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Income Tax Appellate Tribunal, ‘E‘ BENCH
Before: SHRI AMIT SHUKLA & SHRI GAGAN GOYAL
आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the Revenue against the order dated 17/01/2023 passed by NFAC Delhi for the quantum of assessment passed u/s.143(3) for the A.Y.2017-18. 2. The only ground raised by the Revenue reads as under:-
M/s. 5th Element Digital Media Solutions Pvt. Ltd 1. Ld. CIT(A) erred in deleting the addition amounting to Rs. 19,18,51,197/- being the entire expenses which has been added back on protective basis since the assessee has failed to provide explanation/documentary evidence with regard to the expenses claimed in the books of account?"
Here the Revenue is aggrieved by deletion of protective addition. The brief facts qua this issue are that during the course of assessment proceedings AO observed that assessee has debited the following expenses in the profit and loss account:-
Particulars Amount Shooting Expenses 19,22,39,569 Bank Charges 1,05,632 Other Expenses 4,07,760 Audit Fee 25,000 Salary & Wages 4,82,000
According to ld. AO these expenses have not been incurred wholly and exclusively for the purpose of assessee’s business and accordingly, he has disallowed sum of Rs.19,18,51,197/- on protective basis. The protective addition was made on the ground that AO has already made addition of Rs.19,35,39,366/- on account of entire receipts shown in profit and loss account and again he has disallowed the corresponding expenses also. The ld. CIT (A) has deleted the addition after observing as under:-
“[1.5.7.2] It is well known fact that expenses are made out of income. Here in this case, the AO has already made addition of M/s. 5th Element Digital Media Solutions Pvt. Ltd Rs.19,35,39,366/- u/s. 68 of the Act which is the total receipts of the assessee shown in its P&L A/c. Therefore, disallowing expense to tune of Rs. 19,18,51,197/- and adding back it to the income of the assessee leads to double taxation which is not justifiable with the assessee.
Keeping the above discussion in mind that the addition of entire receipts and corresponding payments cannot be brought to tax which result into double taxation, therefore, I hereby delete addition made in the para 10.10 of the impugned order to the tune of Rs.19,18,51,197/- is hereby deleted.
From the aforesaid finding of the ld. CIT(A), we are unable to understand as to how such a protective addition can be sustained when at the same time ld. AO is disallowing the receipts and also disallowing the corresponding expenses incurred out of the said receipts and that to be 100%. Accordingly, we do not find any infirmity in the order of the ld. CIT (A) and the same is confirmed.
In the result, appeal of the Revenue is dismissed.
Order pronounced on 10th July, 2023.