MAIDEN MARKETING INDIA PRIVATE LIMITED,MUMBAI V. COMMISSION OF INCOME TAX (APPEALS), MUMBAI

ITA 70/MUM/2026

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The case involves Maiden Marketing India Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which had dismissed their appeal against the Assessment Order passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 for the Assessment Year 2023-2024. The primary contention was regarding the disallowance of certain expenses claimed by the Assessee, which the Assessing Officer had deemed excessive compared to the turnover of the Assessee. The Tribunal examined the documents and explanations provided by the Assessee and found that the disallowances were not justified.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847528 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Mumbai
• Assessment Year: 2023-2024
• Appeal Filed On: 05-01-2026
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE
• Keywords: Corroborative evidences; Bogus
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL \"F\" BENCH, MUMBAI SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No.70/MUM/2026 (Assessment Year: 2023-2024) Maiden Marketing India Pvt. Ltd. 23/24, 2nd Floor, Vicino/Mega Mall, New Link Road, Oshiwara, Goregaon West, Mumbai – 400104 Maharashtra. [PAN:AAICM7168E] …………. Appellant Income Tax Officer Ward 10(2)(3), Mumbai Aayakar Bhavan, M.K. Road, Mumbai – 400020. Maharashtra Vs …………. Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Humanshu Gandhi Shri Manish Ajudiya Date Conclusion of hearing Pronouncement of order : : 25.03.2026 26.03.2026 O R D E R Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the Order, dated 07/11/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] whereby Learned CIT(A) had dismissed the appeal against the Assessment Order, dated 24/03/2025, passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’], for the Assessment Year 2023-2024. 2. The Assessee has raised following grounds of appeal: “1. The learned Commissioner of Income Tax (Appeals), NFAC erred in appreciating the fact that appellant had duly furnished comprehensive and satisfactory submissions in support of the expenditure claimed for the said Assessment Year. However, despite Printed from counselvise.com ITA No.70/Mum/2026 Assessment Year 2023-2024 2 due consideration by the learned Commissioner of Income Tax (Appeals), NFAC the submissions were not found acceptable, and relevance was placed on the judgment of the learned Assessing officer. The details provided by appellant were complete, substantiated, sufficiently reasoned and in line with applicable provisions, thus no disallowance shall be made w.rt. all the 3 expenses. 2. The learned Commissioner of Income Tax (Appeals), NFAC, has never disputed the genuineness of the expenditure incurred by the appellant. The impugned appellate order does not record any finding or observation alleging that the said expenses are fictitious, non- genuine, or bogus. Further, the appellant had duly furnished all documents and evidences as requisitioned by the learned Assessing Officer for verification. In the absence of any adverse finding regarding the authenticity of the transactions, the conclusion drawn by the learned Commission of Income Tax (Appeals), NFAC, that the documentary evidence was insufficient is factually incorrect and unsustainable in law. 3. The additions accepted by the learned Commissioner of Income Tax (Appeals), NFAC are completely on the basis of an ad hoc estimation of inflation in expenditure, without citing any specific instance of actual inflation, discrepancy, or overstatement in the books of account, which is untenable in the eyes of law and liable to be deleted. 4. The appellant has reserved the right to add, alter, amend or delete the aforesaid grounds at the time of hearing.” 3. The relevant facts in brief are that the Assessee, a private limited company is engaged in providing advertising agency services, filed return of income for the Assessment Year 2023-2024 on 29/11/2023 declaring loss of INR.1,30,31,010/-. The case of the Assessee was selected for regular scrutiny. During the assessment proceedings the Assessing Officer noted that while the turnover of the Assessee had declined by 23.93%, and there was disproportionate increase in the amount of expenses debited to the Profit & Loss Account. Therefore, by way of Show-cause Notice, dated 05/03/2025, the Assessee was asked to explain why disproportionate increase in expenditure amounting to INR.7,42,93,010/- [INR.20,15,26,695/- – INR.12,72,33,685/-] should not be disallowed and added to the taxable income of the Assessee for the Assessment Year 2023-2024. In response the Assessee filed Reply Letter, dated 12/03/2025, providing the following expenditure: Printed from counselvise.com ITA No.70/Mum/2026 Assessment Year 2023-2024 3 “A) Staff welfare expenses: Particular Amount (INR) 31 March 2023 Amount (INR) 31 March 2022 Difference INR % Increase Staff welfare expenses 15,18,668.74 11,64,659.92 3,54,008.82 30% Staff welfare expenses include costs incurred for staff dinners, birthday celebrations, festival celebrations (Diwali and Christmas), and other office supplies. AY 2022-2023: Due to limited staff travel because of COVID-19 restrictions, it is relatively low as staff were travelling less to the office Le only when required AY 2023-2024: The increase in costs is primarily attributable to the resumption of business operations Post-COVID, the resumption of in-office work has led to an increase in staff welfare expenses, including the provision of tea, coffee, and other amenities. B) Salaries and Wages (net) Particular Amount (INR) 31 March 2023 Amount (INR) 31 March 2022 Difference INR % Increase Salaries and wages (net)* 16,66,83,906 15,45,49,473 1,21,34,432.71 8% Contribution to provident fund and other fund 54,17,209 50,88,716.74 3,28,492.29 6% Total compensation to employees 17,21,01,115 15,96,38,190.00 1,24,62,925.00 8% The total increase in salary expense by Rs.1.24 Cr is attributable to both year-on-year increments and new hiring. Additionally, a senior leadership position was filled in January 2023.  Headcount as of March 2022: 102 employees  Headcount as of March 2023: 107 employees Contribution to the provident fund is a statutory obligation and is made to recognised provident fund administered by Government of India for employees @ 12.00% p.a. of their basic salary subject to mandatory minimum amount as per the regulations. The same can be verified from the financial statement (Note 29 page 12) submitted in the submission dated 02/08/2024 as Annexure B2. Attaching the same as Annexure & for your good-self's ready reference. Hence, no excess expenses hence been incurred by the assessee company during the year under the consideration Printed from counselvise.com ITA No.70/Mum/2026 Assessment Year 2023-2024 4 C) Legal and professional fees Particular Amount (INR) 31 March 2023 Amount (INR) 31 March 2022 Difference INR % Increase Legal and professional fees 55,68,105.45 39,13,979.36 16,54,126.09 42% The increase in legal and professional fees is primarily due to higher audit fees, consultancy. services, and professional engagements. A key factor is the company's eligibility for an Internal Financial Controls (IFC) audit, requiring additional audit procedures and expertise. Additionally, rising regulatory and compliance requirements have led to increased professional assistance for statutory adherence, corporate governance, tax compliance, and regulatory filings. Engagement of specialized consultants for risk assessments and industry-specific regulations further contributed to the cost increase. The key contributors to the increase in FY 2023 are as follows: 1. Walker & Chandoik-For group reporting and year-on-year increments. 2 RMJ & Associates LLP-For the IFC audit 3. Advisory services on GST, tax, and local compliance matters, along with an increase in engagement fees for vendors. A comparison of the said expenses of year under consideration and to that of previous year showing the new professional engagements and existing engagements evidencing rise in the consideration is attached as Annexure B Variable expenses of travelling and conveyance has shown a significant rise in the year under the consideration. Particular Amount (INR) 31 March 2023 Amount (INR) 31 March 2022 Difference INR % Increase Travelling and conveyance 1,09,45,117.43 5,10,941.39 1,04,34,176.04 2042% Several factors contribute to an increase the same are as follows: 1. Expansion into a New Business segment. The organization Printed from counselvise.com ITA No.70/Mum/2026 Assessment Year 2023-2024 5 has ventured into a new business segment, necessitating increased travel for business development, client meetings, and operational setup. As mentioned above, Any digital advertising segment was commenced in the year under the consideration. 2. Participation in Industry Events: There has been a strategic emphasis on attending industry conferences, exhibitions, and networking events to enhance market presence, explore new business opportunities, and remain updated with industry developments. Attaching the images of the event attended by the employees as Annexure C. Orion Holidays was the assessee-company's travel partner for Flight and Hotel, total spend amounts to Rs. 43 lakhs Attaching the event details along with the month on month comparison of the travelling expenses and travelling expenses incurred for Orion Holiday as Annexure D. Since the restrictions on travel significantly reduced after the COVID-19 pandemic, there was rise in the events as business activities resumed. The travelling ad conveyance expenses were incurred majorly by the sales personnel. Attaching the said details as Annexure E. 3. Comparison with Previous Years (COVID-19 Impact): During the previous years to the year under consideration, travel was significantly restricted due to the COVID-19 pandemic. With the resumption of regular business activities, the current year reflects a natural increase in travel expenditures compared to the preceding period. The Assessee also furnished following details/documents in support of the above explanation/submissions as annexure to the above Reply Letter dated 12/03/2025: - Comparison of legal and professional expenses with previous year [Annexure B] - Event details along with total travel expenses and Expenses incurred for Orion Holidays on month on month basis [Annexure D] - Travel expense incurred for employees [Annexure E] In addition the Assessee had also filed Reply Letter, dated 08/11/2024, to corroborate the geniuses of the claim for deduction for expenses and had placed before the Assessing Officer the following supporting evidence – (a) Summary of Expenses [Annexure D], (b) Ledger of Expenses Printed from counselvise.com ITA No.70/Mum/2026 Assessment Year 2023-2024 6 (Annexure E) and (c) Staff Welfare Ledger [Annexure F]. 4. The above reply/submission did not find favour with the Assessing Officer and the Assessing Officer proceeded to make disallowance of (a)Workmen and Staff Welfare Expenses amounting to INR.2,37,543/- (b) Travelling Expenses amounting to INR.10,44,000/- and (c) Professional/Consultancy Fees amounting to INR.12,67,105/-. 5. Being aggrieved Assessee challenged the above disallowances before the Learned CIT(A). Vide impugned Order, dated 07/11/2025, the Learned CIT(A) dismissed the appeal preferred by the Assessee concurring with the reasoning given by the Assessing Officer. 6. Now the Assessee has preferred the present appeal before this Tribunal on the grounds reproduced at Paragraph 2 above. 7. We have heard both the sides and have perused the material on record. 8. On perusal of Assessment Order, we find that the Assessing Officer had proceeded to make disallowance of (a) Workmen and Staff Welfare Expenses (INR.2,37,543/-) (b) Travelling Expenses (INR.10,44,000/-) and (c) Professional/Consultancy Fees (INR.12,67,105/-) without identifying any infirmity in the documents/details furnished by the Assessee in support of expenses incurred during the relevant previous year and debited to the Profit & Loss Account. The specific explanation offered by the Assessee by way of Reply Letter, dated 12/03/2025, has been brushed aside observing that the same is general and was not supported by way of documentary evidence. On perusal of the Reply Letter, dated 12/03/2025, filed by the Assessee along with supporting documents placed at Pages 19 to 102 and 114 to 133 of the paper-book filed by the Assessee, we are of the view that the findings returned by the Assessing Officer are factually incorrect. The Assessee has furnished the relevant details of expenditure incurred during the relevant year along with ledger accounts and narration along with explanation for Printed from counselvise.com ITA No.70/Mum/2026 Assessment Year 2023-2024 7 increase in the expenditure in Reply Letters dated 08/11/2024 and 12/03/2025. The Assessee had provided comparison of Workmen and Staff Welfare Expenses, Travelling Expenses and Professional/Consultancy Fees incurred for the Assessment Year 2022- 2023 and 2023-2024. Neither the Assessing Officer nor the Learned CIT(A) had pointed out any infirmity in the documents/details furnished by the Assessee. Even the genuineness of the expenditure claimed as deduction was not doubted. The Assessing Officer has made the disallowance on ad-hoc basis by doing comparative analysis without considering the difference in the facts and circumstances prevailing during the relevant previous year as compared to the preceding previous years (including the impact of COVID Pandemic and business recovery thereafter). We note that the Learned CIT(A) had while confirming the disallowance made by the Assessing Officer recorded that the disallowance was made by the Assessing Officer on the basis of comparative analysis and on reasonable assumption in Paragraph 5.8 which reads as under: “5.8. Therefore, in light of the above discussion, it is clear that the additions made by the AO are based on objective examination of facts, comparative analysis, and reasonable estimation. The appellant has failed to rebut the findings or produce any additional documentary evidence that could establish that the disallowed portions were wholly and exclusively incurred for business purposes. The assessment order reflects due consideration of submissions and cannot be termed as arbitrary or adhoc.” In Paragraph 5.8 above, the Learned CIT(A) has concluded that the disallowance made by the Assessing Officer was neither arbitrary nor adhoc. However, we are not in agreement with the aforesaid conclusion drawn by the Learned CIT(A). In our view, the Assessee had placed on record relevant documents and details and had furnished reasonable explanation in support of increase in expenditure during the relevant previous year. Without pointing out any infirmity in the same, the Learned CIT(A) has proceeded to disallow deduction for a part of the Printed from counselvise.com ITA No.70/Mum/2026 Assessment Year 2023-2024 8 expenditure on the basis of comparative analysis of expenditure incurred over the years and the turnover achieved. The Assessing Officer has disallowed part of (a) Workmen and Staff Welfare Expenses [INR.2,37,543/-] (b) Travelling Expenses [INR.10,44,000/-] and (c) Professional/Consultancy Fees Expenses [INR.12,67,105/-] after taking into consideration the past trend and economic conditions without considering the explanation offered by the Assessee in respect of the facts prevailing during the relevant previous year. In view of the aforesaid, we hold that the approach adopted by the Assessing Officer cannot be countenanced and the disallowance made by the Assessing Officer cannot be sustained. While the CIT(A) has observed that the Assessee had failed to show that the expenditure was incurred wholly and exclusively for the purpose of business, no such allegations were made by the Assessing Officer during the assessment proceedings. Even if it is assumed that the Assessing Officer harbored some doubts in this regard, the disallowance made by the Assessing Officer on ad-hoc basis could not be sustained. Accordingly, we overturn the decision of the Learned CIT(A) and delete the following disallowances made by the Assessing Officer (a) disallowance of INR.2,37,543/- in respect of Workmen and Staff Welfare Expenses (b) disallowance of INR. 10,44,000/- in respect of Travelling Expenses and (c) disallowance of INR.12,67,105/- in respect of Professional/Consultancy Fees. Thus, Ground No. 1 to 3 raised by the Assessee is allowed. 9. In result, appeal preferred by the Assessee is allowed. Order pronounced on 26.03.2026. Sd/- Sd/- (Vikram Singh Yadav) Accountant Member (Rahul Chaudhary) Judicial Member मुंबई Mumbai; िदनांकDated : 26.03.2026 Milan, LDC Printed from counselvise.com ITA No.70/Mum/2026 Assessment Year 2023-2024 9 आदेशकीŮितिलिपअŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent. 3. आयकरआयुƅ/ The CIT 4. Ůधान आयकर आयुƅ/ Pr.CIT 5. िवभागीयŮितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 6. गाडŊफाईल / Guard file. आदेशानुसार/ BY ORDER, सȑािपतŮित //True Copy// उप/सहायकपंजीकार /(Dy./Asstt. Registrar) आयकरअपीलीयअिधकरण, मुंबई / ITAT, Mumbai Printed from counselvise.com "