NAREN P. KUWADEKAR, MUMBAI V. ADDL CIT 11(3), MUMBAI

ITA 7591/MUM/2012

• Counselvise Citation: 759119914 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 24-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 24-12-2012
• Court: TRIBUNAL
• Department Lawyers: YOGESH KAMAT SR
• Assessee Lawyers: B P BADANI
• Keywords: Gift; Business income; Depreciation; Business expenditure
• Section: 143(3); 131

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ./I.T.A. NO.7591/M/2012 ( AY: 2009 - 2010 ) NAREN P KUWADEKAR, 1501, WOODSTOCK, J.P. ROAD, VERSOVA, ANDHERI (W), MUMBAI - 400 061. / VS. ADDL. CIT, RANGE 11(3), MUMBAI. ./ PAN : AACPK3443M ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI B.P. BADANI / RESPONDENT BY : SHRI YOGESH KAMAT, SR. AR / DATE OF HEARING : 20.5 .2015 / DATE OF PRONOUNCEMENT :19 .6.2015 / O R D E R PER G.S. PANNU, AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) - 2, MUMBAI DATED 22.10.2012 FOR THE ASSESSMENT YEAR 2009 - 2010 IN THE MATTER OF ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) (II) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT), DATED 26.12.2011. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - I. (A) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 10,25,041/ - SPENT ON BUSINESS PROMOTION. (B) THE APPELLA NT, THEREFORE, PRAYS THAT THE DIRECTION MAY BE GIVEN TO THE AO TO ALLOW BUSINESS PROMOTION EXPENSES AS REVENUE EXPENSES. II. (A) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON TELEVISION AMOUNTING TO RS. 22,715/ - . (B) APPELLANT PRAYS THAT AO MAY BE DIRECTED TO GIVE DEDUCTION OF DEPRECIATION OF RS. 22,715/ - ON TELEVISION, IN COMPUTING BUSINESS INCOME. III. (A) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING 75% OF DISALLOWANCE OF FLAT EXPENSES AMOUNTING TO RS 2,92,535/ - . (B) APPELLANT PRAYS, IN ALL FAIRNESS, AT LEAST 50% OF THE FLAT EXPENSES SHOULD HAVE BEEN ALLOWED TO BE DEDUCTED AS REVENUE EXPENSES. IV. (A) IN THE FACTS AND CIRCUMSTANC ES OF THE CASE AND IN LAW CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF HOTEL EXPENSES OF RS. 1,68,162/ - . (B) APPELLANT, THEREFORE, PRAYS THAT HOTEL EXPENDITURE OF RS. 1,68,162/ - BE HELD TO BE DEDUCTIBLE EXPENDITURE IN COMPUTING THE BUSINESS INCOME. V. (A) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 71,388/ - U/S 40A(2)(B), OUT OF PAYMENT OF RS. 2,31,388/ - TO MS. KOMAL KUWADEKAR, DAUGHTER OF APPELLANT. 2 (B) APPELLANT PRAYS THAT PAYMENT OF RS. 2,31,388/ - TO MS. KOMAL KUWADEKAR IS FAIR AND REASONABLE. AO MAY BE DIRECTED TO GIVE DEDUCTION OF RS. 2,31,388/ - IN COMPUTING BUSINESS INCOME. 3. GROUND NO.1 RELATES TO THE DISALLOWANCE OF RS. 10,25,041/ - OUT OF BUSINESS PROMOTION EXPENSES CLAIME D. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT , IN THE RETURNED INCOME, ASSESSEE CLAIMED BUSINESS PROMOTION EXPENSES TO THE EXTENT OF RS. 10,25,041/ - IN THE PROFIT & LOSS ACCOUNT. DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO FURNISH TH E REQUISITE DETAILS TO SUBSTANTIATE THAT THE AFORESAID EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR HIS BUSINESS PURPOSE S. IN RESPONSE, ASSESSEE SUBMITTED THAT THE EXPENSES INCLUDE HOTEL PAYMENT, GIFT ARTICLES OF JEWELLERY AND ELECTRONIC PRODUCTS E TC., AND THE SAID EXPENDITURE WAS INCURRED THROUGH CREDIT CARD AND RELEVANT BILLS / VOUCHERS HAVE BEEN MISPLACED, THEREFORE, HE COULD NOT PRODUCE THE DETAILS BEFORE THE ASSESSING OFFICER. FURTHER , ASSESSEE ALSO EXPRESSED HIS INABILITY TO SUBMIT THE NAMES AND ADDRESSES OF THE PERSONS TO WHOM THE GIFTS WERE GIVEN AS WELL AS THE DETAILS OF THE PERSONS FOR WHOM HOTEL PAYMENTS WERE MADE. CONSIDERING THE ASSESSEES FAILURE IN DISCHARGING ITS ONUS TO PRODUCE THE RELEVANT BILLS / VOUCHERS AS WELL AS THE EVIDENCE TO PROVE THAT THE SAID EXPENDITURE WAS DONE WHOLLY AND EXCLUSIVELY FOR HIS BUSINESS PURPOSES , ASSESSING OFFICER DISALLOWED THE SAID AMOUNT OF RS. 10,24,041/ - AND ADDED BACK THE SAME TO THE RETURNED INCOME OF THE ASSESSEE. AGGRIEVED, ASSES SEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS, CIT (A) UPHELD THE DECISION OF THE ASSESSING OFFICER VIDE PARA 2.4 OF HIS ORDER. AGGR IEVED AND DISSATISFIED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE US . 5. DURING THE PROCEEDINGS BEFORE US, LD REPRESENTATIVE FOR THE ASSESSEE, BROUGHT OUR ATTENTION TO THE WRITTEN SUBMISSIONS FILED BEFORE THE US AND MENTIO NED THAT THE IMPUGNED EXPENDITURE, CLAIMED AS BUSINESS PROMOTION EXPENSES, WAS INCURRED FOR HOTEL AND RESTAURANTS, FOR HIMSELF OR HIS EMPLOYEES WHILE GOING TO VARIOUS PLACE S TO A TTEND THE WORK OF HIS BUSINESS. IT WAS ALSO SUBMITTED THAT CONSIDERING THE NA TURE OF ASSESSEES PROFESSION, BEING AN ARCHITECT, IT IS PERTINENT TO MEET VARIOUS AUTHORITIES AND TRAVEL TO VARIOUS PLACES AND WHILE DOING SO, CONSIDERABLE MONEY IS SPENT. IT WAS FURTHER SUBMITTED THAT OFFERING GIFTS TO THE PROSPECTIVE CUSTOMERS IS A NECE SSITY TO MAINTAIN RELATION AS WELL AS TO GET BUSINESS 3 FROM THEM. AS SUCH, THE GIFTS WERE OFFERED ONLY ON THE AUSPICIOUS OCCASIONS OF DIWALI OR NEW YEAR. TAKING INTO ACCOUNT THE ASSESSEES TURNOVER OF RS. 1.69 CRS, THE EXPENDITURE INCURRED FOR BUSINESS PR OMOTION IS HARDLY 6% OF THE SAID TURNOVER AND THE SAME IS QUITE REASONABLE. IT WAS FURTHER SUBMITTED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE DULY AUDITED BY THE AUDITORS AND NO EXPENSES WERE POINTED OUT AS PERSONAL IN NATURE. IT WAS FAIRLY MENTIONED THAT THE ASSESSEE COULD NOT PRODUCE THE RELEVANT DETAILS BEFORE THE ASSESSING OFFICER, AS THE FILE CONTAINING THE DETAILS WAS MISPLACED. IT IS THE PRAYER OF THE LD REPRESENTATIVE THAT THE CONSIDERING THE ABOVE STATED POSITION, THE DISALLOWANCE MADE BY TH E ASSESSING OFFICER AN D CONFIRMED BY THE CIT (A) IS ON A HIGHER SIDE, AND THEREFORE, IF THE DISALLOWANCE IS WARRANTED, IT MAY BE RESTRICTED TO A NOMINAL AMOUNT. 6. ON THE OTHER HAND, LD DR APPEARING FOR THE REVENUE RELIED ON THE ORDERS OF THE ASSESSING OFF ICER AND THE CIT (A). IT IS THE CONTENTION OF THE LD DR THAT THE ONUS IS PURELY ON THE ASSESSEE TO ESTABLISH THAT THE EXPENDITURE INCURRED ON ACCOUNT OF BUSINESS PROMOTION IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AND THE SAME SHOULD BE SUPPORTED BY PROPER BILLS / VOUCHERS EVIDENCING THE SAME. CONSIDERING THE ASSESSEES FAILURE TO SUBSTANTIATE THE SAME, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT (A) IS A REASONABLE DECISION AND THE SAME NEED NOT BE DISTURBED. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. OSTENSIBLY, THE ONUS IS ON THE ASSESSEE TO FURNISH THE BILLS / VOUCHERS IN ORDER TO SUBSTANTIATE THE CLAIM OF EXPENDITURE ON ACCOUNT OF BUSINESS PROMOTION. IN SUCH CASES, IT IS THE ASSESSEE WHO HAS TO PRODUCE THE RELEVA NT EVIDENCE BEFORE THE REVENUE A UTHORITIES. CONSIDERING THE ASSESSEES ADMITTED POSITION OF INABILITY TO PRODUCE THE RELEVANT BILLS / VOUCHERS I N SUPPORT OF HIS CLAIM OF EXPENDITURE AS WELL AS CONSIDERING THE NATURE OF THE EXPENSES, SOME DI SALLOWANCE IS WARRANTED. HOWEVER, IT IS ALSO NOT APPROPRIATE THAT THE ENTIRE EXPENDITURE BE DISALLOWED, AS DONE BY THE REVENU E AUTHORITIES. IN THE CONTEX T OF ASSESSEES NATURE OF BUSINESS, INCURRENCE OF BUSINESS PROMOTION EXPENSES CANNOT BE RULED OUT. THEREFORE, IN OUR CONSIDERED OPINION, RETAINING A DISALLOWANCE OF 10% OF THE EXPENSES INCURRED ON BUSINESS PROMOTION WILL MEET THE ENDS OF JUSTICE. W E ORDER ACCORDINGLY . THUS, ON GROUND NO.1, ASSESSEE PARTLY SUCCEEDS. 4 8. GROUND NO.2 RELATES TO THE DISALLOWANCE OF RS. 22,715/ - OF DEPRECIATION ON TELEVISION (TV). BRIEFLY STATED, RELEVANT FACTS OF THE CASE ARE THAT IN THE RETURNED INCOME, ASSESSEE CLAIMED DEPR ECIATION OF RS. 22, 715/ - ON TWO PLASMA TVS. IN THE ASSESSMENT, ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE RELYING ON THE STATEMENT, GIVEN BY ONE OF THE ASSESSEES EMPLOYEES, RECORDED U/S 131 OF THE ACT, WHEREIN IT WAS STATED THAT THERE WERE NO TVS DURING THE YEAR UNDER CONSIDERATION. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A) AND HE CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. AGAIN AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 9. DURING THE PROCEEDINGS BEFORE US, LD REPRESENTATIVE FOR THE ASSESSEE MENTIONED THAT THE ASSESSEE HAD PURCHASED AND INSTALLED THE TVS AT THE OFFICE - CUM - RESIDENCE PREMISES OF THE ASSESSEE , AS THE SAME ARE NECESSARY, CONSIDERING THE ASSESSEES PROFESSION, FOR GIVING THE VIEW OF THE BUILDING & SITE LAYOUT. IT IS ALSO SUBMITTED THAT TVS ARE CONSIDERED AS BUSINESS ASSETS AND USED FOR BUSINESS PURPOSE ONLY, AND THEREFORE, THE DEPRECIATION ON TVS IS DEDUCTIBLE. 10. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES . 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US . ON HEARING BOTH THE PARTIES, WE AGREE WITH THE ARGUMENT OF THE LD REPRESENTATIVE THAT, BEI NG AN ARCHITECT, THE ASSESS EE REQUIRED TVS TO GIVE A VIEW OF HIS WORK IN RESPECT OF BUILDING AND SITE LAYOUT TO THE CLIENTS WHO APPROACH HIM, WHICH IS A PART AND PARCEL OF ASSESSEES BUSINESS. THEREFORE, THE CLAIM ON DEPRECIATION OF TVS IS ALLOWABLE, AND WE DIRECT THE ASSESSING OF FICER TO DELETE THE ADDITION MADE IN THIS REGARD. ACCORDINGLY, ON GROUND NO.2, ASSESSEE SUCCEEDS. 12. GROUND NO.3 RELATES TO THE DISALLOWANCE OF EXPENSES OF RS. 2,92,535/ - , ON ACCOUNT OF THE MAINTENANCE O F FLAT NOS.1501 AND 1502 BY TREATING THE SAME AS P ERSONAL EXPENDITURE. BRIEFLY STATED, RELEVANT FACTS IN THIS REGARD ARE THAT IN THE RETURNED INCOME, ASSESSEE CLAIMED RS. 3,90,047/ - AS THE BUSINESS EXPENDITURE IN RESPECT OF MAINTENANCE OF THE AFORESAID TWO FLATS. DURING THE ASSESSMENT PROCEEDINGS, ASSES SING OFFICER OBSERVED THAT THE SAID TWO FLATS ARE ADJACENT, INTER - CONNECTED AND ARE BEING USED BY THE ASSESSEE AND HIS FAMILY FOR RESIDENTIAL PURPOSE. ON OBSERVING THE ABOVE, ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE WRONGLY CLAIMED THE EXPENDITURE INC URRED ON THE SAID FLATS AS BUSINESS EXPENDITURE, AND 5 DISALLOWED THE ENTIRE EXPENDITURE OF RS. 3,90,047/ - . AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT (A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, DELETED 25% OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUSTAINED THE REMAINING 75% AMOUNTING TO RS. 2,92,535/ - . AGGRIEVED AND DISSATISFIED WITH THE DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE US. 13. DURING THE PROCEEDINGS BEFORE US, LD REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE FAIRLY ADMITTED BEFORE THE LOWER AUTHORITIES THAT THE AFORESAID TWO FLATS ARE INTERCONNECTED AND ARE BEING USED FOR THE BUSINESS PURPOSE AS WELL AS RESIDENTIAL PURPOSE ALSO. IT IS ALSO PERTINENT TO NOTE THAT THERE IS NO BAR ON A PROFESSIONAL ARCHITECT TO USE HIS RESIDENCE AS OFFICE FOR BUSINESS PURPOSE, WHICH REQUIRES DESIGNING STUDIO AND A LOT OF FU RNITURE TO MAKE ARRANGEMENTS FOR THE VISITING CLIENTS. AT THE TIME OF HEARING, LD REPRESENTATIVE FAIRLY SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED THE TOTAL EXPENDITURE, WHEREAS ON APPEAL, CIT (A) DELETED ONLY 25% OF THE TOTAL EXPENDITURE , THUS THE DISALLOWANCE IS ON A VERY HIGH SIDE. BEFORE US, IT IS THE PRA YER OF THE LD REPRESENTATIVE THAT THE ASSESSEE WOULD BE SATISFIED IF THE DISALLOWANCE IS RESTRICTED TO 50% OF THE TOTAL EXPENDITURE. 14. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 15. WE HAVE HEARD BOTH THE PARTIES AND PER USE D THE ORDERS OF THE REVENUE A UTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON HEARING BOTH THE PARTIES AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE AGREE WITH THE LD REPRESENTATIVES ARGUMENT, AND RESTRICT THE DISALLOWANCE T O 50% OF THE TOTAL CLAIM OF EXPENDITURE , CONSIDERING THE NATURE OF ASSESSEES BUSINESS . WE ORDER ACCORDINGLY. THUS, ON GROUND NO.3 ASSESSEE PARTLY SUCCEEDS. 16. GROUND NO.4 RELATES TO THE DISALLOWANCE OF RS. 1,68,162/ - ON ACCOUNT OF HOTEL EXPENSES. BRI EFLY PUT, RELEVANT FACTS IN THIS REGARD ARE THAT, DURING THE ASSESSMENT PROCEEDINGS, ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD INCURRED RS. 68,112/ - ON ACCOUNT OF TRAVELLING EXPENSES AND RS.1,00,050/ - FOR THE PURPOSE OF HOTEL / TOUR BOOKING. CONSID ERING ASSESSEES FAILURE TO SUBSTANTIATE HIS CLAIM, ASSESSING OFFICER DISALLOWED THE AMOUNT TOTALLING TO RS. 1,68,162/ - . AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. DURING THE PROCEEDINGS BEFORE THE CIT (A), AFT ER CONSIDERING THE SUBMISSIONS OF THE ASSESSE, THE DISALLOWANCE MADE 6 BY THE ASSESSING OFFICER WAS SUSTAINED BY THE CIT (A). AGAIN AGGRIEVED, ASSESSEE IS IN FURTHER APPEAL BEFORE US BY RAISING THE AFOREMENTIONED GROUND NO.4. 17. DURING THE PROCEEDINGS BEFO RE US, LD REPRESENTATIVE SUBMITTED THAT AS AN ARCHITECT, ASSESSE E UNDERTAKES VARIOUS PROJECTS AT DIFFERENT LOCATIONS SPREAD OVER ENTIRE INDIA. FOR THAT PURPOSE, ASSESSEE HAS TO TRAVEL AND STAY AT THE RESPECTIVE PLACES AND THE PAYMENTS WERE MADE THROUGH CO ZY AIR LINKS. IT IS THE CONTENTION OF THE LD REPRESENTATIVE THAT SINCE, THE AFORESAID EXPENDITURE WAS INCURRED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT (A) SHOULD BE DELETED. 18. ON THE OTHER HAND, LD DR APPEARING FOR THE REVENUE RELIE D ON THE ORDERS OF THE REVENUE A UTHORITIES AND SUBMITTED THAT THE ONUS IS ENTIRELY ON THE ASSESSEE TO SUBSTANTIATE THAT THE EXPENSES INCURRED ARE WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE. C ONSIDERING THE ASSESSEES FAILURE TO FURNISH THE EVIDENCE IN SUPPORT OF HIS CLAIM, THE DECISION OF THE ASSESSING OFFICER AS WELL AS THE CIT (A) CANNOT BE FOUND FAULT WITH. 19. WE HAVE HEARD BOTH THE PARTIES AND PER USED THE ORDERS OF THE REVENUE A UTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. IN FACT, IT IS THE ASSESSEE, WHO HAS TO FURNISH ALL THE REQUISITE DETAILS TO SUBSTANTIATE HIS CLAIM BEFORE THE ASSESSING OFFICER, EVEN WHERE THE EXPENDITURE IS GENUINE AND SPENT EXCLUSIVELY FOR THE PURPO SE OF ASSESSEES BUSINESS. IN ALL FAIRNESS, CONSIDERING THE ASSESSEES NATURE OF PROFESSION AS WELL AS THE NATURE OF EXPENDITURE, IN OUR CONSIDERED OPINION, RE STRICTING THE DISALLOWANCE TO 15 % OF THE TOTAL CLAIM OF EXPENDITURE , WILL MEET THE ENDS OF JUSTI CE. WE ORDER ACCORDINGLY . THUS, ON GROUND NO.4 ASSESSEE PARTLY SUCCEEDS. 20. GROUND NO.5 RELATES TO THE DISALLOWANCE OF RS. 71,388/ - ON ACCOUNT OF PAYMENTS MADE TO MS. KOMAL KUWADEKAR . BRIEFLY STATED, RELEVANT FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, ASSESSING OFFICER OBSERVED THAT AN AMOUNT OF RS. 2,31,388/ - WAS SHOWN AS PAID TO MS. KOMAL KUWADEKAR, THE DAUGHTER OF THE ASSESSEE, WHO IS A QUALIFIED INTERIOR DESIGNE R FROM LONDON. IN THIS REGARD, IT WAS THE SUBMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT AS SHE JOINED THE ASSESSEE AS AN EMPLOYEE AND WORKED FOR THE ASSESSEE IN HIS BUSINESS, AND THEREFORE, THE AFORESAID AMOUNT WAS PAID AS REMUNERATION TO H ER SERVICES RENDERED TO THE ASSESSEE. NOT SATISFIED WITH THE ASSESSEES EXPLANATION, RELYING ON THE 7 STATEMENT OF ONE OF THE ASSESSEES EMPLOYEES, ASSESSING OFFICER DISALLOWED RS. 72,388/ - OUT OF THE TOTAL PAYMENT OF RS. 2,31,388/ - MADE TO MS. KOMAL KUWADE KAR . WHILE MAKING THE AFORESAID DISALLOWANCE, ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLA TE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. AGAIN AGGRIEVED, ASSESSEE IS IN FURTHER APPEAL BEFORE US. 21. DURING THE PROCEEDINGS BEFORE US, LD REPRESENTATIVE FOR THE AS SESSEE SUBMITTED THAT THE MS. KOMAL KUWADEKAR IS A WELL QUALIFIED INTERIOR DESIGNER FROM LONDON AND SHE HAS RENDERED HER PROFESSIONAL SKILLS WHILE WORKING WITH THE ASSESSEE FOR THE PROMOTION OF THE ASESSEES BUSINESS. THEREFORE, THE PAYMENT MADE TO MS. KO MAL KUWADEKAR CANNOT BE EQUATED WITH THAT OF MR. HEMANT MEHER, WHO WAS AN INTERIOR DESIGNER EMPLOYED WITH THE ASSESSEE. IT IS ALSO SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED THE SAID AMOUNT OF RS. 71,388/ - ONLY ON THE REASON TH AT MR. KOMAL KUWADEKAR IS DAUGHTER OF THE ASSESSEE, OTHERWISE, THE ASSESSING OFFICER HAS NO REASON TO DISALLOW THE AFORESAID AMOUNT, AND THEREFORE, THE DISALLOWANCE MAY BE DELETED. 22. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT (A). 23. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF TH E REVENUE AUTHORITIES, IT CANNOT BE DENIED THE LEVEL OF REMUNERATION DEPENDS ON THE QUALITY OF SERVICES RENDERED BY THE EMPLOYEES, AS SUCH, MS. KOMAL KUWADEKAR IS A WELL QUALIFIED INTERIOR DESIGNE R AND, IN OUR CONSIDERED OPINION, THE PAYMENT MADE TO HER AS AN EMPLOYEE IS REASONABLE. THE REMUNERATION PAID TO HER CANNOT BE CONSIDERED AS UNREASONABLE OR EXCESSIVE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE ON THIS COUNT . THUS, ON GROUND NO.5 ASSESSEE SUCCEEDS. 24. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 19 TH JUNE, 2015. SD/ - SD/ - ( SANJAY GARG ) ( G.S. PANNU ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 19 .6 .2015 8 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI