITURE IS TO BE ALLOWED FULLY, THEREFORE, KINDLY ALLOW THE SAME. 7. ON THE OTHER HAND, LD. D/R SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. THE LD CIT(A) HAS GONE THROUG H THE INVOICES SUBMITTED BY THE ASSESSEE DURING THE COURSE OF APPE LLATE PROCEEDINGS AND HAS ARRIVED AT A FINDING THAT RS 99,031 RELATES TO PURCHASE OF SOFTWARE. THERE IS NOTHING ON RECORD TO SUGGEST TH AT SAID FINDING IS PERVERSE. FURTHER, THE ASSESSEE IN ITS SUBMISSIONS HAS ALSO STATED THAT IT HAD PAID FOR PURCHASE OF SOFTWARE FOR WEBSITE RELAT ED APPLICATION FOR LAN. IN LIGHT OF THE SAME, WE DONOT SEE ANY INFIRM ITY IN THE FINDINGS OF THE LD CIT(A). THE EXPENDITURE OF RS 99,031 IS HEL D TO BE CAPITAL EXPENDITURE AND BEING IN THE NATURE OF INTANGIBLE A SSETS, THE ASSESSEE SHALL HOWEVER BE ENTITLED FOR DEPRECIATION AS PRESC RIBED FOR INTANGIBLE ASSETS UNDER SECTION 32 OF THE ACT. THE GROUND OF THE ASSESSEES APPEAL IS DISPOSED OFF ACCORDINGLY. 9. REGARDING THE 2 ND GROUND OF APPEAL WHEREIN ASSESSEE HAS CHALLENGED THE SUSTENANCE OF ADDITION MADE BY THE A O ON ACCOUNT OF CAUTION MONEY OF RS. 5 LAKH. THE REVENUE IS ALSO IN CROSS APPEAL IN GROUND NO. 1 WHEREIN IT HAS CHALLENGED THE DELETION OF ADDITION OF RS. 11,68,525/- MADE BY THE LD. CIT(A) OUT OF TOTAL ADD ITION OF RS. 16,68,525/- MADE BY THE AO ON ACCOUNT OF CAUTION MO NEY. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 8 10. IN THIS REGARD THE FACTS OF THE CASE ARE THAT T HE AO MADE A DISALLOWANCE AND AN ADDITION OF RS. 16,68,825/- TOW ARDS CAUTION MONEY TO THE RETURNED INCOME BY OBSERVING AS UNDER:- THE ASSESSEE HAS SHOWN CAUTION MONEY REFUND CLOSING BALANCE AS ON 31.03.2010 AT RS. 71,53,000/-. DETAILS OF THE RECEI PTS AND PAYMENT DURING THE YEAR UNDER CONSIDERATION IN RESPECT OF C AUTION MONEY IS STATED AS UNDER:- PARTICULARS AMOUNT (RS) OPENING BALANCE AS ON 01.04.2009 55,24,500/- ADD: RECEIPTS DURING THE YEAR 1,27,54,000/- TOTAL 1,82,78,500/- LESS: PAYMENT DURING THE YEAR 1,11,25,500/- CLOSING BALANCE AN ON 31.03.2010 71,53,000/- PERUSAL OF THE DETAILS FILED BY THE ASSESSEE REVEAL S THAT SUFFICIENT AMOUNT OF CAUTION MONEY HAS BEEN REFUNDED IN CASH, FOR WHI CH NO PROPER RECEIPT/EVIDENCE HAS BEEN ADDUCED. DETAILS OF CAUTI ON MONEY DISTRIBUTION FOR THE YEAR UNDER CONSIDERATION ARE AVAILABLE ON S HEETS, EXAMINATION OF WHICH REVEALS THAT NEITHER THE SIGNATURE OF THE REC IPIENT NOR THE STAMP (PAID) HAVE BEEN INDICATED AGAINST MANY PLACES, EXA MPLES OF WHICH ARE INDICATED AS UNDER:- S.NO. BATCH ROLL NO. NAME OF THE STUDENT AMOUNT (RS) 1 AO1 16 KUMAR SAURAV 1000 2 AO1 12245 HARDIK AGARWAL 1000 3 AO1 12266 SRIJAN MISHRA 1000 4 AO1 12469 HARVINEET SINGH 1000 5 BO1 523 ANUP KUMAR 1000 ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 9 6 BO1 533 GAURAV JOSHI 1000 7 CO1 860 MANISH KUMAR 1000 8 DO 1 1768 MANISH 1000 9 DO 1 1773 NIKIL PATIL 1000 10 CC 23104 ASHISH MOHAPATRA 1000 SIMILAR IS THE POSITION IN MANY OTHER CASES. MOREOV ER, NO SERIALLY NUMBERED CASH RECEIPTS ARE KEPT BY THE ASSESSEE. IN THE ABSENCE OF PROPER EVIDENCE REGARDING REFUND OF CAUTION MONEY I N CASH AND DUE TO NON APPENDING OF THE SIGNATURES OF THE RESPECTIVE R ECIPIENTS, THE CAUTION MONEY REFUNDED DURING THE YEAR UNDER CONSIDERATION CANNOT BE VERIFIED IN ENTIRETY. MOREOVER, ALL THE CASES WHERE CAUTION MONEY HAS BEEN REFUNDED IN CASH, CANNOT BE VERIFIED IN THE ABSENCE OF COMPLETE PARTICULARS OF THE CONCERNED STUDENTS. IN VIEW OF T HESE FACTS, 15% OF THE TOTAL CAUTION MONEY REFUNDED AT RS. 1,11,25,500/- I.E A SUM OF RS. 16,18,825/- WAS DISALLOWED AND ADDED TO THE ASSESSE ES TOTAL INCOME. 11. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD CIT(A) AND VIDE ITS LETTER DATED 24.6.2014 S UBMITTED AS UNDER:- CAUTION MONEY: THE LEARNED A.O. HAS DISALLOWED AMOUNT OUT OF THE PAYMENT OF CAUTION MONEY BASED ON SURMISES AND CONJ ECTURES. THE CAUTION MONEY IS EXPLAINED THAT WHEN ANY STUDEN T IS ADMITTED FOR EDUCATION IN OUR INSTITUTE, RS. 1000/- ON ACCOUNT O F CAUTION MONEY HAS BEEN FIXED TO BE RECEIVED FROM HIM. THE SAID AMOUNT IS DEPOSITED BY HIM AND IT IS KEPT INTACT TILL HE IS IN OUR INSTITUTE A ND WHEN HE LEAVES THE INSTITUTE THE SAID CAUTION MONEY IS REFUNDED TO HIM . THEREFORE, IT IS NOT ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 10 AN INCOME; IT IS A LIABILITY OF THE INSTITUTE AND H ENCE THE BALANCE IS SHOWN UNDER THE HEAD CURRENT LIABILITIES. SAME IS THE POS ITION EVERY YEAR AND WHATEVER THE MONEY IS REFUNDED TO THE STUDENTS, IS DEALT WITH IN A PARTICULAR AND IT HAS BEEN HANDLED BY 4 PERSONS OF OUR STAFF. TO ENSURE THAT THE CAUTION MONEY IS PROPERLY REFUND ED TO THE STUDENTS AND ON THE BASIS OF THEIR REPORT, THE TREATMENT IS GIVEN IN THE BOOKS OF ACCOUNTS. THIS FEATURE IS IN EVERY YEAR. IN THIS CO MPANY THERE IS A STRONG CONTROL ON THE AMOUNT RECEIVED FROM THE STUDENTS AN D IT HAS BEEN CHECKED BY THE HIGHER MANAGEMENT AND IT IS ENSURED THAT THE AMOUNT RECEIVED AS CAUTION MONEY FROM THE STUDENTS, IS PAI D TO THEM PROPERLY. THE CAUTION MONEY IS BEEN PAID ON PULL MODEL BASI S THAT IS WHEN AN STUDENT APPROACHES FOR REFUND HE IS PAID TO ENSURE ONLY RIGHT HAND HAVE BEEN RECEIVING THE AMOUNT AND SO SOMETIMES IT HAPPE NS THAT STUDENT MAY BE COMING EVEN AFTER 1-2 YEARS FOR THE REFUND. THE LEARNED A.O. HAS DUE TO SOME VERY LESS UNPAID R EFUNDS OF THE CAUTION MONEY I.E 10 OUT OF STUDENT STRENGTH IN THO USANDS, HAS DISALLOWED 15% OF CAUTION MONEY STATING THAT THERE IS NO PROPER RECEIPT OR EVIDENCE. IN THIS MATTER WE SUBMIT THAT WE HAVE GIVEN DETAILS OF REFUND AND A COPY OF THE PAGE OF THE REGISTER AND T HE SYSTEM WHAT WE ARE FOLLOWING IN CASE OF REFUND OF MONEY. NO PARTIC ULAR INCIDENCE HAS BEEN NOTICED BY THE LEARNED A.O. THAT THE SAME HAS NOT BEEN REFUNDED TO THE STUDENTS. IT COULD BE CHECKED ANYTIME BY CALLING THE STUDENT ANYTIME ABOUT RECEIVING THE MONEY WHICH WE ALSO APPLY PRACTICALLY TO ENSURE PROPER ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 11 DISBURSAL BUT NO SUCH EXERCISE HAS BEEN DONE AND ST RAIGHT AWAY DEDUCTED 15%. HE HAS MADE UP HIS MIND THAT DUE TO N ON-LEGIBILITY OF SIGNATURES OF THE RECIPIENTS, MONEY REFUNDED DURING THE YEAR, CANNOT BE VERIFIED IN ENTIRETY WHEREAS WE HAVE SUBMITTED THAT WE HAVE STRONG PROCEDURE FOR REFUND OF CAUTION MONEY. WE GOT THE SIGNATURES OF THE STUDENTS OR THE PARENT S THOSE WHO TAKE BACK THE CAUTION MONEY AND ALL THOSE SHEETS WERE FI LED ALONG WITH OUR REPLY BEFORE THE LEARNED A.O. WE ARE SORRY TO STATE THAT EVEN IN SUCH A SITUATION HOW HE HAS DOUBTED THAT WHETHER IT WAS RE FUNDED OR NOT, BUT THIS IS A PROBABILITY AND HIS ASSESSMENT. THERE IS NO CONCRETE FINDING THAT THE SAME WAS NOT REFUNDED. THEREFORE ANY ESTIMATE O F DISALLOWANCE, MADE BY HIM OUT OF THE TOTAL REFUND, IS TOTALLY WRO NG, BASELESS, BASED ON HIS OWN THINKING, HENCE IT SHOULD BE DELETED. WE AL SO SUBMIT THAT THIS IS THE PROCEDURE FOLLOWED BY THE COMPANY SINCE ITS INC EPTION AND IN NO YEAR SUCH TYPE OF BASELESS DISALLOWANCES WERE MADE IN THE PAST. 12. WE NOW REFER TO THE FINDINGS OF THE LD CIT(A) W HICH ARE UNDER CHALLENGE BEFORE US: I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AOS FINDINGS. THE ASSESSEE CLAIMED THAT IT HAS NOT CLAIMED ANY EXPEND ITURE AGAINST REPAYMENT OF CAUTION MONEY. THE AO ADDED A SUM OF R S. 16,68,825/- ON THE BASIS OF EXAMPLE OF RS. 10,000/- PAID IN CASH W ITHOUT OBTAINING ANY SIGNATURE. IN MY OPINION, CAUTION MONEY IS RECEIVED DURING THE COURSE OF BUSINESS AND IF THE SAME IS NOT REFUNDED, THE SAME CAN BE TREATED AS INCOME AS AND WHEN THE LIABILITY TO PAY SUCH AMOUNT IS WRITTEN OFF IN THE BOOKS OF ACCOUNTS. DURING THE YEAR, ASSESSEE HAD SH OWN TO HAVE PAID ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 12 RS. 1,11,25,500/-. IF ANY OF THE REPAYMENT WAS NOT ACTUALLY MADE, THE SAME WOULD FORM THE INCOME OF ASSESSEE. CONSIDERING THE ABOVE, I AM OF THE OPINION THAT SOME ADDITION WAS JUSTIFIED. HO WEVER, MAKING ADDITION OF RS. 16,68,825/- ON THE BASIS OF DEFECTS OF RS. 10,000/- WAS NOT JUSTIFIED. CONSIDERING THE FACTS OF THE CASE, I N MY OPINION, AN ADDITION OF RS. 5,00,000/- WOULD MEET THE END OF JUSTICE. TH E AO IS DIRECTED TO DELETE BALANCE ADDITION OF RS. 11,68,825/-. THIS GR OUND OF APPEAL IS THEREFORE PARTLY ALLOWED. 13. BEFORE US, LD. AR HAS CONTENDED THAT BEFORE THE LOWER AUTHORITIES, IT WAS SUBMITTED THAT CAUTION MONEY IS A CAPITAL RE CEIPT KEPT FOR A YEAR OR TWO OR SO LONG THE STUDENT IS TAKING COACHING IN OU R INSTITUTION. WHEN HE IS LEAVING, THE SAME IS REFUNDED TO HIM. THEREFORE, IT CAN NEVER BECOME IN THE CHARACTER OF INCOME. FURTHER, FOR THE PAYMEN TS MADE DURING THE YEAR, A DETAILED LIST, AS PER REGISTER, WAS SUBMITT ED, BUT THE LEARNED AO HAS MADE AD HOC ADDITION OF 15% BASED ON CERTAIN MI SSING SIGNATURES OF THE RECIPIENTS AND THE LEARNED CIT(A) HAS SUSTAINED THE SAID ADDITION OF RS. 5,00,000/- IN PLACE OF RS. 16,68,525/- ADDED BY THE LEARNED AO. WE SUBMIT BEFORE YOUR HONOUR THAT ON PERUSAL OF THE PAYMENT SHEET OF RS. 1,000/- EACH IN SIGNATURE COLUMNS, THOUGH PAYME NT HAS BEEN MADE, UNFORTUNATELY THE SIGNATURES WERE NOT OBTAINED AND ON THE BASIS OF REPORT, GIVEN BY THE CASHIER OR THE PERSON WHO WAS IN-CHARGE OF REFUND OF THE CAUTION MONEY, THE PAYMENT HAS BEEN DEBITED IN THE BOOKS ALTHOUGH THERE IS NO DOUBT ABOUT THE NON-PAYMENT OF THE SAME. THE AMOUNT ENTERED IN THE REGISTER, HAS ENTIRELY BEEN P AID DURING THE YEAR ITSELF AND IF SOMETHING IS NOT CLAIMED IN THE YEAR ITSELF THEN IT IS KEPT CREDITED IN CAUTION MONEY TILL THE STUDENT CLAIMS A ND THE MATTER OF ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 13 WRITTEN OFF COMES IN PICTURE AFTER 4-5 YEARS BUT NO SUCH CASE HAS COME IN THE CASE OF BANSAL CLASSES AND, THERE HAS NEVER BEE N A CHANCE TO WRITTEN OFF. THE LEARNED CIT(A) OBSERVED THAT THE LEARNED AO MAD E ADDITION OF RS. 16,68,525/- ON THE BASIS OF OUT OF RS. 10,000/- AND HELD NOT JUSTIFIED, BUT AGAIN HE ALSO CAME ON THE ESTIMATION. OUR SUBMISSIO N IS THAT OUT OF THE TOTAL PAYMENT OF RS. 1,11,25,500/- THERE ARE INSTAN CES OF 10 STUDENTS (RS. 10,000/-) ON WHICH THERE WERE NO SIGNATURES. I N SUCH A SITUATION EVEN IF YOU DO NOT BELIEVE THE AUTHENTICITY OF THE COACHING INSTITUTE WHO HAS PAID SUCH A HUGE AMOUNT, AT THE MOST RS. 10,000 /- CAN BE DISALLOWED SINCE, EXCEPT THIS ONE, THERE ARE NO INS TANCES AND WHEN THERE ARE NO INSTANCES, THEN THERE IS NO QUESTION OF ESTI MATION OF SUCH A CASE. IN VIEW OF THIS WE SUBMIT THAT THE CAUTION MONEY, P AID TO THE STUDENTS, IS TO BE ALLOWED FULLY AND THERE IS NO SCOPE OF ANY DI SALLOWANCE. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. THE CAUTION MONEY IS RECEIVED FROM THE STUDENTS AT THE TIME OF SEEKING ADMISSION FOR THE VARIOUS COACH ING CLASSES BEING RUN BY THE ASSESSEE. IT IS A SECURITY DEPOSIT WHICH IS REFUNDABLE TO THE STUDENTS AT THE TIME OF EITHER COMPLETION OF THEIR CLASSES OR LEAVING THE INSTITUTE, AS THE CASE MAY BE. THE CHARACTER OF TH E CAUTION MONEY AT THE TIME OF RECEIPT IS THEREFORE CLEARLY CAPITAL IN NAT URE. THE SAME IS EVIDENCED BY THE FACT THAT DURING THE YEAR UNDER CO NSIDERATION, THE ASSESSEE HAS RECEIVED CAUTION MONEY OF RS 12,754,00 0 FROM THE STUDENTS WHO HAVE SOUGHT ADMISSION DURING THE YEAR AND WHICH HAS BEEN TREATED BY THE ASSESSEE AS CURRENT LIABILITIES AND DULY ACC EPTED BY THE REVENUE ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 14 BY ACCEPTING THE SAID TREATMENT AND NOT BRINGING TH E SAME TO TAX AS REVENUE RECEIPT. 15. THE LIMITED CASE OF THE REVENUE IS THAT CAUTIO N MONEY AMOUNTING TO RS 1,11,25,500 HAS BEEN REFUNDED IN CASH DURING THE YEAR AND FOR WHICH NO PROPER RECEIPT/EVIDENCE HAS BEEN ADDUCED B Y THE ASSESSEE AND HE ACCORDINGLY STATED THAT 15% OF CAUTION MONEY REF UNDED AMOUNTING TO RS 16,18,825 IS DISALLOWED AND ADDED TO THE ASSESSE ES TOTAL INCOME. THE REVENUE IS THUS NOT DISPUTING THE FACT OF REPAYMENT OF THE CAUTION MONEY BY THE ASSESSEE COMPANY TO THE STUDENTS. EVE N BEFORE US, THE LD DR HAS NOT DISPUTED OR BROUGHT TO OUR NOTICE ANY FA CTS WHICH PROVE THAT THE CAUTION MONEY HAS NOT BEEN REFUNDED TO THE STUD ENTS. WHERE THE REVENUE IS NOT DISPUTING THE FACT OF REPAYMENT OF C AUTION MONEY, THE QUESTION OF WRITING OFF SUCH LIABILITY OR FORFEITUR E OF SUCH CAUTION MONEY DOESNT ARISE FOR CONSIDERATION. THEREFORE, MERELY ON ACCOUNT OF THE FACT THAT SOME OF THE REPAYMENTS WHICH HAVE BEEN MADE BY THE ASSESSEE IN CASH ARE NOT VERIFIABLE, THE SAME CANNOT FORM THE B ASIS FOR DISALLOWANCE. DURING THE COURSE OF HEARING, THE ASSESSEE HAS SUBM ITTED THAT IT HAS ADEQUATE INTERNAL CONTROLS FOR REPAYMENT OF CAUTION MONEY TO THE STUDENTS AND BOOKS OF ACCOUNTS HAVE BEEN AUDITED AN D NO ADVERSE FINDING HAS BEEN GIVEN BY THE AUDITORS. FURTHER, D ETAILS OF REPAYMENTS IN TERMS OF CAUTION MONEY LEDGER, VOUCHERS AND OTHER D ETAILS WERE SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS WHICH IS ALSO NOT DISPUTED BY THE REVENUE. FURTHER, THE QUESTION OF DISALLOWANCE COMES WHERE THERE IS A CLAIM OF EXPENDITURE AT FIRST PLAC E WHICH IS NOT THE CASE BEFORE US. IN THE ENTIRETY OF FACTS AND CIRCUMSTAN CES OF CASE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO BASIS FOR ADHO C DISALLOWANCE OF 15% ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 15 OF CAUTION MONEY WHICH HAS BEEN REFUNDED TO THE STU DENTS DURING THE YEAR. WE ACCORDINGLY SET-ASIDE THE FINDINGS OF THE AO AND THE LD CIT(A) AND THE DISALLOWANCE OF CAUTION MONEY SO REFUNDED I S DELETED IN ENTIRETY. IN THE RESULT, GROUND OF ASSESSEES APPEAL IS ALLOW ED AND GROUND OF REVENUES APPEAL IS DISMISSED. 16. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED TH E SUSTENANCE OF ADDITION U/S 40A(2)(B) ON ACCOUNT OF SALARY PAYMENT TO ARTI BANSAL AMOUNTING OF RS. 2,42,000/-. THE REVENUE IS ALSO IN CROSS APPEAL IN GROUND NO. 3 RELATING TO DELETION OF ADDITION OF RS . 5,52,000/- OUT OF TOTAL ADDITION OF RS. 7,94,000/- MADE BY THE AO U/S 40A(2 )(B) OF THE ACT. 17. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE T HE AO MADE AN ADDITION OF RS. 7,94,000/- OBSERVING AS UNDER:- AS PER DETAILED FILED ALONGWITH AUDIT REPORT AND E XAMINATION OF FURTHER DETAILS FILED DURING THE COURSE OF ASSESSMENT PROCE EDINGS, IT IS NOTICED THAT THE ASSESSEE COMPANY HAS MADE PAYMENT OF SALAR Y TO THE FOLLOWING PERSONS SPECIFIED U/S 40A(2)(B); S. NO. NAME OF THE PERSON RELATION WITH THE DIRECTOR SALARY PAID IN F.Y. 08- 09 SALARY PAID IN F.Y. 09- 10 INCREASE IN SALARY DURING THE F.Y. 09-10 PERCENTAGE OF INCREASE IN SALARY 1. SMT. AARTI BANSAL DAUGHTER 34,00,000/- 40,50,000/- 6,50,000/- 19.11% 2. SMT. MAHIMA BANSAL WIFE OF DIRECTOR 16,50,000/- 24,00,000/- 7,50,000/- 45.45% CONSIDERING THE HEFTY INCREASE IN SALARY PAYMENT TO THE ABOVE NOTED LADIES COVERED U/S 40A(2)(B); THE ASSESSEE WAS ASKED TO JU STIFY SALARY INCREASE ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 16 VIDE ORDER SHEET ENTRY DATED 05.03.2013. THE ASSESS EE HAS FAILED TO EXPLAIN SUCH ABNORMAL INCREASE IN PAYMENT OF SALARY TO THE SAID LADIES, WITH ANY SUPPORTIVE EVIDENCE. SMT. AARTI BANSAL HAS BEEN LOOKING AFTER THE BUSINESS AFFAIRS AT AJMER BRANCH OF THE ASSESSEE CO MPANY. AS PER DETAILS FILED, TOTAL STUDENTS DURING THE YEAR UNDER CONSIDE RATION WERE 246 FROM WHOM TOTAL TUTION FEES WAS RECEIVED AT RS. 1,56,99, 720/-. IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR, NUMBER OF STUD ENTS WERE 226 FROM WHOM TOTAL AMOUNT OF TUITION FEES RECEIVED AMOUNTED TO RS. 1,34,32,411. THIS SHOWS THAT INCREASE IN THE TUTION FEES DURING THE YEAR UNDER CONSIDERATION IS TO THE EXTENT OF 16.88% ONLY, WHIC H DOES NOT WARRANT SUCH HUGE INCREASE IN SALARY TO SMT. AARTI BANSAL. HENCE , SALARY PAYMENTS MADE TO THESE TWO LADIES IS CONSIDERED TO BE EXCESSIVE, UNREASONABLE AND UNJUSTIFIABLE. IN VIEW OF THE INCREMENTAL FACTOR AN D INFLATIONARY TRENDS, INCREASE OF SALARIES @ 12% IS CONSIDERED TO BE FAIR AND JUDICIOUS. HENCE; EXCESS SALARY, AS COMPUTED BELOW, IS DISALLOWED U/S 40A(2)(B):- S. NO. NAM E OF THE PERSO N RELATION WITH THE DIRECTOR SALARY PAID IN F.Y. 08-09 INCREASE IN SALARY DURING THE F.Y. 09-10 PERCENT AGE OF INCREAS E IN SALARY INCREAS E IN SALARY @ 12% EXCESS SALARY 1. SMT. ARTI BANSAL DAUGHTER 34,00,000/ - 6,50,000/ - 19.11% 4,08,000/ - 2,42,000 /- 2. SMT. MAHI MA BANSAL WIFE OF DIRECTOR 16,50,000/ - 7,50,000/ - 45.45% 1,98,000/ - 5,52,000 /- ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 17 THEREFORE, TOTAL EXCESS SALARY OF RS. 7,94,000/-(2, 42,000+5,52,000) PAID TO THE ABOVE SAID RELATIVES OF THE DIRECTORS IS DIS ALLOWED U/S 40A(2)(B) AND ADDED TO THE ASSESSEES TOTAL INCOME. 18. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFO RE THE LD CIT(A), THE ASSESSEE VIDE LETTER DATED 24/06/2014 SUBMITTED AS UNDER:- SALARY : IN COURSE OF ASSESSMENT THE DETAILS OF SA LARY PAID TO VARIOUS PERSONS WERE FILED. IN THE DETAILS THE LEARNED AO T OOK UP THE SALARY OF TWO PERSONS SMT. ARTI BANSAL AND SMT. MAHIMA BANSAL. SMT. ARTI BANSAL IS NOT ONLY LOOKING AFTER THE ENTIRE CLASSES AT AJMER BUT ALSO TAKING LECTURES AT KOTA BANSAL CLASSES AND, THEREFORE, SHE HAS BEEN MA DE THE GENERAL MANAGER FOR THE CLASSES AT AJMER BY THE INSTITUTE. LOOKING TO WORK, HER QUALIFICATION DEGREE CERTIFICATE ENCLOSED, EXPERIEN CE AND TIME DEVOTED, THE SALARY WAS INCREASED FROM RS. 34 LACS TO 40.5 LACS AND THIS INCREASE IS JUSTIFIED WITH THE TURNOVER OF THE AJMER WHICH HAS BEEN INCREASED FROM 134.32 LACS TO 156.99 LACS. THAT GROWTH AS CALCULAT ED BY LD. A.O. COMES TO AROUND ROUGHLY 17% AND INCREASE IN SALARY COMES TO ROUGHLY AROUND 19% BUT HE FORGET TO CONSIDER THE MOST IMPORTANT FACT T HAT SHE IS NOT ONLY MANAGING AJMER BRANCH BUT ALSO CONTRIBUTING TO KOTA HEAD OFFICE AND IN THAT SCENARIO THE INCREASE IS WELL DESERVED JUSTIFI ED. ALSO THE COMPARISON BETWEEN PROFITABILITY AND SALAR Y IS NOT WELL JUSTIFIED IT IS EVIDENT THAT EVEN SOME COMPANIES THAT ARE INC URRING LOSSES ARE INCREASING STAFF REMUNERATION AS DUE TO BUSINESS EX PEDIENCY THEN AS PER LD. AO THESE EMPLOYEES ARE NOT EVEN DESERVING SALAR Y AS COMPANY IS LOSS MAKING BUT IT IS NOT SO THE CASE. THE PROFITABILITY OF THE COMPANY IS ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 18 AROUND 60% HENCE ON THE INCREASED TURNOVER OF RS. 2 2 LACS THE INCREASE @ 60% COMES TO RS. 13.2 LACS OUT OF THAT RS. 6.5 LA CS HAVE BEEN INCREASED WHEREAS THIS INCREASE OR THE INCOME IS DU E TO THE ENTIRE EFFORTS OF SAID SMT. ARTI BANSAL. THEREFORE, THE SALARY INC REASE FOR HER IS TOTALLY JUSTIFIED. THERE IS NOTHING TO DISALLOW BECAUSE IT WAS PAID DUE TO HER QUALIFICATION. THE SALARY BEING PAID TO SMT. MAHIMA BANSAL WAS RS. 16.5 LACS AND IN THIS YEAR SHE WAS ENTRUSTED WITH MORE CLASSES LOOKI NG TO THE INCREASED NEED OF THE STUDENTS AND HER SALARY WAS ACCORDINGLY INCREASED. ALSO AS IT IS BEEN PRESUMED BY THE LD. A.O. THAT SHE IS GETTIN G HIGH REMUNERATION BECAUSE SHE IS RELATIVE OF BANSAL GROUP THEN SIR HE RE TO MENTION THAT THERE ARE 10 MORE TEACHERS IN BANSAL CLASSES THAT A RE EARNING MORE THAN THE MAHIMA BANSAL. HER DEGREE CERTIFICATE COPY IS A LSO ENCLOSED. SO IF RELATION BEING SOLE CRITERIA OF EARNING REMUNERATIO N IN BANSAL CLASSES THEN WHY THERE ARE 10 MORE PEOPLE ABOVE MAHIMA BANS AL GETTING HIGHER REMUNERATION. IT CANNOT BE SAID THAT LOOKING TO THE RELATION SHE WAS PAID THIS MUCH INCREASE IN THE SALARY. WE HAVE SUBMITTED THE DETAI LS OF SALARY AND INFORMED TO THE LEARNED A.O. THAT THERE ARE SO MANY OTHER PERSONS OF WHOM LIST IS ENCLOSED WHO ARE DRAWING SALARY MORE T HAN SMT. MAHIMA BANSAL WHEREAS THE WORK DONE BY SMT. MAHIMA BANSAL IS MUCH MORE IN COMPARISON TO OTHER TEACHERS. SALARY OF OTHER TEACHERS THAT ARE NOT IN RELATED PA RTY PAYMENT ARE CONSIDERED RIGHT BY THE LD. A.O. BUT TO MENTION THA T OUT OF THOSE 10 TEACHERS WHO ARE GETTING HIGHER SALARY THEN MAHIMA BANSAL ONLY 1 IS CURRENTLY SERVING IN BANSAL CLASSES REST ALL JOINED OTHER CLASSES OR OPENED ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 19 THERE OWN VENTURES SO LOYALTY SHOULD ALSO BE CONSID ERED WHILE CONSIDERING INCREASE IN SALARY AS MORE AND MORE LOA D OF TEACHERS LEAVING IS FALLING ON OLDER ONES. AS SUCH, LOOKING TO HER QUALIFICATION DEVOTION AND WORK DONE, THE SALARY WAS INCREASED AND IT CAN BE COMPARED WITH OTHER TEA CHERS. AS SUCH, THE SALARY PAYMENT IS FULLY JUSTIFIED. IT CANNOT BE TRE ATED AS A CASE U/S 40A(2)(B) BECAUSE NO COMPARATIVE CASE HAS BEEN GIVE N BY THE LEARNED A.O. HE HAS JUST GIVEN THE CALCULATION THAT THIS MU CH OF PERCENTAGE OF SALARY IS INCREASE; IT SHOULD ALSO INCREASE ACCORDI NGLY. THIS CANNOT BE THE BASIS. THERE IS SEPARATE BASIS FOR JUSTIFYING EVERY PERSON IN THIS LINE OF BUSINESS, HENCE SHOULD BE ALLOWED FULLY. 19. THE RELEVANT FINDING OF THE CIT(A) IS REPRODUCE D AS UNDER:- I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AOS FINDINGS. IT WAS SEEN THAT SMT. ARTI BANSAL WAS LOOKING AFTER AJMER BRANCH OF THE ASSESSEE COMPANY. THE TOTAL RECEIPTS OF AJMER BRANC H WAS RS. 1,56,99,720/-. PAYMENT OF RS. 40,50,000/- TO SMT. A RTI BANSAL APPEARED TO BE EXCESSIVE, CONSIDERING THE FACT THAT TOTAL TU RNOVER WAS ONLY RS. 1,56,99,720/- AND THERE WERE OTHER TEACHERS ALSO. T HEREFORE, DISALLOWANCE OF RS. 2,42,000/- RELATED TO SMT. ARTI BANSAL IS CONFIRMED. THE AO HAS NOT GIVEN ANY REASON FOR DISALLOWANCE OF SALARY TO SMT. MAHIMA BANSAL. THEREFORE, AO IS DIRECTED TO DELETE ADDITION OF RS. 5,52,000/-. 20. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT THIS IS IN RELATION TO THE PAYMENT MADE TO MRS. ARTI BANSAL TR EATING IT TO BE THE ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 20 PAYMENT U/S 40A(2). IT IS SUBMITTED THAT MRS. ARTI BANSAL IS THE DAUGHTER OF MR. V.K. BANSAL AND AFTER GETTING HER QUALIFICAT IONS, SHE STARTED TAKING COACHING CLASSES ALONG WITH HER FATHER IN KOTA. AFT ER HER MARRIAGE, SHE SHIFTED TO AJMER AND A BRANCH OF BANSAL CLASSES WAS OPENED THERE AND SHE STARTED TAKING COACHING CLASSES OVER THERE AS A HEAD OF THE BRANCH. IN CONSIDERATION TO THAT SHE WAS PAID THE SALARY. S INCE SHE WAS LOOKING AFTER ENTIRE INSTITUTION AT AJMER, HENCE SALARY OF RS. 40.50 LACS WAS PAID IN PLACE OF RS. 34 LACS PAID IN EARLIER YEAR. IT WAS A N INCREASE OF 19.11%. THE LEARNED CIT(A) LINKED IT WITH THE INCREASE IN T HE TUITION FEE AND OBSERVED THAT 12% INCREASE IS REASONABLE. WE HAVE G IVEN SO MANY INSTANCES THAT THERE HAS BEEN INCREASE IN OTHER CAS ES ALSO. FURTHER LOOKING TO HER QUALIFICATION AND A PART OF FAMILY O F BANSAL CLASSES SHE WAS PAID SALARY, HENCE THE PAYMENT WAS REASONABLE SINCE THERE ARE SO MANY TEACHERS THOSE WHO ARE GETTING SALARY MORE THAN HER THOUGH THEY WERE TAKING ONLY CLASSES WHEREAS SHE WAS TAKING CARE OF ALL THE CLASSES, GIVING COACHING AND ALSO ADMINISTERING THE AJMER BRANCH. L OOKING TO THESE FACTS, THE SALARY INCREASE WAS MOST JUSTIFIED. THEREFORE, THE ADDITION, SUSTAINED BY THE LEARNED CIT(A), MAY KINDLY BE DELETED. 21. THE LD DR IS HEARD WHO HAS RELIED ON THE ORDER OF THE AO. 22. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE UNDER CONSIDERATION RELATES TO DISALLOWANCE OF SALARY PAYMENT TO ARTI BANSAL AND M AHIMA BANSAL WHICH IS FOUND TO BE EXCESSIVE BY THE AO AND DISALLOWED UNDE R SECTION 40A(2)(B) OF THE ACT. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 21 23. FOR DETERMINING THE REASONABLENESS OF THE SALAR Y PAID TO A PERSON WHAT IS ESSENTIAL TO EXAMINE IS THE RELEVANT QUALIF ICATION AND EXPERIENCE WHICH THAT PERSON HOLDS, AND WHETHER THE SAME IS CO MMENSURATE WITH THE WORK RESPONSIBILITIES SHE HAS BEEN ASSIGNED AND FOR WHICH SHE IS RESPONSIBLE FOR. FURTHER, THE REASONABLENESS HAS TO BE SEEN VIS-A-VIS LEGITIMATE NEEDS OF THE ASSESSEE COMPANY AND BENEFI T DERIVED OR ACCRUING TO THE ASSESSEE COMPANY AS WELL AS FAIR MARKET VALU E OF SUCH SERVICES. 24. IT IS NOTED THAT ARTI BANSAL HOLDS THE DEGREE O F MSC (MATHS) AND IS A FACULTY MEMBER IN THE MATHEMATICS DEPARTMENT IN IIT -JEE DIVISION FOR AJMER AND KOTA CENTERS WITH OVER 10 YEARS OF EXPERI ENCE. HER JOB RESPONSIBILITIES INCLUDE TAKING 4-5 LECTURES EACH D AY OF CLASS XI/XII/XIII TARGET IIT-JEE, TEST PAPER SETTING AND ITS SOLUTION S, DPP/LITERATURE DEVELOPMENT, ETC. DURING THE YEAR, SHE WAS MADE RE SPONSIBLE FOR THE UPLIFTMENT OF THE AJMER CENTER AND MANAGING THE ACA DEMIC AND ADMINISTRATIVE ACTIVITIES OF THE CENTER AND SHARING DUAL RESPONSIBILITY OF AJMER CENTER INCHARGE ACADEMICALLY AND ADMINISTRATI VELY. AS PER HER ANNUAL APPRAISAL REPORT, KEEPING IN VIEW HER PAST P ERFORMANCE AND HER CURRENT RESPONSIBILITIES, HER SALARY WAS FIXED AT R S 40.5 LACS PER ANNUM. 25. SIMILARLY, IT IS NOTED THAT MAHIMA BANSAL HOLD S THE DEGREE OF BE AND IS A FACULTY MEMBER IN THE MATHEMATICS DEPARTMENT I N IIT-JEE DIVISION FOR KOTA CENTER WITH OVER 8 YEARS OF EXPERIENCE. H ER JOB RESPONSIBILITIES INCLUDE TAKING 4-5 LECTURES EACH DAY OF CLASS XI/XI I/XIII TARGET IIT-JEE, TEST PAPER SETTING AND ITS SOLUTIONS, DPP/LITERATUR E DEVELOPMENT, ETC. AS PER HER ANNUAL APPRAISAL REPORT, KEEPING IN VIEW HE R PAST PERFORMANCE AND HER CURRENT RESPONSIBILITIES, HER SALARY WAS FI XED AT RS 24 LACS PER ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 22 ANNUM FOR THE FINANCIAL YEAR 2009-10 WHICH WAS INCR EASED TO RS 37.50 LACS FOR THE SUBSEQUENT FINANCIAL YEAR 2010-11, THE REAFTER INCREASED TO RS 60 LACS FOR THE FINANCIAL YEAR 2011-12 AND THEREAFT ER, INCREASED TO RS 69 LACS FOR THE FINANCIAL YEAR 2012-13. 26. AS PER AO, SALARY PAYMENTS MADE TO THESE TWO L ADIES IS CONSIDERED TO BE EXCESSIVE, UNREASONABLE AND UNJUSTIFIABLE AND IN VIEW OF THE INCREMENTAL FACTOR AND INFLATIONARY TRENDS, INCREAS E OF SALARIES @ 12% IS CONSIDERED TO BE FAIR AND JUDICIOUS AND THE REMAINI NG SALARY WAS HELD EXCESSIVE AND DISALLOWED IN ALL THESE FINANCIAL YEA RS. 27. REGARDING SALARY PAYMENT TO ARTI BANSAL, THE C ONTENTION OF THE ASSESSEE IS THAT BESIDES BEING A QUALIFIED FACULTY MEMBER WHERE SHE TAKES CLASSES AT AJMER AND KOTA, SHE HAS BEEN ENTRU STED WITH THE ADMINISTRATIVE RESPONSIBILITY FOR THE AJMER BRANCH DURING THE YEAR AND COMMENSURATE WITH HER QUALIFICATION AND AREA OF RES PONSIBILITIES, THE SALARY PAID TO HER IS COMMENSURATE. FURTHER, IT WA S CONTENDED THAT NO COMPARATIVE CASES HAS BEEN GIVEN BY THE AO TO JUSTI FY THE DETERMINATION OF SALARY AS DONE BY HIM. THE LD CIT(A) HELD THAT SINCE ARTI BANSAL WAS LOOKING AFTER AJMER BRANCH OF THE ASSESSEE COMPANY AND THE TOTAL RECEIPTS OF AJMER BRANCH WAS RS. 1,56,99,720/-, PAY MENT OF RS. 40,50,000/- TO ARTI BANSAL WAS HELD TO BE EXCESSIVE AND DISALLOWANCE OF RS. 2,42,000/- RELATED TO ARTI BANSAL WAS CONFIRMED . WE FIND THAT FIRSTLY, THERE IS NO COMPARATIVE CASE WHICH HAS BEEN HIGHLIG HTED BY THE AO WHICH COMPARES WITH THE CASE OF ARTI BANSAL, SECOND LY, WE DONOT FIND ANY BASIS FOR DETERMINATION OF ANNUAL INCREMENT @ 12% A S DETERMINED BY THE AO AND THIRDLY, THE BASIS ADOPTED BY THE LD CIT (A) IS ALSO NOT CORRECT AS THE DETERMINATION OF SALARY WAS DONE AT THE BEGI NNING OF THE YEAR AND ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 23 WHAT THE LD CIT(A) HAS DONE IS TO COMPARE THE TURNO VER WHICH HAS BEEN CLOCKED DURING THE FINANCIAL YEAR BY THE AJMER BRAN CH AND THEN COMPARED IT WITH SALARY WHICH IS ALREADY DETERMINED AT THE B EGINNING OF THE YEAR. 28. IN OUR VIEW, GIVEN THE QUALIFICATION AND THE EX PERIENCE OF ARTI BANSAL AND THE FACT THAT BESIDES BEING A FACULTY MEMBER, S HE ALSO MANAGED THE AFFAIRS OF THE AJMER BRANCH AND CLOSELY AND ACTIVEL Y INVOLVED IN MANAGEMENT AND DAY TO AFFAIRS OF THE AJMER BRANCH, THE SALARY PAID TO HER IS REASONABLE VIS-A-VIS LEGITIMATE NEEDS OF THE ASSESSEE COMPANY AND BENEFIT DERIVED OR ACCRUING TO THE ASSESSEE COMPANY . WE DO NOT SEE ANY JUSTIFIABLE REASON TO DISTURB THE DECISION WHICH HA S BEEN TAKEN BY THE MANAGEMENT OF THE ASSESSEE COMPANY IN TERMS OF DETE RMINING THE APPROPRIATE REMUNERATION PAYABLE TO HER. THE ONLY SCENARIO WHERE ONE CAN THINK OF DISTURBING THE SAID DECISION TAKEN BY THE MANAGEMENT OF THE ASSESSEE COMPANY IS WHERE PEOPLE HOLDING SIMILAR PO SITION AND HAVING SIMILAR EXPERIENCE AND QUALIFICATION HAVE BEEN DRAW ING LESSER REMUNERATION COMPARED TO WHAT HAS BEEN PAID TO THES E PERSONS BY THE ASSESSEE COMPANY. IN OTHER WORDS, THE TEST OF REASO NABLENESS CAN BE INVOKED WHERE THERE IS CONTEMPORARY DATA IN TERMS O F IDENTIFIABLE THIRD PARTY TRANSACTIONS IN SIMILAR FIELD OF COMPETITIVE COACHES CLASSES BEING CONDUCTED BY OTHER COMPANIES. IN THE INSTANT CASE, THE REVENUE HAS NOT BROUGHT ON RECORD ANY SUCH CONTEMPORARY DATA IN TER MS OF OTHER EDUCATIONAL INSTITUTIONS OF SAME SCALE-AND SIZE AND HAVING SIMILAR STRENGTH OF STUDENT AND INFRASTRUCTURE WHEREIN FACU LTY MEMBER HOLDING THE DUAL RESPONSIBILITY HAVE BEEN PAID LESSER SALAR Y. FURTHER THE COURTS HAVE HELD FROM TIME TO TIME THAT THE REASONABLENESS OF THE EXPENDITURE IS TO BE ADJUDGED FROM THE POINT OF VIEW OF A BUSIN ESS MAN AND NOT OF ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 24 THE REVENUE. IN OTHER WORDS, THE REASONABLENESS HAS TO BE SEEN VIS-A-VIS LEGITIMATE NEEDS OF THE ASSESSEE COMPANY AND BENEFI T DERIVED OR ACCRUING TO THE ASSESSEE COMPANY AND AS DETERMINED BY THE ASSESSEE COMPANY. IN THE ENTIRETY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE, WE ARE OF THE VIEW THAT THE SALARY PAID TO ARTI BANSAL IS COMMENSURATE WITH QUALIFICATIONS AND EXPERIENCE AS WELL AS AREA OF HE R WORK RESPONSIBILITY IN TERMS OF FACULTY, MANAGEMENT AND DAY TO DAY AFFAIRS OF THE AJMER BRANCH AND COMMENSURATE VIS-A-VIS LEGITIMATE NEEDS OF THE ASSESSEE COMPANY AND BENEFIT DERIVED OR ACCRUING TO THE ASSESSEE COM PANY. IN THE RESULT, DISALLOWANCE OF SALARY PAYMENT TO ARTI BANSAL UNDER THE PROVISIONS OF SECTION 40A(2)(B) IS HEREBY DELETED. 29. REGARDING SALARY PAYMENT TO MAHIMA BANSAL, THE CONTENTION OF THE ASSESSEE IS THAT SHE IS AGAIN AN EXPERIENCED AND QU ALIFIED FACULTY MEMBER IN THE MATHEMATICS DEPARTMENT IN IIT-JEE DIV ISION FOR KOTA CENTER WITH OVER 8 YEARS OF EXPERIENCE AND HER JOB RESPONSIBILITIES INCLUDE TAKING 4-5 LECTURES EACH DAY OF CLASS XI/XI I/XIII TARGET IIT-JEE, TEST PAPER SETTING AND ITS SOLUTIONS, DPP/LITERATUR E DEVELOPMENT, ETC. BASED ON HER ANNUAL APPRAISAL REPORT, HER SALARY HA S BEEN INCREASED ON ANNUAL BASIS WHICH IS COMMENSURATE WITH HER PAST PE RFORMANCE AND HER CURRENT/FUTURE RESPONSIBILITIES. SPECIFICALLY, IT W AS SUBMITTED THAT DURING THE FINANCIAL YEAR 2010-11, DUE TO SUDDEN EXIT OF O THER FACULTY MEMBERS, SHE WAS ENTRUSTED WITH ADDITIONAL WORK RESPONSIBILI TIES AND HER & SUBSEQUENT SALARY INCREMENT IS THUS COMMENSURATE WI TH HER WORK RESPONSIBILITIES. 30. IN THIS REGARD, WE FIND THAT IN FINANCIAL YEAR 2009-10, THE LD CIT(A) HAS DELETED THE ADDITION HOLDING THAT NO BASIS HAS BEEN GIVEN BY THE AO. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 25 IN FINANCIAL YEAR 2010-11, THE LD CIT(A) HAS AGAIN DELETED THE ADDITION HOLDING THAT THERE ARE MANY COACHING INSTITUTES IN KOTA AND SALARY HIGHER THAN SALARY PAID TO MAHIMA BANSAL HAS BEEN PAID TO MANY FACULTY MEMBERS. IN FINANCIAL YEAR 2011-12, THE LD CIT(A) HAS EXAMIN ED THE DETAILS OF SALARY INCREASE OF OTHER TEACHERS AND HAS GIVEN A F INDING THAT SALARY INCREASE OF THE OTHER FACULTY WHO IS MORE EXPERIENC ED AND QUALIFIED SHOWS THAT COMPARATIVELY THERE IS A DEFINITE EXCESS IVE INCREASE IN HER CASE. ESPECIALLY WHERE SHE IS ONLY B.E AND OTHER FA CULTY IS B.TECH, IIT AND HAVING MORE THAN 3-4 YEARS EXTRA EXPERIENCE THAN HE R. THE LD CIT(A) ACCORDINGLY RESTRICTED THE ADDITION TO RS 8,00,000/ - AND THE REMAINING ADDITION OF RS. 35,20,000/- WAS DELETED. FOLLOWING THE SAME REASONING, IN FINANCIAL YEAR 2012-13, THE LD CIT(A) RESTRICTED TH E DISALLOWANCE TO RS 6,00,000 AND BALANCE DISALLOWANCE WAS DELETED. 31. FIRSTLY, OUR REASONING AS STATED ABOVE IN CASE OF ARTI BANSAL SHALL APPLY WITH EQUAL FORCE TO THE PRESENT CASE. FURTHE R, WE FIND THAT UNLIKE THE CASE OF ARTI BANSAL, IN CASE OF MAHIMA BANSAL, COMPARATIVE DATA HAS BEEN EXAMINED AND ANALYSED BY THE LD CIT(A) EVEN TH OUGH IT IS AN INTERNAL DATA AS PROVIDED BY THE ASSESSEE COMPANY. BASED ON THE ANALYSIS OF THE SAID DATA, THE LD CIT(A) HAS GIVEN A FINDING THAT THE SALARY PAYMENT TO MAHIMA BANSAL IS EXCESSIVE BY RS 8 LACS IN FINANCIAL YEAR 2011-12 RELEVANT TO ASSESSMENT YEAR 2012-13 AND BY RS 6 LACS IN FINANCIAL YEAR 2012-13 RELEVANT TO ASSESSMENT YEAR 2013-14. THE SAID FINDINGS OF THE LD CIT(A) IS THEREFORE IN CONSONANC E WITH OUR REASONING GIVEN ABOVE IN CASE OF ARTI BANSAL. HOWEVER, THERE IS NO COMPARATIVE ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 26 DATA THAT IS AVAILABLE AND ANALYSED FOR THE FINANCI AL YEAR 2009-10 AND 2010-11. WE ACCORDINGLY CONFIRM THE DELETION OF AD DITION OF SALARY PAYMENTS TO MAHIMA BANSAL FOR AY 2010-11 AND AY 201 1-12. FOR AY 2012-13 AND AY 2013-14, WE CONFIRM THE ADDITION AS SUSTAINED BY THE LD CIT(A) AND BALANCE ADDITION IS DELETED. THE RESPEC TIVE GROUNDS OF APPEAL ARE DISPOSED OFF ACCORDINGLY. 32. REGARDING GROUND NO. 2 OF REVENUES APPEAL WHE REIN THE ACTION OF THE LD CIT(A) HAS BEEN CHALLENGED IN DELETING THE A DDITION OF RS. 19,65,348/- MADE BY THE AO ON ACCOUNT OF DEPRECIATI ON ON PLD UNIT BUILDING ON THE BASIS OF ADDITIONAL EVIDENCE ADMITT ED IN VIOLATION OF RULE 46A. 33. IN THIS REGARD, BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE AO MADE AN ADDITION OF RS. 19,65,348/- OBSERVING AS UN DER:- THE ASSESSEE HAS CLAIMED THAT THE PLD UNIT BUILDING WAS CONSTRUCTED AND ITS CONSTRUCTION WAS COMPLETED BEFORE 31.03.201 0. THE ASSESSEE WAS ASKED TO PRODUCE COMPLETION CERTIFICATE, OCCUPATION CERTIFICATE AND COPY OF THE VALUATION REPORT, VIDE THE ORDER SHEET ENTRY DATED 08.02.2013, IN SUPPORT OF ITS CONTENTION REGARDING COMPLETION OF B UILDING DURING THE YEAR UNDER CONSIDERATION. FURTHER, THE ASSESSEE WAS ALSO ASKED VIDE ORDER SHEET ENTRY DATED 05.03.2013 TO PRODUCE THE RELEVAN T ELECTRICITY BILLS IN RESPECT OF THE PLD UNIT BUILDING FOR VERIFICATION O F THE PERIOD OF CONSTRUCTION. IT IS ALSO PERTINENT TO MENTION HERE THAT COPY OF THE VALUATION REPORT FROM THE REGISTERED VALUER AS WELL AS THE COPY OF COMPLETION CERTIFICATE FROM THE COMPETENT AUTHORITY WITH REGARD TO BUILDING OF PLD UNIT WERE ALSO CALLED FOR PREVIOUSL Y VIDE THIS OFFICE LETTER ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 27 DATED 29.10.2012. HOWEVER; THE ASSESSEE HAS FAILED TO PRODUCE THE ABOVE NOTED INFORMATION/ DOCUMENTS IN SUPPORT OF CO MPLETION AND SUBSEQUENT OCCUPATION OF THE SAID PLD UNIT. IN THE ABSENCE OF THE RELEVANT DOCUMENTARY EVIDENCE, REGARDING COMPLETION AND OCCUPATION OF THE SAID BUILDING, IT IS NOT PROVED THAT THE ASSESS EE HAS USED THIS ASSET FOR ITS BUSINESS PURPOSES. ACCORDINGLY; DEPRECIATIO N CLAIMED AT RS. 19,65,348/- ON THE PLD BUILDING IS DISALLOWED AND A DDED TO THE ASSESSEES TOTAL INCOME. 34. DURING THE COURSE OF HEARING BEFORE THE LD CIT( A), THE LD. AR SUBMITTED THAT:- DEPRECIATION ON PLD UNIT BUILDING : DURING THIS YEAR THE COMPANY HAS COMPLETED ITS PLD UNIT BUILDING WHICH IS ADJACENT T O THE EXISTING PREMISES OF THE COMPANY IN I.P.I.A. AREA. THIS IS WE CAN SAY THE MOTHERBOARD OF BANSAL CLASSES CONSIDERING IT BE A COMPUTER AS THIS IS SPECIFICALLY THE PLACE WHERE THE STUDY MATERIAL, QUESTION PAPERS AND OTHER RELATED LITERATURE IS BEING DEVELOPED IN STRICT VIGIL OF SH RI V.K.BANSAL THE PATRIARCH HIMSELF. THIS PLD UNIT BUILDING IS RESPONSIBLE FOR QUALITY CONTROL OF MATERIAL OF BANSAL CLASSES AND WITHOUT THIS UNIT TH E CLASSES WOULD BE HANDICAPPED. THIS IS SPECIFICALLY DESIGNED AS ADJOI NING BUT SEPARATE TO MAIN BUILDING TO ENSURE PROPER SEGREGATION AND NO D ISTURBANCE OF ANY KIND. IN CASE OF ASSESSMENT PROCEEDINGS THE DETAILS OF CO NSTRUCTIONS WERE SUBMITTED. THE CONSTRUCTION WORK BEGAN IN MARCH 200 8 AND CONTINUED UPTO DECEMBER, 2009. THE MAJOR WORK WAS COMPLETED B Y END OF SEPTEMBER AND THEREAFTER THE SAID BUILDING WAS TAKE N IN USE. HOWEVER, CERTAIN FURNITURE & FIXTURES WERE CARRIED ON AND TH AT TOO WAS FINISHED BY ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 28 DECEMBER, 2009. AS SUCH THE COMPANY CLAIMED DEPRECI ATION @ 5% TREATING IT TO BE IN USE BELOW 6 MONTHS. THE LEARNE D A.O. HAS CALLED UPON SOME INFORMATION SUCH AS ELECTRICITY BILL, COMPLETI ON CERTIFICATE ETC. HOWEVER, WE HAVE SUBMITTED THE COPY OF THE ELECTRIC ITY BILL SINCE THE BILLS ARE COMMON FOR THE ENTIRE PREMISES. AS REGARDS COMPLETION CERTIFICATE, IT WAS SUBMITTED THAT IT IS NOT A SYSTEM IN KOTA TO OBTAIN ANY COMPLETION CERTIFICATE . HOWEVER, WE GOT IT VALUED FROM THE VALUER. HE HAS ALSO MENTIONED ABOUT COMPLETION OF IT, BUT BY THAT TIME THE CERTIFICATE WAS GIVEN, THE ASS ESSMENT WAS COMPLETE. WE ARE NOW SUBMITTING A COMPLETION CERTIF ICATE OF A REGISTERED VALUER WHICH CONTAINS THEREIN THE DETAIL S OF THE EXPENDITURE INCURRED. THE FOREMOST THING IS THAT THE EXPENDITUR E WAS LAST INCURRED IN DECEMBER, 2010, HENCE IT IS PRESUMED THAT BY DEC EMBER, 2010 THE SAID BUILDING WAS COMPLETE. WE ALSO SUBMIT THAT IN RELATION TO THE VALUATION CERTIFICATE THE SAME QUERY WAS RAISED BY THE LEARNED A.O. IN THE LAST YEAR AND IN OUR REPLY WE FILED THE VALUATI ON CERTIFICATE FROM A REPUTED ARCHITECT OF KOTA WHICH HAS ALSO BEEN CONFI RMED BY THE SAME THAT IT IS A TWO PAGE REPORT, DOES NOT CONTAIN ANY DETAILS AND IN THE NEXT YEAR ALSO DEPRECIATION HAS NOT BEEN ALLOWED. WE FURTHER RESPECTFULLY SUBMIT THAT FIRST OF ALL, W HEN OUR BOOKS OF ACCOUNTS HAVE BEEN ACCEPTED, THEN THE EXPENDITURE I N THE BOOKS TOWARDS BUILDING HAVE BEEN ACCEPTED FULLY. SECONDLY , IF HE WAS HAVING ANY DOUBT OF ITS OWN THEN IT WOULD HAVE BEEN GOT VE RIFIED FROM HIS OWNSELF, BUT WITHOUT DOING ANY EFFORTS, THE LEARNED AO REPEATED OWN ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 29 VERSION THAT THERE IS NO CERTIFICATE WHEREAS WE HAV E ALSO INFORMED HIM IN OUR REPLY TO CHECK HIMSELF BY THE VISIT TO THE B UILDING WHICH IS COMPLETE AND USED BY THE COMPANY. AS SUCH THE LEARN ED AO HAS DISALLOWED THE DEPRECIATION WITHOUT ANY ENQUIRY, WI THOUT HAVING ANY REGARD FOR THE DOCUMENTS FILED BY THE COMPANY. SO F AR THE LIGHT, POWER CONNECTION ARE CONCERNED, WE ALSO SUBMIT THAT AFTER COMPLETION OF THIS UNIT THE POWER LOAD WAS GOT INCREASED, THE RELEVANT DOCUMENTS ARE ALSO SUBMITTED AS THIS COULD EASILY JUSTIFY OUR STA ND. 35. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE UNDER CONSIDERATION RELATION TO COMPLETION OF THE BUILDING AND PUTTING THE SAME TO USE FOR THE PURPOSES OF CLAIMING DEPRECIATION UNDER SECTION 32 OF THE ACT AT HALF TH E NORMAL RATE BEING USED FOR LESS THAN SIX MONTHS. THE ASSESSEE HAS SU BMITTED THAT THE MAJOR CONSTRUCTION WORK OF THE BUILDING WAS COMPLET ED IN SEPTEMBER 2009 AND THEREAFTER, CERTAIN FURNITURE AND FIXTURES /INSTALLED WERE FINISHED BY DECEMBER 2009 AND THE BUILDING WAS PUT TO USE. IN SUPPORT, THE CONSTRUCTION ACCOUNT OF THE BUILDING EVIDENCING THE NATURE AND PERIOD OF EXPENDITURE WAS SUBMITTED WHICH HAS SUBSEQUENTLY BE EN VERIFIED BY THE REGISTERED VALUER. FURTHER, USAGE OF THE BUILDING W AS CORROBORATED BY USAGE OF ELECTRICITY THROUGH COMMON METER AND INCRE ASE IN ELECTRICITY LOAD WHICH WAS SANCTIONED IN AUGUST 2009. FURTHER, THE ASSESSEE HAS REQUESTED FOR A PHYSICAL VERIFICATION OF ITS BUILDI NG TO ESTABLISH THE COMPLETION AND USAGE OF THE BUILDING. ALL THESE FA CTS HAVE BEEN DULY CONSIDERED BY THE LD CIT(A) AND WE HAVE GONE THROUG H HIS FOLLOWING FINDINGS AND THE SAME ARE HEREBY CONFIRMED: ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 30 THE AO DISALLOWED THE DEPRECIATION MAINLY ON TWO C OUNTS. NO ELECTRICITY BILL WAS PRODUCED AND NO COMPLETION CER TIFICATE WAS PRODUCED. THE ASSESSEE SUBMITTED THAT THE NEW BUILDING WAS AD JACENT TO THE EXISTING BUILDING AND BOTH THE BUILDINGS HAVE COMMO N CONNECTION AND THE ELECTRICITY BILLS ARE COMMON FOR BOTH THE PREMI SES. THE ASSESSEE SUBMITTED THAT AFTER COMPLETION OF NEW BUILDING, TH E ELECTRICITY LOAD WAS GOT INCREASED. THE ASSESSEE FURTHER SUBMITTED T HAT IN KOTA, THERE IS NO SYSTEM OF OBTAINING A COMPLETION CERTIFICATE. I HAVE GONE THROUGH THE CONSTRUCTION ACCOUNT OF THE BUILDING AND IT WAS SEEN THAT IN THE CURRENT FINANCIAL YEAR, LAST PAYMENT WAS MADE ON 21 .12.2009. IT WAS ALSO SEEN THAT ASSESSEE APPLIED FOR INCREASE IN ELE CTRIC LOAD FROM 350KW TO 500 KW ON 27.07.2009 AND DEMAND NOTE WAS I SSUED (BY JAIPUR VIDHYUT VITRAN NIGAM LTD.) ON 21.08.2000, WH ICH WAS DEPOSITED ON 28.08.2009. CONSIDERING THE ABOVE, I AM OF THE O PINION THAT THE BUILDING WAS COMPLETED AND PUT TO USE DURING THE SE COND HALF OF CURRENT FINANCIAL YEAR. THE AO IS THEREFORE DIRECTE D TO DELETE ADDITION OF RS. 19,65,348. THIS GROUND OF APPEAL IS ALLOWED. IN THE RESULT, THE GROUND OF THE REVENUE IS DISMISS ED. 36. REGARDING THE GROUND NO. 4 OF REVENUES APPEAL WHEREIN THE REVENUE HAS CHALLENGED THE ACTION OF LD CIT(A) IN D ELETING THE ADDITION OF RS. 4,90,07,505/- MADE BY THE AO ON ACCOUNT OF DISA LLOWANCE OF DEDUCTION CLAIMED BY ASSESSEE U/S 80G OF THE ACT. 37. THE FACTS OF THE CASE ARE THAT THE AO MADE AN A DDITION OF RS. 4,90,07,505/- OBSERVING AS UNDER:- ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 31 DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS MADE DONATIONS AGGREGATING RS. 9,80,89,200/- AND CL AIMED DEDUCTION OF RS. 4,90,07,505/- U/S 80G AGAINST GROSS TOTAL IN COME OF RS. 98,01,50,108/-. THE ASSESSEE VIDE THIS OFFICE LETTE R DATED 29.06.2011 WAS ASKED TO JUSTIFY THE CLAIM U/S 80G AND FILE EVI DENCE IN SUPPORT OF ITS CLAIM. VIDE REPLY FILED ON 27.02.2012, THE ASSE SSEE FILED COPIES OF RECEIPTS ISSUED BY BANSAL PUBLIC EDUCATION SOCIETY, REGISTERED OFFICE, 5-A-13, VIGYAN NAGAR, KOTA., IN TOKEN OF RECEIPT OF CONTRIBUTION TOWARDS CORPUS FUND/ DONATION FOR BUILDING FUND/ DO NATION AS PER THE UNDER NOTED DETAILS:- S.NO. RECEIPT NO. DATE OF RECEIPT AMOUNT OF RECEIP T 1 1 07.10.2009 RS. 50,00,000/- 2 2 07.10.2009 RS. 25,00,000/- 3 3 13.10.2009 RS. 15,00,000/- 4 4 03.11.2009 RS. 10,00,000/- 5 5 09.11.2009 RS. 50,00,000/- 6 6 09.11.2009 RS. 20,00,000/- 7 7 12.11.2009 RS. 10,00,000/- 8 8 08.12.2009 RS. 50,00,000/- 9 9 26.12.2009 RS. 10,00,000/- 10 10 08.01.2010 RS. 50,00,000/- 11 11 11.01.2010 RS. 10,00,000/- 12 12 14.01.2010 RS. 10,00,000/- 13 15 01.02.2010 RS. 10,00,000/- ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 32 14 22 24.02.2010 RS. 50,00,000/- 15 23 25.02.2010 RS. 10,00,000/- 16 29 15.03.2010 RS. 1,00,00,000/- 17 39 16.03.2010 RS. 1,00,00,000/- 18 40 17.03.2010 RS. 1,00,00,000/- 19 41 17.03.2010 RS. 1,00,00,000/- 20 46 19.03.2010 RS. 1,00,00,000/- 21 47 19.03.2010 RS. 1,00,00,000/- THE ABOVE NOTED DONATIONS AGGREGATING RS. 9,80,00,2 00/ - HAVE BEEN DISALLOWED BY THE ASSESSEE IN THE COMPUTATION OF IN COME; BUT DEDUCTION OF RS. 4,90,07,505/- HAS BEEN CLAIMED U/S 80G AGAIN ST THE GROSS TOTAL INCOME COMPUTED AT RS. 98,01,50,108/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED VIDE THIS OFFICE LETTER DATED 29.10.2012 TO PRODUCE REGISTER U/S 301 OF THE COMPANY LAW, MAINTAINED BY IT FOR THE YEAR UNDER CO NSIDERATION SO AS TO VERIFY THE VERACITY OF THE PROVISIONS OF DONATION F ACTOR. BUT NO SUCH REGISTER U/S 301 HAS BEEN PRODUCED. THE ASSESSEE CO MPANY HAS, HOWEVER, FILED A COPY OF AN EXTRACT DATED 12.05.200 9 FROM THE MINUTES OF MEETING OF THE BOARD OF DIRECTORS HELD AT KOTA ON 0 1.05.2009, WHICH READS AS UNDER:- CERTIFIED COPY OF AN EXTRACT FROM THE MINUTES OF M EETING, OF THE BOARD OF DIRECTORS OF BANSAL CLASSES PRIVATE LIMITED, DUL Y CONVENED AND AT WHICH A PROPER QUORUM WAS PRESENT, HELD AT KOTA ON 1 ST MAY, 2009. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 33 WE HEREBY CERTIFY THAT THE FOLLOWING RESOLUTION OF THE BOARD OF DIRECTORS OF BANSAL CLASSES PRIVATE LIMITED, WAS PASSED AT A MEETING OF THE BOARD HELD ON 1 ST MAY, 2009 AND HAS BEEN DULY RECORDED IN THE MINUTE BOOK OF THE SAID COMPANY. RESOLVED THAT BANSAL CLASSES PRIVATE LIMITED IS AUT HORIZED BY ITS BOARD OF DIRECTORS TO GIVE DONATION TO ANY PUBLIC/RELIGIOUS/ CHARITABLE/ANY SUCH KIND OF INSTITUTION UP TO 10% OF ITS GROSS PROFIT. RESOLVED FURTHER THAT THE SAID RESOLUTIONS SHALL CO NTINUE IN FORCE TILL RESCINDED BY THE BOARD. SIGNATURES OF ON BEHALF OF BOARD OF DIRECTORS BANSAL CLASSES PRIVATE LIMITED -SD/- (PROMOD KUMAR BANSAL) CHAIRMAN DIRECTOR. -SD/- (RICHA BANSAL) DIRECTOR. THE SO CALLED RESOLUTION PASSED BY THE BOARD OF DIR ECTORS DOES NOT STAND THE LEGALITIES OF THE COMPANY LAW, AS THIS RESOLUTI ON HAS NOT BEEN SIGNED BY ALL THE DIRECTORS OF THE COMPANY. ONLY TW O DIRECTORS HAVE SIGNED THIS RESOLUTION AND THE REMAINING TWO DIRECT ORS VIZ SH. VINOD KUMAR BANSAL AND SHRI SAMIR BANSAL ARE NOT SIGNATOR IES TO THE SO CALLED RESOLUTION. FURTHER, IN THE ABSENCE OF PRODUCTION O F THE REGISTER U/S 301 ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 34 OF THE COMPANY LAW, IT IS NOT VERIFIABLE WHETHER TH IS RESOLUTION FINDS A MENTION IN THE SAID REGISTER OR NOT. THE ASSESSEE H AS CATEGORICALLY DENIED VIDE ITS REPLY FILED ON 21.12.2012 THAT DURING THE, THE COMPANY HAS NOT ENTERED INTO ANY SUCH CONTRACTOR OR ARRANGE MENT AS NOTIFIED IN SECTION 301 OF COMPANIES ACT, 1956 HENCE; THERE IS NO SANCTITY OF THE SAID RESOLUTION IN THE EYES OF LAW. IT IS PERTINENT TO MENTION HERE THAT THE DIRECTORS ARE APPOINTED BY THE SHAREHOLDERS OF THE COMPANY AND THEY ARE TRUSTIES OF THE SHAREHOLDERS. AS SUCH, THEY ARE IN A FIDUCIARY POSITION AND CANNOT TAKE UNDUE ADVANTAGE OF THEIR P OSITION USING THEIR OFFICE. SECTION 299(1) CASTS AN OBLIGATION ON A DIR ECTOR TO DISCLOSE NATURE OF HIS CONCERN OR INTEREST IN ANY CONTRACT OR ARRAN GEMENT WHICH IS PROPOSED TO BE ENTERED INTO ON BEHALF OF THE COMPAN Y. SUCH DISCLOSURE IS TO BE MADE AT THE MEETING OF BOARD OF DIRECTORS. SECTION 299(1) OF THE COMPANIES ACT, READS AS UNDER EVERY DIRECTOR OF A COMPANY WHO IS IN ANY WAY, WHETHER DIRECTLY OR INDIRECTLY, CONCERN ED OR INTERESTED IN A CONTRACT OR ARRANGEMENT, OR PROPOSED CONTRACT OR AR RANGEMENT, ENTERED INTO OR TO BE ENTERED INTO, BY OR ON BEHALF OF THE COMPANY, SHALL DISCLOSE, THE NATURE OF HIS CONCERN OR INTEREST AT A MEETING OF THE BOARD OF DIRECTORS. THE WORDS IN ANY WAY, WHETHER DIRECTLY OR INDIRE CTLY, PROPOSED CONTRACT OR ARRANGEMENT ENTERED INTO OR TO BE ENT ERED INTO WOULD INDICATE THAT SCOPE OF THE SECTION IS WIDER AND COV ERS ALL POSSIBLE TRANSACTIONS WITH RELATIVES, FIRMS, COMPANIES IN WH ICH THE DIRECTOR IS ASSOCIATED BY VIRTUE OF HIS OFFICE OR OTHERWISE. IN THE CASE OF ASSESSEE COMPANY, NO SUCH DISCLOSURE HAS BEEN MADE IN THE SO CALLED RESOLUTION DATED 12.05.2009. THE DIRE CTORS OF THE COMPANY ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 35 ARE ALSO EITHER TRUSTEES OF THE BANSAL PUBLIC EDUCA TION SOCIETY, REGISTERED OFFICE, 5-A-13, VIGYAN NAGAR, KOTA OR CL OSE RELATIVES OF THE TRUSTEES, AS DETAILED BELOW:- 1. SH. V.K. BANSAL (DIRECTOR) CHAIRMAN 2. P.K. BANSAL (DIRECTOR) SECRETARY 3. MAHIMA BANSAL (DIRECTORS WIFE) TREASURER 4. SAMEER BANSAL (DIRECTOR) VICE CHAIRMAN 5. RICHA BANSAL (DIRECTOR) JOINT SECRETARY THERE IS NO MENTION IN THE SO CALLED COPY OF EXTRAC T OF THE RESOLUTION THAT DONATIONS WOULD BE MADE TO THE SAID SOCIETY ONLY. T HERE IS NO NEXUS OF THE HUGE DONATIONS MADE TO THE SAID SOCIETY WITH TH E BUSINESS PURPOSES OF THE ASSESSEE COMPANY. MOREOVER; THERE IS NO COMM ERCIAL EXPEDIENCY IN MAKING DONATIONS WORTH RS.9,80,51,000/- TO ONLY ONE SOCIETY I.E. BANSAL PUBLIC EDUCATION SOCIETY, REGISTERED OFFICE, 5-A-13, VIGYAN NAGAR, KOTA. MAKING SUCH HUGE DONATIONS TO THIS SOC IETY IS ONLY A COLORFUL DESIGN ON THE PART OF ASSESSEE COMPANY TO DIVERT ITS PROFITS TO THE TRUST, HAVING TRUSTEES WHICH ARE EITHER CLOSE R ELATIVES OF THE DIRECTORS OR THE DIRECTORS THEMSELVES. DIVERSION OF ITS PROFI TS BY WAY OF DONATIONS IS A CLEVER STRATEGY ON THE PART OF ASSESSEE COMPAN Y TO TRANSFER ITS PROFITS UNDER THE GARB OF DONATIONS TO THE TRUST, H AVING EXEMPT INCOME. CONSIDERING THE TOTALITY OF THE FACTS AND NON PRODU CTION OF THE MATERIAL DOCUMENTARY EVIDENCE IN SUPPORT OF PROVISION OF DON ATION, THE AMOUNT OF RS.9,80,51,000/- DONATED TO THE SAID TRUST IS AB SOLUTELY UNNECESSARY AND IN GENUINE. THIS ALSO GATHERS SUPPORT FROM THE FACT THAT THE ASSESSEE HAS NOT MADE ANY SUBSTANTIAL DONATION TO A NY OTHER TRUST / ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 36 INSTITUTION. HENCE, DEDUCTION OF RS.4,90,07,505/- C LAIMED U/S 80G IS NOT CONSIDERED GENUINE AND ACCORDINGLY, IS DISALLOWED. 38. WE NOW REFER TO THE RELEVANT FINDINGS OF THE CI T(A) WHICH ARE UNDER CHALLENGE BEFORE US: I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AOS FINDINGS. THE ASSESSEE HAD MADE PAYMENT OF RS. 9,80,51,000/- TO B ANSAL PUBLIC EDUCATION SOCIETY. THE AO HELD THAT THERE WAS NO NE XUS OF HUGE DONATION MADE TO THE SAID SOCIETY WITH THE BUSINESS PURPOSE OF THE ASSESSEE AND THERE WAS NO COMMERCIAL EXPEDIENCY IN MAKING SUCH DONATIONS. THE AO HELD THAT IT WAS A CLEVER STRATEG Y TO DIVERT PROFITS OF THE COMPANY UNDER THE GARB OF DONATIONS TO THE TRUS T. IN THE MY OPINION, FOR THE PURPOSES OF SECTION 80G, WHAT IS REQUIRED IS TO DONATE THE AMOUNT TO ANY ENTITY REGISTERED U/S 80G. IF THE ACTIVITIES OF SUCH ENTITY ARE DOUBTFUL, THEN THE DONATION CAN BE ADDED IN THE HANDS OF SUCH ENTITY. THE FACT OF DONATION WAS NOT DOUBTED. SECTION 80G DOES NOT PROHIBIT DONATIONS TO EXEMPTED ENTITIES CONTROLLED BY RELATED PERSONS. SECTION 80G DOES NOT REQUIRE THAT THE DONATION SHOU LD HAVE NEXUS WITH THE BUSINESS PURPOSES OF DONEE. SECTION 80G DOES NO T REQUIRE THAT THE DONATION SHOULD BE FOR COMMERCIAL EXPEDIENCY. MOST OF THESE THINGS ARE REQUIRED FOR ALLOWING DEDUCTION OF BUSINESS EXPENDI TURE U/S 37 OF THE I.T. ACT. CONSIDERING THE FACTS, IT IS HELD THAT ASSESSE E HAS FULFILLED ALL THE CONDITIONS NECESSARY FOR CLAIMING DEDUCTION U/S 80G . THE AO IS THEREFORE DIRECTED TO DELETE ADDITION OF RS. 4,90,07,505/- ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 37 39. DURING THE COURSE OF HEARING, THE LD AR REITERA TED HIS SUBMISSIONS MADE BEFORE THE LD CIT(A). FURTHER, HE SUBMITTED T HAT THE DONATIONS HAVE BEEN MADE AFTER DUE APPROVAL FROM THE BOARD OF DIRECTORS OF THE ASSESSEES COMPANY. HE FURTHER SUBMITTED THAT THER E IS NO VIOLATION OF ANY OF THE PROVISIONS OF THE COMPANIES ACT. HE FUR THER SUBMITTED THAT THE BANSAL PUBLIC SCHOOL EDUCATION SOCIETY HAS BEEN DULY REGISTERED UNDER SECTION 12AA AS WELL AS SECTION 80G OF THE AC T AND THE ASSESSEE COMPANY HAS RIGHTLY CLAIMED THE DEDUCTION TO THE EX TENT OF 50% OF DONATIONS MADE DURING THE YEAR. 40. THE LD DR HAS VEHEMENTLY ARGUED THE MATTER AND RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 41. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. DURING THE YEAR UNDER CONSIDER ATION, THE ASSESSEE COMPANY HAS CONTRIBUTED BY WAY OF DONATION OF RS 9, 80,00,000 TO BANSAL PUBLIC SCHOOL EDUCATION SOCIETY HAVING REGISTERED O FFICE AT 5-A-13, VIGYAN NAGAR, KOTA, RAJASTHAN AND A DEDUCTION TO AN EXTENT OF 50% OF THE SAID DONATION AMOUNTING TO RS 4,90,00,000 HAS BEEN CLAIM ED IN THE RETURN OF INCOME IN TERMS OF SECTION 80G OF THE ACT. THE SAI D SOCIETY HAS BEEN CLAIMED TO BE APPROVED BY THE COMMISSIONER OF INCOM E TAX AND DULY REGISTERED UNDER SECTION 80G(5)(VI) OF THE ACT. 42. WE AGREE WITH THE FINDINGS OF THE LD CIT(A) WHE RE HE SAYS THAT SECTION 80G DOES NOT PROHIBIT DONATIONS TO EXEMPTE D ENTITIES CONTROLLED BY RELATED PERSONS. SECTION 80G DOES NOT REQUIRE TH AT THE DONATION SHOULD HAVE NEXUS WITH THE BUSINESS PURPOSES OF DON EE. SECTION 80G DOES NOT REQUIRE THAT THE DONATION SHOULD BE FOR CO MMERCIAL EXPEDIENCY. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 38 MOST OF THESE THINGS ARE REQUIRED FOR ALLOWING DEDU CTION OF BUSINESS EXPENDITURE U/S 37 OF THE I.T. ACT. 43. ON POINTED QUESTION RAISED BY THE BENCH AS TO W HETHER, AT THE POINT IN TIME, WHEN THE SAID DONATIONS WERE MADE DURING T HE FINANCIAL YEAR, THE SAID REGISTRATION WAS GRANTED AND IN FORCE AND WHETHER THE REGISTRATION DOCUMENTS ARE AVAILABLE IN THE PAPERBO OK THROUGH WHICH IT CAN BE SUBSTANTIATED. THE LD AR SUBMITTED THAT THE REGISTRATION UNDER SECTION 80G WAS GRANTED BY THE LD CIT, KOTA IN AUGU ST 2009 AND IT WAS GRANTED FOR THE PERIOD STARTING APRIL 2009 TO MARCH 2011 AND IT COVERS THE PERIOD OF DONATION STARING OCTOBER 2009 TILL MARCH 2010 AND IT WAS THUS VALID AND IN FORCE FOR THE PERIOD DURING WHICH THE DONATION WAS MADE BY THE ASSESSEE COMPANY. IT WAS FURTHER SUBMITTED THA T THE REGISTRATION DOCUMENT IS CURRENTLY NOT AVAILABLE IN THE PAPERBOO K WHICH HAS BEEN SUBMITTED BEFORE THE BENCH AND THE SAME CAN BE SUBM ITTED AT THE NEXT DATE OF HEARING WHERE SO PERMITTED. IT WAS FURTHER SUBMITTED THAT ALTERNATIVELY, THE ASSESSEE HAS NO OBJECTION WHERE THE BENCH SO DESIRE, THE NECESSARY DIRECTIONS MAY BE ISSUED TO THE ASSES SING OFFICER TO VERIFY THE SAME. WE ARE ACCORDINGLY SETTING ASIDE THE MAT TER TO THE FILE OF THE AO FOR A LIMITED PURPOSE TO VERIFY THE VALIDITY OF THE APPROVAL GRANTED BY THE COMMISSIONER OF INCOME TAX UNDER THE PROVISIONS OF SECTION 80G(5)(VI) TO BANSAL PUBLIC SCHOOL EDUCATION SOCIET Y FOR THE FINANCIAL YEAR RELEVANT TO THE IMPUNGED ASSESSMENT YEAR. WHERE TH E ASSESSING OFFICER FINDS THAT THE APPROVAL GRANTED UNDER SECTION 80G(5 )(VI) TO BANSAL PUBLIC SCHOOL EDUCATION SOCIETY IS VALID AND IN FORCE FOR THE FINANCIAL YEAR RELEVANT TO THE IMPUNGED ASSESSMENT YEAR, HE IS HER EBY DIRECTED TO ALLOW THE NECESSARY RELIEF TO THE ASSESSEE COMPANY BY WAY OF ALLOWING THE ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 39 NECESSARY DEDUCTION IN TERMS OF PROVISIONS OF SECTI ON 80G OF THE ACT AS CLAIMED BY THE ASSESSEE COMPANY IN ITS RETURN OF IN COME. THE GROUND OF THE REVENUE IS DISPOSED OFF ACCORDINGLY. ITA NO. 699/JP/14 & 739/JP/14 44. WE NOW COME TO CROSS APPEALS FILED FOR AY 2011- 12 WHEREIN THE RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER: ASSESSEES GROUNDS OF APPEAL (ITA NO. 699/JP/14) (1) THAT THE LD. CIT(A) GROSSLY ERRED IN NOT DELET ING THE ADDITION MADE BY LD. AO ON ACCOUNT OF CAUTION MONEY RS. 5,00,000/ -. THE LD. AO MADE THE ADDITION OF CAUTION MONEY RS. 1650450/- OUT OF THAT LD. CIT(A) SUSTAINED THE ADDITION OF RS. 5,00,000/-. (2) THAT THE LD. AO AS WELL AS LD. CIT(A) GROSSLY E RRED IN DISALLOWING THE ADVERTISEMENT EXPENSES RS. 57200/- (3) THAT THE LD. AO AS WELL AS LD. CIT(A) GROSSLY E RRED IN MAKING THE DISALLOWANCE OF RS. 2,00,000/- THE EXPENSES INCURRE D ON PUBLIC WELFARE I.E. CONTRIBUTION TO POLICE WELFARE FUND. REVENUES GROUNDS OF APPEAL (ITA NO. 739/JP/14) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN:- (I) DELETING THE ADDITION OF RS. 11,50,450/- OUT OF TOT AL ADDITION OF RS. 16,50,450/- MADE BY THE AO ON ACCOUNT OF UNPAID CAU TION MONEY; (II) DELETING THE ADDITION OF RS. 10,62,000/- MADE BY TH E AO U/S 40A(2)(B) OUT OF SALARY PAID; (III) DELETING THE ADDITION OF RS. 4,53,00,000/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED BY ASS ESSEE U/S 80G; ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 40 (IV) DELETING THE DISALLOWANCE OF RS. 43,088/- MADE BY T HE AO OUT OF DEPRECIATION ON XEROX MACHINE; (V) DELETING THE ADDITION OF RS. 38,23,006/- MADE BY TH E AO ON ACCOUNT OF DEPRECIATION ON PLD UNIT BUILDING BY FOL LOWING HIS DECISION DATED 21.08.2014 IN THE CASE OF THE ASSESSEE FOR AY 2010-11 WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT; 45. REGARDING COMMON GROUND NO. 1 OF ASSESSEES AS WELL AS REVENUES APPEAL RELATING TO REFUND OF THE CAUTION MONEY, THE RELEVANT FINDING OF THE LD CIT(A) IS REPRODUCED AS UNDER:- I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AOS FINDINGS. THE ASSESSEE CLAIMED THAT IT HAS NOT CLAIMED ANY EXPEND ITURE AGAINST RE- PAYMENT OF CAUTION MONEY. THE AO ADDED A SUM OF RS. 16,50,450/- ON THE BASIS OF EXAMPLE OF RS. 10,000/- PAID IN CASH W ITHOUT OBTAINING ANY SIGNATURE. IN MY OPINION, CAUTION MONEY IS RECEIVED DURING THE COURSE OF BUSINESS AND IF THE SAME IS NOT REFUNDED, THE SAME CAN BE TREATED AS INCOME AS AND WHEN THE LIABILITY TO PAY SUCH AMOUNT IS WRITTEN OFF IN THE BOOKS OF ACCOUNTS. DURING THE YEAR, ASSESSEE HAD SH OWN TO HAVE PAID RS. 1,10,03,000/-. IF ANY OF THE REPAYMENT WAS NOT ACTU ALLY MADE, THE SAME WOULD FORM THE INCOME OF ASSESSEE. CONSIDERING THE ABOVE, I AM OF THE OPINION THAT SOME ADDITION WAS JUSTIFIED. HOWEVER, MAKING ADDITION OF RS. 16,50,450/- ON THE BASIS OF DEFECTS OF RS. 10,0 00/- WAS NOT JUSTIFIED. CONSIDERING THE FACTS OF THE CASE, IN MY OPINION, A N ADDITION OF RS. 5,00,000/- WOULD MEET THE END OF JUSTICE. THE AO IS DIRECTED TO DELETE BALANCE ADDITION OF RS. 11,50,450/-. THIS GROUND OF APPEAL IS THEREFORE PARTLY ALLOWED. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 41 46. WE HAVE ALREADY EXAMINED THIS ISSUE AT LENGTH AND OUR FINDINGS AND DIRECTIONS CONTAINED IN ITA NO. 698/JP/14 & 738 /JP/14 SHALL APPLY MUTATIS MUTANDIS TO THIS YEAR AS WELL. IN THE RESULT, ASSESSEES G ROUND OF APPEAL IS ALLOWED AND REVENUES GROUND OF APPEAL IS DISMISSED. 47. REGARDING GROUND NO. 2 OF ASSESSEES APPEAL, BR IEFLY STATED FACTS OF THE CASE ARE THAT THE AO MADE A DISALLOWANCE TOWARD S ADVERTISEMENT EXPENDITURE OF RS. 57,200/- OBSERVING AS UNDER:- AS PER DETAILS FILED, THE ASSESSEE HAS CLAIMED THE FOLLOWING AMOUNTS AS EXPENDITURE UNDER THE HEAD ADVERTISEMENT:- SECRETARY RA.MA VIDYALAYA CIVIL LINES : RS. 5,10 0/- KOTA DISTRICT CRICKET ASSOCIATION : RS. 50,000/- KOTA ZILA BODY BUILDING : RS. 2,100/- TOTAL : RS. 57,200/- VIDE ORDER SHEET ENTRY DATED 04.03.2014, THE ASSESS EE WAS ASKED TO EXPLAIN AS TO WHY THE ABOVE SAID PAYMENTS MAY NOT B E DISALLOWED, AS THERE IS NO NEXUS OF THESE EXPENSE WITH THE BUSINES S PURPOSES. THE ASSESSEE VIDE ITS WRITTEN SUBMISSIONS FILED ON 13.0 3.2014 STATED AS UNDER:- THE COMPANY IS ALSO LIABLE TO DO SOCIAL WORK AND I N THIS RELATION & TO PROMOTE THE SOCIAL CAUSE HELP TO POOR, ENVIRONMENT HEALTH IT HAS CONTRIBUTED AMOUNT IN SOUVENIR WITH THE DIFFERENT O RGANIZATION. AS SUCH THE AMOUNT WAS CONTRIBUTED TO ROTARY CLUBS, LIONS C LUBS, POOR LADY FATIMA SULTANA, JIM KHANA ETC. THIS IS PURELY THE B USINESS EXPENDITURE. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 42 THE SUBMISSIONS MADE BY THE ASSESSEE HAVE DULY BEEN CONSIDERED AND NOT FOUND ACCEPTABLE. THERE IS NO COMMERCIAL EXPEDI ENCY IN MAKING THE ABOVE SAID EXPENDITURE, AS NO NEXUS OF THESE EXPENS ES WITH THE BUSINESS PURPOSES OF THE ASSESSEE IS PROVED. HENCE; THE ABOV E NOTED EXPENSES AGGREGATING RS.57,200/- ARE DISALLOWED, BEING NOT I NCIDENTAL TO THE BUSINESS OF THE ASSESSEE COMPANY. 48. THE RELEVANT FINDINGS OF THE LD CIT(A) ARE AS UNDER: I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AOS FINDINGS. LAST YEAR, I HAVE ALLOWED SIMILAR PAYMENTS ON THE GROUND THAT THE SAME WERE MADE FOR THE PURPOSES OF ADVERTISEMENT. HOWEVER, NO EVIDENCE WAS SUBMITTED TO SHOW THAT THE PAYMENTS IN CURRENT YEAR WERE FOR THE PURPOSES OF ADVERTISEMENT. THEREFORE, IT CANNOT BE HELD THAT THESE PAYMENTS WERE FOR THE PURPOSES OF BUSINESS. ALTERNA TIVELY, THESE PAYMENTS CAN BE CLAIMED AS DONATION. DONATIONS ETC. CAN BE CLAIMED UNDER THE PROVISIONS OF ACT AFTER FULFILLING CERTAI N CONDITIONS, E.G. DONATIONS CAN BE CLAIMED U/S 80G ETC. AS ASSESSEE H AS FAILED TO FULFILL ANY OF THE CONDITION FOR CLAIMING DEDUCTION, THE DI SALLOWANCE BY AO WAS JUSTIFIED. THE ADDITION OF RS. 57,200/- IS CONFIRME D. THIS GROUND OF APPEAL IS THEREFORE DISMISSED. 49. THE LD CIT(A) HAS GIVEN A FINDING THAT NO EVIDE NCE HAS BEEN SUBMITTED TO SUBSTANTIATE THE EXPENDITURE AS CLAIME D TO HAVE BEEN INCURRED TOWARDS ADVERTISEMENT. FURTHER, THE ASSES SEE HAS FAILED TO ESTABLISH THE NECESSARY NEXUS OF INCURRENCE OF SUCH EXPENDITURE FOR ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 43 BUSINESS PURPOSES. IN LIGHT OF THE SAME, THE ABOVE FINDINGS OF THE LD CIT(A) REMAIN UNCONTROVERTED BEFORE US AND THE SAME ARE HEREBY CONFIRMED. IN THE RESULT, ASSESSEES GROUND OF APP EAL IS DISMISSED. 50. REGARDING GROUND NO. 3, BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AO DISALLOWED A SUM OF RS. 2,00,000/- OBSERVING AS UNDER:- THE ASSESSEE COMPANY HAS DEBITED AN AMOUNT OF RS. 2,00,000/- ON 14.09.2010 UNDER THE HEAD PUBLIC WELFARE EXPENSES, WITH THE FOLLOWING CITATION:- CONFERENCE HALL CONSTRUCTION FOR POLICE FORCE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED TO JUSTIFY THE SAID PAYMENTS AS TO HOW THIS AMOUNT QUALIFIES FOR CLAIM AS REVENUE EXPENDITURE. THE ASSESSEE HAS NOT BEEN ABLE TO GIVE ANY PLAUSIBLE EXPLANATION, EXCEPT STATING VIDE REPLY FI LED ON 13.03.2014 THAT PUBLIC WELFARE EXPENSES ARE THE NEED OF TODAY WE H AVE TO CONTRIBUTE SOMETHING FOR PUBLIC IT IS PART OF BUSINESS'. PAYME NT OF THIS AMOUNT AS PER THE ASSESSEES VERSION HAS NO NEXUS WITH THE BU SINESS PURPOSES OF THE ASSESSEE COMPANY AND THERE WAS NO COMMERCIAL EX PEDIENCY TO JUSTIFY THIS EXPENDITURE, WHICH IS OTHERWISE NOT AD MISSIBLE AS PER LAW. HENCE; IT CANNOT BE HELD THAT THE SAID EXPENDITURE HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES U/ S 37(1). IN VIEW OF THESE FACTS, THIS AMOUNT OF RS. 2,00,000/- IS DISAL LOWED AND ADDED TO THE ASSESSEES TOTAL INCOME. 51. THE RELEVANT FINDINGS OF THE LD CIT(A) ARE AS U NDER: ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 44 I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AOS FINDINGS. THIS EXPENSES WERE NOT WHOLLY AND EXCLUSIVELY FOR THE PU RPOSES OF BUSINESS. THE EXPENDITURE WAS IN THE NATURE OF DONATION. DONA TIONS ETC. CAN BE CLAIMED UNDER THE PROVISIONS OF THE ACT AFTER FULFI LLING CERTAIN CONDITIONS, E.G. DONATIONS CAN BE CLAIMED U/S 80G ETC. AS ASSES SEE HAS FAILED TO FULFILL ANY OF THE CONDITION FOR CLAIMING DEDUCTION , THE DISALLOWANCE BY AO WAS JUSTIFIED. THE ADDITION OF RS. 2,00,000/- IS CO NFIRMED. THIS GROUND OF APPEAL IS THEREFORE DISMISSED. 52. IN ITA NO. 435JP/16, IN CONTEXT OF CONTRIBUTION TO POLICE WELFARE FUND, WE HAVE HELD AS UNDER: 71. IN OUR VIEW, THE CONTENTION OF THE ASSESSEE TH AT THE CONTRIBUTION TOWARDS POLICE WELFARE FUND HAS A NECESSARY NEXUS W ITH THE SAFETY OF THE STUDENTS IN AND AROUND KOTA AND HENCE, WITH THE BUS INESS OF THE ASSESSEE CANNOT BE REJECTED. IT IS AN EXPENDITURE WHICH HAS BEEN LAID DOWN TO DEVELOP AND STRENGTHEN THE COORDINATION AND WORKING RELATIONSHIP WITH THE LOCAL POLICE DEPARTMENT. GIVEN THE BUDGETARY CONST RAINTS WHICH, AT TIMES, ARE FACED BY POLICE DEPARTMENT, WHERE AN ASSESSEE C ONTRIBUTES CERTAIN AMOUNT FOR WELFARE OF THE POLICE PERSONNEL TO HELP IMPROVE THEIR EXTREME WORK CONDITIONS WHERE THEY ARE DEPLOYED IN CLOSE PR OXIMITY TO ASSESSEES AREA OF OPERATIONS, THE NECESSARY NEXUS IS CERTAINL Y ESTABLISHED WITH THE BUSINESS OF THE ASSESSEE. IN OUR VIEW, SUCH AN EXP ENDITURE WILL BE ELIGIBLE FOR ALLOWANCE UNDER SECTION 37(1) AS INCURRED FOR T HE PURPOSES OF ITS BUSINESS. IN THE RESULT, ASSESSEES GROUND OF APPE AL IS ALLOWED. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 45 IN OUR VIEW, THE ABOVE REASONING WILL APPLY WITH FU LL FORCE TO CONTRIBUTION TOWARDS BUILDING THE CONFERENCE HALL FOR USE OF THE POLICE PERSONNEL. IN THE RESULT, THE GROUND OF APPEAL IS ALLOWED. 53. NOW COMING TO THE REVENUES APPEAL. REGARDING G ROUND NO. 2 OF REVENUES APPEAL RELATING TO DELETION OF THE ADDITI ON OF RS. 10,62,000/- MADE BY THE AO U/S 40A(2)(B) OUT OF SALARY PAID TO MAHIMA BANSAL. WE HAVE ALREADY EXAMINED THIS ISSUE AT LENGTH IN ITA N O. 698/JP/14 & 738/JP/14 AND AS DISCUSSED THEREIN, THE ORDER OF TH E LD CIT(A) IS CONFIRMED. ACCORDINGLY, REVENUES GROUND OF APPEAL IS DISMISSED. 54. REGARDING GROUND NO. 3 OF THE REVENUES APPEAL RELATING TO DELETION OF ADDITION OF RS. 4,53,00,000/- MADE BY T HE AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED BY ASSESSEE U/S 8 0G, THE RELEVANT FINDING OF THE CIT(A) IS REPRODUCED AS UNDER:- I HAVE GONE THROUGH ASSESSEES SUBMISSION AND ASSE SSING OFFICERS FINDINGS. THE ASSESSEE HAD MADE PAYMENT OF RS. 9,01 ,00,000/- TO BANSAL PUBLIC EDUCATION SOCIETY AND RS. 5,00,000/- TO INDI AN ASSOCIATION OF MUSCULAR DYSTROPHY. THE AO HELD THAT THERE WAS NO N EXUS OF HUGE DONATION MADE TO THE SAID SOCIETY WITH THE BUSINESS PURPOSE OF THE ASSESSEE AND THERE WAS NO COMMERCIAL EXPEDIENCY IN MAKING SUCH DONATIONS. THE AO HELD THAT IT WAS A CLEVER STRATEG Y TO DIVERT PROFITS OF THE COMPANY UNDER THE GARB OF DONATIONS TO THE TRUST. IN MY OPINION, FOR THE PURPOSES OF SECTION 80G, WHA T IS REQUIRED IS TO DONATE THE AMOUNT TO ANY ENTITY REGISTERED U/S 80G. IF THE ACTIVITIES OF SUCH ENTITY ARE DOUBTFUL, THEN THE DONATION CAN BE ADDED IN THE HANDS OF ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 46 SUCH ENTITY. THE FACT OF DONATION WAS NOT DOUBTED. SECTION 80G DOES NOT PROHIBIT DONATIONS TO EXEMPTED ENTITIES CONTROLLED BY RELATED PERSONS. SECTION 80G DOES NOT REQUIRE THAT THE DONATION SHOU LD HAVE NEXUS WITH THE BUSINESS PURPOSES OF DONEE. SECTION 80G DOES NO T REQUIRE THAT THE DONATION SHOULD BE FOR COMMERCIAL EXPEDIENCY. MOST OF THESE THINGS ARE REQUIRED FOR ALLOWING DEDUCTION OF BUSINESS EXPENDI TURE U/S 37 OF THE I.T. ACT. CONSIDERING THE FACTS, IT IS HELD THAT ASSESSEE HAS FULFILLED ALL THE CONDITIONS NECESSARY FOR CLAIMING DEDUCTION U/S 80G . THE AO IS THEREFORE DIRECTED TO DELETE ADDITION OF RS. 4,53,00,000/-. T HIS GROUND OF APPEAL IS ALLOWED. 55. WE HAVE ALREADY EXAMINED THIS ISSUE AT LENGTH A ND OUR FINDINGS AND DIRECTIONS CONTAINED IN ITA NO. 698/JP/14 & 738/JP/ 14 SHALL APPLY MUTATIS MUTANDIS TO THIS YEAR AS WELL. IN THE RESULT, REVENUES G ROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 56. REGARDING GROUND NO. 4 OF REVENUES APPEAL RELA TING TO DELETION OF DISALLOWANCE OF RS. 43,088/- MADE BY THE AO OUT OF DEPRECIATION ON XEROX MACHINE, THE RELEVANT FACTS OF THE CASE ARE THAT TH E AO MADE AN ADDITION OF RS. 54,763/- OBSERVING AS UNDER:- IN THE DETAILS OF FIXED ASSETS FILED BY THE ASSESS EE, THE ASSESSEE HAS PURCHASED THE FOLLOWING ITEMS, WHICH ARE DEBITED IN THE COMPUTER ACCOUNT:- S. NO. NAME OF DATE OF AMOUNT RATE OF AMOUNT OF ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 47 THE ITEM PURCHASE DEPRECIATION CLAIMED DEPRECIATION CLAIMED 1 XEROX MACHINE 17.08.2010 RS. 95,750/- 60% RS. 57, 450/ - 2 CANON PRINTERS 23.10.2010 RS. 45,900/- 60% RS. 13,770/ - 03.12.2010 RS. 5,990/- 60% RS. 1,797/ - TOTAL RS. 73,017/ - HOWEVER; DEPRECIATION ON XEROX MACHINE AND PRINTERS IS ADMISSIBLE @ 15% AND NOT @ 60% CLAIMED BY THE ASSESSEE. HENCE; E XCESS DEPRECIATION HAS BEEN CLAIMED BY THE ASSESSEE, AS U NDER:- ITEM AMOUNT OF DEPRECIATION ADMISSIBLE EXCESS DEPRECIATION CLAIMED XEROX MACHINE RS. 14,362/ - RS. 43,088/ - CANON PRINTERS RS. 3,442/ - RS. 10,328/ - HP PRINT ER RS. 450/ - RS. 1,347/ - TOTAL RS. 54,763 ACCORDINGLY, EXCESS DEPRECIATION OF RS. 54,763/- IS DISALLOWED AND ADDED TO THE ASSESSEES INCOME. 57. THE RELEVANT FINDINGS OF THE LD CIT(A) IS AS UN DER: I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AOS FINDINGS. ON SIMILAR FACTS, THE HONBLE ITAT IN THE CASE OF SHRI RAM KISHAN VERMA (ITA NO. 589/JP/2011, A.Y. 2006-07) HAS ALLOWED DEP RECIATION @ 60% ON PRINTERS AND DELETED THE ADDITION. FOLLOWING THE DECISION OF HONBLE ITAT, THE AO IS DIRECTED TO DELETE ADDITION OF RS. 54,763/-. THIS GROUND OF APPEAL IS ALLOWED. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 48 58. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. NOTHING HAS BEEN BROUGHT ON R ECORD TO SUGGEST THAT XEROX MACHINE CANNOT FUNCTION INDEPENDENT OF T HE COMPUTER SYSTEM UNLIKE A PRINTER WHOSE FUNCTIONALITY IS INTE RCONNECTED WITH A COMPUTER SYSTEM. IN LIGHT OF THE SAME, WE UPHELD T HE ACTION OF THE AO IN TREATING XEROX MACHINE AS ELIGIBLE FOR DEPRECIAT ION @ 15% AS A STANDALONE MACHINE. IN THE RESULT, THE APPEAL OF R EVENUE IS ALLOWED. 59. REGARDING GROUND NO. 5 OF REVENUES APPEAL RELA TES TO DELETION OF THE ADDITION OF RS. 38,23,006/- MADE BY THE AO ON A CCOUNT OF DEPRECIATION ON PLD UNIT BUILDING BY FOLLOWING HIS DECISION DATE D 21.08.2014 IN THE CASE OF THE ASSESSEE FOR AY 2010-11. 60. THE AO MADE AN ADDITION OF RS. 38,23,006/- OBSE RVING AS UNDER:- THE ASSESSEE HAS CLAIMED THAT THE PLD UNIT BUILDIN G WAS CONSTRUCTED AND ITS CONSTRUCTION WAS COMPLETED BEFORE 31.03.2010. T HE ASSESSEE WAS ASKED TO PRODUCE COMPLETION CERTIFICATE, OCCUPATION CERTIFICATE AND COPY OF THE VALUATION REPORT, VIDE QUESTIONNAIRE DATED 13.0 9.2013, IN SUPPORT OF ITS CONTENTION REGARDING COMPLETION OF THE SAID BUILDIN G. IT IS ALSO PERTINENT TO MENTION HERE THAT COPY OF THE VALUATION REPORT FROM THE REGISTERED VALUER AS WELL AS THE COPY OF COMPLETION CERTIFICATE FROM THE COMPETENT AUTHORITY WITH REGARD TO BUILDING OF PLD UNIT WERE ALSO CALLE D FOR DURING THE ASSESSMENT PROCEEDINGS FOR THE A.Y. 2010-11. HOWEVE R; THE ASSESSEE HAD FAILED TO PRODUCE THE ABOVE NOTED INFORMATION/ DOCU MENTS IN SUPPORT OF COMPLETION AND SUBSEQUENT OCCUPATION OF THE SAID PL D UNIT. VIDE ITS REPLY FILED ON 05.12.2013, THE ASSESSEE FILED COPY OF TWO PAGE VALUATION REPORT ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 49 OF THE PLD UNIT BUILDING, WHICH IS SIGNED BY ONE-MR . V. PADMA NABHAN ON 20.04.2013, INDICATING THEREIN THE COST OF CONSTRUC TION OF THE SAID UNIT BUILDING AT RS. 3,89,43,952/- AND DATE OF COMPLETIO N AS ON 21.12.2009. THE VALUATION REPORT IS A TWO PAGE DOCUMENT AND IS DATED IS 20.04.2013 AND DOES NOT CONTAIN THE COMPLETE DETAILS OF VARIOU S RELEVANT ASPECTS, AS ARE REQUIRED OF THE LEGALLY VALID VALUATION REPORT. IT WAS VIVIDLY HELD AT THE TIME OF FRAMING ASSESSMENT FOR THE A.Y. 2010-11 THA T THE BUILDING REMAINED INCOMPLETE AS ON 31.03.2010, FOR THE DETAI LED REASONS RECORDED IN THE RELEVANT ASSESSMENT ORDER AND ACCORDINGLY, D EPRECIATION ON THIS UNIT BUILDING WAS VALIDLY DISALLOWED. EVEN DURING THE PR OCEEDINGS OF THE A.Y. 2011-12, THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE COMPLETION CERTIFICATE, COMPLETE VALUATION REPORT AND OCCUPATI ON CERTIFICATE FROM THE COMPETENT AUTHORITY. FURTHERMORE; DURING THE YEAR U NDER CONSIDERATION TOO, THE ASSESSEE HAS FURTHER ADVANCED AMOUNTS OF R S. 5,00,000/- ON 24.02.2011 AND AGAIN RS. 5,00,000/- ON 28.03.2011 T O M/S MAAN PROJECTS & CONSTRUCTION PVT. LTD. THIS FACT CLEARLY ESTABLIS H THAT THE PLD UNIT BUILDING IS STILL INCOMPLETE AS ON 31.03.2011 AND H ENCE; THE INCOMPLETE VALUATION REPORT DATED 20.04.2013 IS ABSOLUTELY INC ORRECT, INGENUINE AND IS UNACCEPTABLE. IN THE ABSENCE OF THE RELEVANT DOCUME NTARY EVIDENCE, REGARDING COMPLETION AND OCCUPATION OF THE SAID BUI LDING, IT IS NOT PROVED THAT THE ASSESSEE HAS USED THIS ASSET FOR ITS BUSIN ESS PURPOSES. ACCORDINGLY; DEPRECIATION CLAIMED AT RS.38,23,006/- ON THE PLD BUILDING IS DISALLOWED AND ADDED TO THE ASSESSEES TOTAL INCOME . 61. THE RELEVANT FINDING OF THE CIT(A) IS REPRODUC ED AS UNDER:- ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 50 I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AOS FINDINGS. THE AO DISALLOWED THE DEPRECIATION MAINLY ON TWO COUNTS. N O ELECTRICITY BILL WAS PRODUCED. NO COMPLETION CERTIFICATE WAS PRODUCED. T WO PAYMENTS OF RS. 5.00 LAC WERE MADE TO MAN PROJECTS & CONSTRUCTION P VT. LTD. ON 24.02.2011 & 28.03.2011. I HAVE HELD (AY 2010-11- APPEAL NO. 70/2013-14) AS UNDER:- THE ASSESSEE SUBMITTED THAT THE NEW BUILDING WAS A DJACENT TO THE EXISTING BUILDING AND BOTH THE BUILDINGS HAVE COMMO N CONNECTION AND THE ELECTRICITY BILLS ARE COMMON FOR BOTH THE P REMISES. THE ASSESSEE SUBMITTED THAT AFTER COMPLETION OF NEW BUI LDING, THE ELECTRICITY LOAD WAS GOT INCREASED. THE ASSESSEE FU RTHER SUBMITTED THAT IN KOTA, THERE IS NO SYSTEM OF OBTAINING A COM PLETION CERTIFICATE. I HAVE GONE THROUGH THE CONSTRUCTION ACCOUNT OF THE BUILDING AND IT WAS SEEN THAT IN THE CURRENT FINANCIAL YEAR, LAS T PAYMENT WAS MADE ON 21.12.2009. IT WAS ALSO SEEN THAT ASSESSEE APPLIED FOR INCREASE IN ELECTRIC LOAD FROM 350 KW TO 500 KW ON 27.07.2009 AND DEMAND NOTE WAS ISSUED (BY JAIPUR VIDHYUT VITRAN NIGAM LTD.) ON 21. 08.200, WHICH WAS DEPOSITED ON 28.08.2009. CONSIDERING THE ABOVE, I AM OF THE OPINION THAT THE BUILDING WAS COMPLETED AND PUT TO USE DURING THE SECOND HALF OF CURRENT FINANCIAL YEAR. THE AO IS THEREFORE DIRECTED TO DEL ETE ADDITION OF RS. 19,65,348 /-. THIS GROUND OF APPEAL IS ALLOWED. THE ONLY DIFFERENCE DURING THE YEAR WAS TWO PAYMENT S MADE TO M/S MAN ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 51 PROJECTS & CONSTRUCTION PVT. LTD. THE ASSESSEE SUBM ITTED THAT PAYMENTS TO M/S MAN PROJECTS 8S CONSTRUCTION PVT. LTD. WAS NOT RELATED TO PLD UNIT. THE ASSESSEE SUBMITTED COPY OF DEPRECIATION SCHEDUL E TO SHOW THAT THERE WAS NO ADDITION UNDER THE HEAD OF PLD UNIT. SECON DLY, THE AO DID NOT CONFRONT THIS ISSUE WITH THE ASSESSEE. THEREFORE, N O ADVERSE INFERENCE, ON THE BASIS OF PAYMENTS TO M/S MAN PROJECTS 8S CONSTR UCTION PVT. LTD., CAN BE DRAWN. I HAVE ALREADY HELD IN A.Y. 2010-11 THAT THE BUILDI NG WAS COMPLETED IN THE SECOND HALF OF FINANCIAL YEAR 2009-10. CONSIDERING THE ABOVE, THE AO IS DIRECTED TO DELETE ADDITION OF RS. 38,23,006/- THIS GROUND OF APPEAL IS ALLOWED. 62. WE HAVE ALREADY EXAMINED THIS ISSUE AT LENGTH A ND OUR FINDINGS AND DIRECTIONS CONTAINED IN ITA NO. 698/JP/14 & 738/JP/ 14 SHALL APPLY MUTATIS MUTANDIS TO THIS YEAR AS WELL. IN THE RESULT, REVENUES GR OUND OF APPEAL IS DISMISSED. ITA NO. 435/JP/16 & 298/JP/16 63. WE NOW COME TO CROSS APPEALS FOR AY 2012-13 WHE REIN THE RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER: ASSESSEES GROUNDS OF APPEAL (ITA NO. 435/JP/16) (1) THAT THE LD. CIT(A) GROSSLY ERRED IN NOT DELE TING THE ADDITION MADE BY THE LD. AO ON ACCOUNT OF CAUTION MONEY RS. 400,0 00/-. THE LD. AO MADE THE ADDITION OF CAUTION MONEY RS. 1257450.0 0 OUT OF THAT LD. CIT(A) SUSTAINED THE ADDITION OF RS. 400,000/- AS SUCH THE LD. AO ERRED IN MAKING THE ADDITION & LD. CIT(A) GROSSLY E RRED IN SUSTAINING RS. 400,000/- ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 52 (2) THAT THE LD. AO GROSSLY ERRED ON LAW & FACTS IN MAK ING THE ADDITION BY DISALLOWING THE SALARY PAID TO SMT. MAHIMA BANSA L BY INVOKING SEC. 40A(2)(B) OF I.T. ACT, 1961 AND THE LD. CIT GR OSSLY ERRED IN SUSTAINING THE PART OF ADDITION OF RS. 800,000/-. (3) THAT THE LD. AO AS WELL AS LD. CIT(A) GROSSLY ERRED IN DISALLOWING THE ADVERTISEMENT EXPENSES RS. 56000/- (4) THAT THE LD. AO AS WELL AS LD. CIT(A) GROSSLY ERRED IN MAKING THE DISALLOWANCE OF RS. 100,000/- THE EXPENSES INCURRED ON PUBLIC WELFARE I.E. CONTRIBUTION TO POLICE WELFARE FUND. REVENUES GROUNDS OF APPEAL (ITA NO. 298/JP/16) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN:- (I) DELETING ADDITION OF RS. 8,57,450/- OUT OF TOTAL AD DITION OF RS. 12,57,450/- MADE BY DISALLOWING REFUND OF CAUTION M ONEY; (II) DELETING ADDITION OF RS. 35,20,000/- OUT OF TOTAL A DDITION OF RS. 43,20,000/- MADE BY INVOKING PROVISIONS OF SECTION 40A(2)(B) ON ACCOUNT OF EXCESS SALARY PAYMENT; (III) DELETING ADDITION OF RS. 1,03,00,000/- MADE BY DISA LLOWING DEDUCTION CLAIMED BY THE ASSESSEE COMPANY U/S 80G O F THE ACT; (IV) DELETING ADDITION OF RS. 1,06,277/- MADE BY DISALLO WING EXCESS DEPRECIATION CLAIMED ON XEROX MACHINE; 64. REGARDING COMMON GROUND OF APPEAL NO.1 IN BOTH THE CROSS APPEALS RELATING TO REFUND OF CAUTION MONEY, THE RE LEVANT FINDING OF THE CIT(A) IS REPRODUCED AS UNDER:- I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AOS FINDINGS. THE ASSESSEE CLAIMED THAT IT HAS NOT CLAIMED ANY EXPEND ITURE AGAINST RE- ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 53 PAYMENT OF CAUTION MONEY. THE AO ADDED A SUM OF RS. 12,57, 450/- AS PER THE PRACTICE IN EARLIER YEARS. MY PREDECESSOR IN HIS ORDER IN APPEAL NO. 638 FOR A .Y 2011-12 ANALYSED THE ISSUE AT LENGTH AND HAD HELD THAT- I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AOS FINDINGS. THE ASSESSEE CLAIMED THAT IT HAS NOT CLAIMED ANY EX PENDITURE AGAINST REPAYMENT OF CAUTION MONEY. THE AO ADDED A SUM OF RS. 16, 50,450/- ON THE BASIS OF EXAMPLE OF RS. 10,000/ -PAID IN CASH WITHOUT OBTAINING ANY SIGNATURE. IN MY OPINION, CAUTION MONEY IS RECEIVED DURING THE COURSE OF BUSINESS AND IF THE SAME IS NOT REFUNDED, THE SAME CAN BE TREATED AS INCOME AS AND WHEN THE LIABILITY TO PAY SUCH AMO UNT IS WRITTEN OFF IN THE BOOKS OF ACCOUNTS. DURING THE YEAR, ASSE SSEE HAD SHOWN TO HAVE PAID RS. 1, 10, 03,000/-. IF ANY OF THE REP AYMENT WAS NOT ACTUALLY MADE, THE SAME WOULD FORM THE INCOME OF AS SESSEE. CONSIDERING THE ABOVE, I AM OF THE OPINION THAT SOM E ADDITION WAS JUSTIFIED. HOWEVER, MAKING ADDITION OF RS. 16, 50,4 50/- ON THE BASIS OF DEFECTS OF RS. 10,000/- WAS NOT JUSTIFIED. CONSIDERING THE FACTS OF THE CASE, IN MY OPINION, AN ADDITION OF RS . 5, 00,000/- WOULD MEET THE END OF JUSTICE. THE AO IS DIRECTED T O DELETE BALANCE ADDITION OF RS. 11, 50,450/-. RESPECTFULLY FOLLOWING THE SAME BASIS, I CONSIDER T HAT ON THE AVAILABLE FACTS, AN ADDITION OF RS. 4,00,000/- WILL SERVE THE ENDS OF JUSTICE AND IS CONFIRMED. THE REMAINING PART OF THE ADDITION, I.E, 8,57,450/- IS ACCORDINGLY DELETED. THIS GROUND OF APPEAL IS THERE FORE PARTLY ALLOWED. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 54 65. WE HAVE ALREADY EXAMINED THIS ISSUE AT LENGTH A ND OUR FINDINGS AND DIRECTIONS CONTAINED IN ITA NO. 698/JP/14 & 738/JP/ 14 SHALL APPLY MUTATIS MUTANDIS TO THIS YEAR AS WELL. IN THE RESULT, ASSESSEES G ROUND OF APPEAL IS ALLOWED AND REVENUES GROUND OF APPEAL IS DISMISSED . 66. REGARDING COMMON GROUND NO. 2 OF THE ASSESSEES AS WELL AS REVENUES APPEAL RELATING TO DISALLOWANCE OF SALARY PAYMENT TO MAHIMA BANSAL UNDER SECTION 40A(2)(B), WE HAVE ALREADY EXA MINED THIS ISSUE AT LENGTH IN ITA NO. 698/JP/14 & 738/JP/14 AND AS DIS CUSSED THEREIN, THE ORDER OF THE LD CIT(A) IS CONFIRMED. ACCORDINGLY, BOTH THE REVENUES AND ASSESSEES APPEAL IS DISMISSED. 67. REGARDING GROUND NO. 3 OF THE ASSESSEES AP PEAL, THE RELEVANT FINDING OF THE CIT(A) IS REPRODUCED AS UNDER:- I HAVE GONE THROUGH THE ASSESSEES SUBMISSION AND AOS FINDINGS. MY PREDECESSOR IN THE EARLIER YEAR HAD ON PART EXPE NSES OF SIMILAR NATURE IN THE SAME HEAD OF EXPENDITURE HAD HELD THA T- LAST YEAR, I HAVE ALLOWED SIMILAR PAYMENTS ON THE GROUND THAT THE SAM E WERE MADE FOR THE PURPOSES OF ADVERTISEMENT. HOWEVER, NO EVIDENCE WAS SUBMITTED TO SHOW THAT THE PAYMENTS IN CURRENT YEAR WERE FOR THE PURPOSES OF ADVERTISEMENT. THEREFORE, IT CANNOT BE HELD THAT TH ESE PAYMENTS WERE FOR THE PURPOSES OF BUSINESS. ALTERNATIVELY, THESE PAYMENTS CAN BE CLAIMED AS DON ATION. DONATIONS ETC. CAN BE CLAIMED UNDER THE PROVISIONS OF ACT AFTER FU LFILLING CERTAIN CONDITIONS, E.G. DONATIONS CAN BE CLAIMED U/S 80G E TC. AS ASSESSEE HAS ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 55 FAILED TO FULFILL ANY OF THE CONDITION FOR CLAIMING DEDUCTION, THE DISALLOWANCE BY AO WAS JUSTIFIED. IT IS OBSERVED THAT THE NATURE OF THE EXPENSES MADE TO CERTAIN INSTITUTIONS AS HIGHLIGHTED BY THE ASSESSING OFFICE R IN HIS ORDER ARE SIMILAR TO PREVIOUS YEARS DISALLOWED EXPENSES. SINCE NO EV IDENCE WAS SUBMITTED TO SHOW THAT THE PAYMENTS IN CURRENT YEAR WERE FOR THE PURPOSES OF ADVERTISEMENT, THEREFORE, IT CANNOT BE HELD THAT TH ESE PAYMENTS WERE FOR THE PURPOSES OF BUSINESS. I FIND NO REASON TO INTER FERE WITH THE ADDITION OF RS. 56,000/- MADE BY THE A.O IN THIS HEAD. THIS GROUND OF APPEAL IS THEREFORE DISMISSED. 68. THE LD CIT(A) HAS GIVEN A FINDING THAT NO EVIDE NCE HAS BEEN SUBMITTED TO SUBSTANTIATE THE EXPENDITURE AS CLAIME D TO HAVE BEEN INCURRED TOWARDS ADVERTISEMENT. FURTHER, THE ASSES SEE HAS FAILED TO ESTABLISH THE NECESSARY NEXUS OF INCURRENCE OF SUCH EXPENDITURE FOR BUSINESS PURPOSES. IN LIGHT OF THE SAME, THE ABOVE FINDINGS OF THE LD CIT(A) REMAIN UNCONTROVERTED BEFORE US AND THE SAME ARE HEREBY CONFIRMED. IN THE RESULT, GROUND OF APPEAL IS DISM ISSED. 69. REGARDING GROUND NO. 4 OF THE ASSESSEES APPEAL , THE RELEVANT FACTS AND SUBMISSIONS OF THE ASSESSEE ARE AS UNDER: - THAT BANSAL CLASSES IS RUNNING A COACHING INSTITUT ION WHICH IS HAVING 20,000 TO 30,000 STUDENTS, ALL THEY ARE SPREAD OVE R IN NEW KOTA, THEY ARE RESIDING IN HOSTELS, HOUSES ETC AND THEY USED TO AT TEND CLASSES IN 3-4 INTERVALS, HENCE LOOKING TO THE SAFETY OF STUDENTS & TEACHERS, WE USED TO TAKE ASSISTANCE OF POLICE DEPARTMENT, AND THE SECUR ITY PROVIDED BY POLICE ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 56 DEPARTMENT GIVE TRUST TO PARENTS OF STUDENTS IN THE ENTIRE COUNTRY TO SEND THEIR CHILDREN AT KOTA AND IT INCREASES ITS BUSINES S. THAT ON CALLING UPON BY THE POLICE DEPARTMENT TO CO NTRIBUTE IN WELFARE FUND THE MANAGEMENT TOOK DECISION TO CONTRIBUTE AND IT WAS PURELY ON BUSINESS INVESTMENT, HENCE CLAIMED AS EXPENSES, IT IS WHOLLY & EXCLUSIVELY FOR BUSINESS PURPOSE AND COVERED U/S 37(1). HOWEVER, THE LD. A.O. DISALLOWED WITHOUT ANY CONCRE TE REASON, WHEREAS THIS EXPENSES ARE MUST AND NECESSARY FOR THE COMPAN Y. THE EXPENSES ARE GENUINE FOR THE NEED OF BUSINESS, THEREFORE, WE REQUEST YOU TO KINDLY ALLOWED. 70. THE RELEVANT FINDINGS OF THE LD CIT(A) ARE AS U NDER: I HAVE GONE THROUGH THE ASSESSEES SUBMISSION AND AOS FINDINGS. THE EXPENSES WERE NOT WHOLLY AND EXCLUSIVELY FOR TH E PURPOSE OF BUSINESS. THE EXPENDITURE WAS IN THE NATURE OF DONATION. DONA TIONS ETC. CAN BE CLAIMED UNDER THE PROVISION OF ACT AFTER FULFILLING CERTAIN CONDITIONS, E.G. DONATIONS CAN BE CLAIMED U/S 80G ETC. AS ASSESSEE H AS FAILED TO FULFILL ANY OF THE CONDITIONS FOR CLAIMING DEDUCTION, THE DISAL LOWANCE BY AO WAS JUSTIFIED. THEREFORE, THE ADDITION OF RS. 1,00,000/ - IS CONFIRMED. THE GROUND OF APPEAL, THEREFORE, DISMISSED. 71. IN OUR VIEW, THE CONTENTION OF THE ASSESSEE THA T THE CONTRIBUTION TOWARDS POLICE WELFARE FUND HAS A NECESSARY NEXUS W ITH THE SAFETY OF THE STUDENTS IN AND AROUND KOTA AND HENCE, WITH THE BUS INESS OF THE ASSESSEE CANNOT BE REJECTED. IT IS AN EXPENDITURE WHICH HAS BEEN LAID DOWN TO DEVELOP AND STRENGTHEN THE COORDINATION AND WORKING RELATIONSHIP WITH THE ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 57 LOCAL POLICE DEPARTMENT. GIVEN THE BUDGETARY CONST RAINTS WHICH, AT TIMES, ARE FACED BY POLICE DEPARTMENT, WHERE AN ASSESSEE C ONTRIBUTES CERTAIN AMOUNT FOR WELFARE OF THE POLICE PERSONNEL TO HELP IMPROVE THEIR EXTREME WORK CONDITIONS WHERE THEY ARE DEPLOYED IN CLOSE PR OXIMITY TO ASSESSEES AREA OF OPERATIONS, THE NECESSARY NEXUS IS CERTAINL Y ESTABLISHED WITH THE BUSINESS OF THE ASSESSEE. IN OUR VIEW, SUCH AN EXP ENDITURE WILL BE ELIGIBLE FOR ALLOWANCE UNDER SECTION 37(1) AS INCURRED FOR T HE PURPOSES OF ITS BUSINESS. IN THE RESULT, ASSESSEES GROUND OF APPE AL IS ALLOWED. 72. NOW, WE COME TO REVENUES APPEAL. REGARDING GR OUND NO. 3 OF THE REVENUES APPEAL, THE RELEVANT FINDING OF THE CIT(A ) IS REPRODUCED AS UNDER:- IN MY OPINION, IN THIS YEAR ALSO, THE FACT OF DONA TION WAS NOT DOUBTED. SEC. 80G DOES NOT PROHIBIT DONATIONS TO EXEMPTED EN TITIES CONTROLLED BY RELATED PERSONS. SEC. 80G DOES NOT REQUIRE THAT THE DONATION SHOULD HAVE NEXUS WITH THE BUSINESS PURPOSES OF DONEE. CON SIDERING THAT THE FACTS INVOLVED IN THIS YEAR ARE EXACTLY SIMILAR TO THE PREVIOUS YEAR, 1 AM INCLINED TO FOLLOW THE ORDER OF MY PREDECESSOR IN T HE EARLIER YEAR AS MENTIONED ABOVE. ACCORDINGLY, IT IS HELD THAT ASSESSEE HAS FULFILLED ALL THE CONDITIONS NECESSARY FOR CLAIMING DEDUCTION U/S 80G. THE AO IS THEREFORE DIRECTED TO DELETE ADDITION OF RS. 1,03,00,000/-. THIS GROUN D OF APPEAL IS ALLOWED. 73. WE HAVE ALREADY EXAMINED THIS ISSUE AT LENGTH A ND OUR FINDINGS AND DIRECTIONS CONTAINED IN ITA NO. 698/JP/14 & 738/JP/ 14 SHALL APPLY MUTATIS MUTANDIS TO THIS YEAR AS WELL. IN THE RESULT, REVENUES GRO UND OF APPEAL IS ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 58 ALLOWED FOR STATISTICAL PURPOSES. 74. REGARDING GROUND NO. 4 OF THE REVENUES APPEAL, THE RELEVANT FINDING OF THE CIT(A) IS REPRODUCED AS UNDER:- I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WELL A S SUBMISSIONS OF THE ASSESSEE. ON SIMILAR FACTS, THE HONBLE ITAT IN THE CASE OF SHRI RAM KISHAN VERMA (ITA NO. 589/JP/2011, A.Y. 2006 - 07) HAS ALLOWED DEPRECIATION @ 60% ON PRINTERS AND DELETED THE ADDI TION. THE SAME WAS FOLLOWED BY MY PREDECESSOR CIT(A) IN THE EARLIER YE ARS ORDER REFERRED AT OTHER PLACES IN THIS ORDER. FOLLOWING THE DECISION OF HONBLE ITAT, THE AO IS D IRECTED TO DELETE ADDITION OF RS. 1, 06,277/-. THE GROUND OF APPEAL I S ALLOWED. 75. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. NOTHING HAS BEEN BROUGHT ON R ECORD TO SUGGEST THAT XEROX MACHINE CANNOT FUNCTION INDEPENDENT OF T HE COMPUTER SYSTEM UNLIKE A PRINTER WHOSE FUNCTIONALITY IS INTE RCONNECTED WITH A COMPUTER SYSTEM. IN LIGHT OF THE SAME, WE UPHELD T HE ACTION OF THE AO IN TREATING XEROX MACHINE AS ELIGIBLE FOR DEPRECIAT ION @ 15% AS A STANDALONE MACHINE. IN THE RESULT, THE APPEAL OF R EVENUE IS ALLOWED. ITA NO. 296/JP/17 & 345/JP/17 76. WE NOW COME TO CROSS APPEALS FOR AY 2013-14 WHE REIN THE RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER: ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 59 ASSESSEES GROUNDS OF APPEAL (ITA NO. 296/JP/17) 1. THAT THE LD. AO GROSSLY ERRED ON LAW & FACTS I N MAKING THE ADDITION TO WARDS PAYMENT OF CAUTION MONEY AND THE LD. CIT(A ) ALSO ERRED IN SUSTAINING THE DISALLOWANCE OF RS. 50,000/- OUT OF RS. 1,78,650/- THE /- ADDITION MADE BY A.O. 2. THAT THE LD. AO GROSSLY ERRED ON LAW & FACTS IN DISALLOWING THE SALARY BY INVOKING SEC. 40A(2) (B) AND THE LD. CIT(A) ALSO ERRED IN SUSTAINING THE ADDITION OF RS. 600,000/-. 3. THAT THE LD. AO GROSSING ERRED ON LAW & FACTS IN DISALLOWING THE STUDENTS PROMOTION EXPENSES RS. 1492788/-. THE LD. C(T(A) ALSO ERRED IN SUSTAINING THE ADDITION OF RS. 500,000/- OUT OF SAI D AMOUNT OF RS. 14,92,788/-. 4. THAT THE LD. AO GROSSLY ERRED ON LAW & FACTS IN DISALLOWING THE TRAVELLING EXPENSES RS. 3,02,888/- AND THE LD. CIT( A) ALSO ERRED IN SUSTAINING RS. 1,51,444/-. REVENUES GROUNDS OF APPEAL (ITA NO. 345/JP/17) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN :- (I) DELETING ADDITION OF RS. 1,28,650/- OUT OF TOTA L ADDITION OF RS. 1,78,650/- MADE BY DISALLOWING REFUND OF CAUTION MO NEY; (II) DELETING ADDITION OF RS. 15,96,000/- OUT OF TO TAL ADDITION OF RS. 21,96,000/- MADE BY INVOKING PROVISIONS OF SECTION 40A(2)(B) ON ACCOUNT OF EXCESS SALARY PAYMENT; ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 60 (III) DELETING ADDITION OF RS. 1,50,25,500/- MADE B Y DISALLOWING DEDUCTION CLAIMED BY THE ASSESSEE COMPANY U/S 80G OF THE ACT; (IV) DELETING ADDITION OF RS. 9,92,788/- OUT OF TOT AL ADDITION OF RS. 14,92,788/- MADE BY DISALLOWING STUDENT PROMOTION E XPENSES; (V) DELETING ADDITION OF RS. 1,51,444/- OUT OF TOTA L ADDITION OF RS. 3,02,288/- MADE BY DISALLOWING TRAVELLING EXPENSES. 77. FIRSTLY, REGARDING COMMON GROUND OF APPEAL RELA TING TO REFUND OF CAUTION MONEY, THE RELEVANT FINDING OF THE CIT(A) I S REPRODUCED AS UNDER:- I HAVE GONE THROUGH ASSESSEES SUBMISSION AND AOS FINDINGS. I HAVE DEALT WITH THIS ISSUE IN ASSESSEES OWN CASE FOR A.Y 2012-13 VIDE ORDER I APPEAL NO 658/14-15 DATED 19/01/2016 WHERE I HAVE HELD THAT CAUTION MONEY IS RECEIVED DURING THE COURSE OF BUSI NESS AND IF THE SAME IS NOT REFUNDED, THE SAME CAN BE TREATED AS INCOME AS AND WHEN THE LIABILITY TO PAY SUCH AMOUNT IS WRITTEN OFF IN THE BOOKS OF ACCOUNTS. IN LINE WITH THE STAND TAKEN WHILE DECIDING APPEALS ON THIS ISSUE IN EARLIER YEARS, ADDITION IS RESTRICTED TO RS. 50,000 /-. THE BALANCE DISALLOWANCE OF RS. 1,28,650/- IS DIRECTED TO BE DE LETED. THIS GROUND OF APPEAL IS PARTLY ALLOWED . 78. WE HAVE ALREADY EXAMINED THIS ISSUE AT LENGTH A ND OUR FINDINGS AND DIRECTIONS CONTAINED IN ITA NO. 698/JP/14 & 738/JP/ 14 SHALL APPLY MUTATIS MUTANDIS TO THIS YEAR AS WELL. IN THE RESULT, ASSESSEES G ROUND OF APPEAL IS ALLOWED AND REVENUES GROUND OF APPEAL IS DISMISSED. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 61 79. REGARDING COMMON GROUND OF APPEAL RELATING TO D ISALLOWANCE OF SALARY PAYMENT TO MAHIMA BANSAL U/S 40A(2)(B), WE H AVE ALREADY EXAMINED THIS ISSUE AT LENGTH IN ITA NO. 698/JP/14 & 738/JP/14 AND AS DISCUSSED THEREIN, THE ORDER OF THE LD CIT(A) IS CO NFIRMED. ACCORDINGLY, BOTH THE REVENUES AND ASSESSEES APPEALS ARE DISMI SSED. 80. REGARDING COMMON GROUND OF APPEAL NO. 3 OF ASSE SSEES APPEAL AND GROUND NO. 4 OF THE REVENUES APPEAL RELEVANT F ACTS ARE AS UNDER: ON EXAMINATION OF PROFIT & LOSS A/C OF THE COMPANY , IT IS SEEN THAT ASSESSEE HAS CLAIMED STUDENT PROMOTION EXPENSES OF RS.99,51,921/- WHEREAS ASSESSEE CLAIMED THIS EXPENDITURE LAST YEAR I.E. F.Y. 2011-12 OF RS.45,45,545/-. VIDE ORDER SHEET ENTRY DATED 24.02. 2016, ASSESSEE ASKED TO SUBMIT THE JUSTIFICATION OF THESE HUGE EXP ENSES IN COMPARISON TO LAST YEAR. THE ASSESSEE VIDE HIS REPLY DATED 08. 03.2016 HAS SUBMITTED AS UNDER : THE SOURCE OF AN INCOME IN A COACHING INSTITUTE IS STUDENT AND ANY PROMOTION THAT IS BEEN DONE TO PROMOTE SOURCE IS WE LL JUSTIFIED EXPENSES AS IT IS DIRECTLY RELATABLE TO THE INCOME THEREFORE IT IS MOST SACROSANCT EXPENSES THAT IS FULLY ALLOWABLE THEREFORE THE STUD ENT PROMOTION EXPENSES THAT HAS VARIOUS SUBHEADS AS ENCLOSED LEDG ER IS PAID MAJORLY TOWARDS RANKERS AND BEST PERFORMING STUDENT THROUGH PERFORMING FAREWELL FUNCTION OR GIVING SCHOLARSHIPS TO TOP RAN KERS OR ALL INDIA RANKERS PRIZES ETC AND TO ALL STUDENTS AT LARGE IN FORM OF MEDICAL TIE-UPS AND STUDENT WALFARES IT IN CLASSROOMS. THEREFORE AL L THESE EXPENSES ARE DIRECTLY RELATABLE. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 62 SECONDLY THERE ARE DOWN FALL IN REVENUES OF THE COM PANY AND VARIOUS NEW CENTRES HAVE BEEN INCREASED DURING THE YEAR TO PROMOTE BUSINESS THEREFORE IN CURRENT YEAR BOTH THE EXPENSE AND IS I TS PERCENTAGE HAS INCREASED BUT THIS IS ONE THE MOST NECESSARY EXPEND ITURE AND IS PAID BY CHEQUES SO SHOULD BE ALLOWED FULLY. THE ABOVE REPLY FILED BY THE ASSESSEE HAS BEEN CONS IDERED BUT NOT FOUND TENABLE BECAUSE RECEIPT OF THE COMPANY HAS BE EN DECREASED WHEREAS ASSESSEE INCURRED HUGE EXPENSES IN COMPARIS ON TO LAST YEAR. ALSO ON PERUSAL OF LEDGER OF SUB HEADS FURNISHED BY THE ASSESSEE IT IS REVEALED THAT MANY EXPENSES WERE INCURRED ON DINNER PARTY, TEA PARTY, LUNCH PARTY ETC., MANY PAYMENTS MADE ON CASH BASIS. THE ASSESSEE HAS ALSO MADE PAYMENTS THROUGH HANDMADE VOUCHERS/ INCOM PLETE VOUCHERS ETC. PROPER BILLS & VOUCHERS IN SUPPORT OF ITS CLAI M HAVE NOT BEEN PRODUCED FOR VERIFICATION. THEREFORE IN ABSENCE PRO PER BILLS/VOUCHERS THESE EXPENSES ARE NOT SUBJECT ON VERIFICATION HENC E 15% OF THESE EXPENSES I.E . RS.14,92,788/- ARE DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 81. THE RELEVANT FINDINGS OF THE LD CIT(A) ARE AS U NDER: THE ABOVE EXPENSES APPEAR TO BE IN THE NATURE OF A DVERTISING AND SALES PROMOTION IN LOOSE CONNOTATION. THE COACHING INSTIT UTES BEING RUN COMMERCIALLY DO HAVE TO GO AFTER ELIGIBLE STUDENT P OPULATION TO MAXIMISE THEIR FEASIBILITY. THE A.OS ARGUMENT THAT THE TURNOVER HAS REDUCED THOUGH THESE EXPENSES HAVE GONE UP CAN BE S EEN THE OTHER WAY ROUND THAT IF THESE EXPENSES WERE ALSO NOT INCU RRED OR AGGRESSIVE MARKETING NOT DONE THE REVENUES COULD HAVE FALLEN F URTHER. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 63 HOWEVER, IT IS ALSO JUSTIFIABLE ON THE PART OF THE A.O THAT THERE ARE SEVERAL SHORTCOMINGS IN THE MAINTENANCE OF SUPPORTI NG EVIDENCES ATTACHED TO THESE EXPENSES. UNDER THE CIRCUMSTANCES AND CONSIDERING THE TOTALITY OF FACTS INVOLVED, A REASONABLE DISALL OWANCE OUT OF THESE EXPENSES IS JUSTIFIED. A DISALLOWANCE OF RS. 5,00,0 00/- OUT OF THE TOTAL CLAIM WOULD SERVE THE ENDS OF JUSTICE IN MY OPINION . THIS AMOUNT OF DISALLOWANCE IS CONFIRMED. THE BALANCE DISALLOWANCE OF RS. 9,92,788/- IS DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS PA RTLY ALLOWED. 82. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. AN ADHOC DISALLOWANCE OF 15% OF STUDENT WELFARE EXPENSES HAS BEEN DISALLOWED BY THE AO. THE LD CIT (A) HAS AGAIN FOLLOWED THE PRINCIPLE OF ADHOCISM AND CONFIRMED TH E DISALLOWANCE OF RS 5 LACS OUT OF THE AMOUNT SO DISALLOWED BY THE AO. BOTH THE AO AND LD CIT(A) HAS NOT HIGHLIGHTED SPECIFIC EXPENDITURE WHI CH FAIL THE TEST OF BUSINESS EXPEDIENCY AS LAID DOWN BY THE COURTS FROM TIME TO TIME. FURTHER, NO SPECIFIC INSTANCES OF EXPENDITURE HAVE BEEN HIGHLIGHTED WHICH COULD NOT BE VERIFIED FOR WANT OF PROPER SUPP ORTING DOCUMENTATION. MERELY GENERALIZATION AND HOLDING T HAT PAYMENTS HAVE BEEN MADE IN CASH DOESNT NECESSARILY LEAD TO DISAL LOWANCE OF ELIGIBLE EXPENDITURE. THERE IS NO BASIS FOR ADHOCISM IN THE EYES OF LAW. IN THE RESULT, DISALLOWANCE MADE BY THE AO IS HEREBY DELET ED. THE ASSESSEES GROUND OF APPEAL IS ALLOWED AND REVENUES GROUND OF APPEAL IS DISMISSED. 83. REGARDING COMMON GROUND NO. 4 OF ASSESSEES APP EAL AND GROUND NO. 5 OF THE REVENUES APPEAL, THE RELEVANT FACTS A RE AS UNDER:- ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 64 ON EXAMINATION OF PROFIT & LOSS A/C OF THE COMPANY IT IS SEEN THAT ASSESSEE HAS CLAIMED TRAVELLING EXPENSES OF RS.30,2 8,885/-. VIDE ORDER SHEET ENTRY DATED 05.02.2016, ASSESSEE ASKED TO SUB MIT THE JUSTIFICATION OF THESE EXPENSES. THE ASSESSEE VIDE HIS REPLY DATE D 08.03.2016 HAS SUBMITTED AS UNDER: DURING THE YEAR AS THE REVENUE FROM KOTA CENTRE ARE ON FALL SO MANAGEMENT IS AGGRESSIVELY INVOLVED IN SETUP OF NEW CENTRES AS TO REDUCE THE DEPENDENCY ON KOTA CENTRE THEREFORE THES E EXPENSES ARE INCURRED. THEREFORE FURTHER RELATING THE COMMERCIAL EXPEDIENC Y, EXPENDITURE MAY NOT BE INCURRED UNDER ANY LEGAL OBLIGATION BUT YET IT IS ALLOWABLE AS BUSINESS EXPENDITURE IF IT IS INCURRED ON GROUND OF COMMERCIAL EXPEDIENCY. REFER ADDIDAS INDIA MARKETING (P) LIMIT ED V AO 10 TAXMANN.COM 18. AGAIN, EXPENSES INCURRED WHICH WAS BASED ON COMMERCIAL CONSIDERATION AND BUSINESS EXPEDIENCY, N O INTERFERENCE IS WARRANTED. REFER, UDAIPUR DISTILLERY CO. LTD. 224 C TR 32 (SC). SIMILARLY, THE ISSUE WAS OF DEDUCTION OF CERTAIN EXPENDITURE ISSUE MANAGEMENT EXPENSES AND THE ASSESSEE SUCCEEDED ONLY ON THE GR OUND OF CONSISTENCY. WITHOUT GOING INTO THE MERITS, THE SUP REME COURT REMITTED BACK THE MATTER TO THE HIGH COURT HOLDING THAT THE HIGH COURT SHOULD HAVE EXAMINED THE NATURE OF THE SAID EXPENDITURE. R EFER OSWAL AGRO MILLS LTD. 313 ITR 24. THE ABOVE REPLY FILED BY THE ASSESSEE HAS BEEN CONS IDERED BUT NOT FOUND TENABLE BECAUSE MANY PAYMENTS MADE ON CASH BA SIS. THE ASSESSEE HAS ALSO MADE PAYMENTS THROUGH HAND MADE V OUCHERS/ ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 65 INCOMPLETE VOUCHERS ETC. PROPER BILLS & VOUCHERS IN SUPPORT OF ITS CLAIM HAVE NOT BEEN PRODUCED FOR VERIFICATION. THE CASE L AW SUBMITTED BY THE ASSESSEE IS NOT APPLICABLE IN THIS CASE BECAUSE THE FACTS OF THIS AND SUBMITTED BY THE ASSESSEE ARE DIFFERENT. THEREFORE IN ABSENCE PROPER BILLS/VOUCHERS THESE EXPENSES ARE NOT SUBJECT ON VE RIFICATION HENCE 10% OF THESE EXPENSES I.E. RS.3,02,888/- ARE DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 84. THE RELEVANT FINDINGS OF THE LD CIT(A) ARE AS U NDER: LOOKING TO THE FACTS INVOLVED, THE DISALLOWANCE MA DE TO SOME EXTENT IS JUSTIFIABLE. THE SAME IS BEING RESTRICTED TO 5% AS BEING REASONABLE DISALLOWANCE ON ACCOUNT OF THE DISCREPANCIES INVOLV ED. DISALLOWANCE OF RS. L,51,444/-(5%) IS CONFIRMED. THE BALANCE DISALL OWANCE OF RS. 1,51,444/- IS DIRECTED TO BE DELETED. THIS GROUND O F APPEAL IS PARTLY ALLOWED. 85 . AS WE HAVE HELD ABOVE IN THE CONTEXT OF STUDENT WE LFARE EXPENSES, THERE IS NO BASIS FOR ADHOCISM IN THE EYES OF LAW. IN THE INSTANT CASE, DISALLOWANCE OF 10% OF THE TRAVEL EXPENSES HAVE BEE N MADE BY THE AO WHICH HAS BEEN REDUCED TO 5% BY THE LD CIT(A). OUR FINDINGS AND DIRECTIONS AS CONTAINED IN CONTEXT OF STUDENT WELFA RE EXPENSES SHALL EQUALLY APPLY IN THE PRESENT CASE. IN THE RESULT, DISALLOWANCE MADE BY THE AO IS HEREBY DELETED. THE ASSESSEES GROUND OF APPEAL IS ALLOWED AND REVENUES GROUND OF APPEAL IS DISMISSED. ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 66 86. NOW, WE COME TO REVENUES APPEAL OTHER THAN COM MON GROUNDS OF APPEAL WHICH RELATES TO GROUND NO. 3 OF REVENUES A PPEAL, THE RELEVANT FINDING OF THE CIT(A) IS REPRODUCED AS UNDER:- IN MY OPINION, IN THIS YEAR ALSO, THE FACT OF DON ATION WAS NOT DOUBTED. SEC. 80G DOES NOT PROHIBIT DONATIONS TO EXEMPTED EN TITIES CONTROLLED BY RELATED PERSONS. SEC. 80G DOES NOT REQUIRE THAT THE DONATION SHOULD HAVE NEXUS WITH THE BUSINESS PURPOSES OF DONE. CONSIDERI NG THAT THE FACTS INVOLVED IN THIS YEAR ARE EXACTLY SIMILAR TO THE PR EVIOUS YEAR, I AM INCLINED TO FOLLOW THE ORDER OF MY PREDECESSOR IN T HE EARLIER YEAR AS MENTIONED ABOVE. ACCORDINGLY, IT IS HELD THAT ASSES SEE HAS FULFILLED AT THE CONDITIONS NECESSARY FOR CLAIMING DEDUCTION U/S 80G . THE AO IS THEREFORE DIRECTED TO DELETE ADDITION OF RS. 1,50,25,500/-. T HIS GROUND OF APPEAL IS ALLOWED. 87. WE HAVE ALREADY EXAMINED THIS ISSUE AT LENGTH A ND OUR FINDINGS AND DIRECTIONS CONTAINED IN ITA NO. 698/JP/14 & 738/JP/ 14 SHALL APPLY MUTATIS MUTANDIS TO THIS YEAR AS WELL. IN THE RESULT, REVENUES GRO UND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AND T HE ASSESSEE FOR THE RESPECTIVE YEARS ARE DISPOSED OFF WITH ABOVE DIRECT IONS. ORDER PRONOUNCED IN THE OPEN COURT ON 31/10/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER ITA NO. ITA NO. 698-JP-14, 738-JP-14, 699-JP-14, 739-JP-14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17 M/S BANSAL CLASSES PRIVATE LIMITED, KOTA VS. JCIT, RANGE-1, KOTA 67 TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31/10/2017 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S BANSAL CLASSES PRIVATE LIMITED, KOTA 2. IZR;FKHZ@ THE RESPONDENT- JCIT, RANGE-1, KOTA 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {698-JP-14, 738-JP-14, 699-JP-14, 739-JP - 14, 435-JP-16, 298-JP-16, 345-JP-2017, 296-JP-17} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR