Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: Shri P.M. Jagtap, Vice- & Shri Satbeer Singh Godara
Date of concluding the hearing : December 10, 2019 Date of pronouncing the order : January 08, 2020
O R D E R
Per Shri P.M. Jagtap, Vice-President:
This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-12, Kolkata dated 29th March, 2019 and the solitary issue involved therein relates to the disallowance of Rs.17,55,000/- made by the Assessing Officer on account of salary expenditure, which is sustained by the ld. CIT(Appeals) to the extent of 90%.
The assessee in the present case is an Investment Company, which filed its return of income for the year under consideration on 10.09.2015 declaring total income of Rs.51,350/-. In the Profit & Loss Account filed along with the said return, a sum of Rs.17,64,680/- was debited by the assessee on account of salary and bonus. During the course of assessment proceedings, the assessee-company was called upon by the Assessing
Assessment Year: 2015-2016 Fastflow Merchants Private Limited Officer to provide the relevant details of salary and bonus claimed to be paid to the nine employees. Although the names of the employees were provided by the assessee-company, their Aadhaar Numbers and details of Provident Fund Accounts were not furnished by the assessee. Even the details of Bank accounts through which salary and bonus to the employees were paid could not be furnished by the assessee. Keeping in view this failure of the assessee to furnish the relevant details and documents and having regard to the fact that the activity of the assessee- company was limited to investment, which had resulted in earning the income on account of interest only to the extent of Rs.29,79,864/-, the claim of the assessee for expenditure incurred on salary and bonus was treated by the Assessing Officer as bogus and the same was disallowed by him. On appeal, the ld. CIT(Appeals) sustained the disallowance made by the Assessing Officer on account of salary and bonus to the extent of 90% allowing the relief of 10% to the assessee on this issue. Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.
We have heard the arguments of both the sides and also perused the relevant material available on record. The ld. Counsel for the assessee has submitted that even though the details required by the Assessing Officer in respect of salary and bonus paid by the assessee-company to the nine employees were not fully furnished by the assessee, the disallowance made by him and sustained by the ld. CIT(Appeals) to the extent of 90% is highly excessive and unreasonable keeping in view the fact that the assessee is a Company, which was engaged in the business of investment and the investment made by it in the unlisted equity shares had increased from Rs.2,83,50,000/- to Rs.5,07,05,000/- during the year under consideration as noted by the Assessing Officer in the assessment order. He has also pointed out that recovery of loans and advances to the tune of Rs.2.89 crores was made by the assessee-company during the year under consideration and the said amount was invested in the equity shares of Assessment Year: 2015-2016 Fastflow Merchants Private Limited unlisted companies. Keeping in view the factum and quantum of these investment activities carried on by the assessee-company during the year under consideration, which is duly taken note of by the Assessing Officer in paragraph no. 2.1 of the assessment order and having regard to the fact that the status of the assessee being a Company, which is required to comply with the statutory requirement, we are of the view that the disallowance of 90% of the expenditure claimed by the assessee on account of salary and bonus as sustained by the ld. CIT(Appeals) is highly excessive and unreasonable. According to us, it would be fair and reasonable in the facts and circumstances of the case to restrict the disallowance made by the Assessing Officer on account of salary and bonus to 50%. We accordingly modify the impugned order of the ld. CIT(Appeals) on this issue and restrict the disallowance made by the Assessing Officer on account of salary and bonus to 50%.
In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on January 08, 2020.