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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश/ O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-34, Chennai in dated 08.02.2018 for assessment year 2012-13.
M/s. HMH Education Consultants (India) Pvt. Ltd., the assessee, is a coordinator of the Annamalai University for conducting Distance Education Program. The only business of the company is to act as implementing agent of M/s. Annamalai University for the Information Technology Education in Dual Degree curriculum. As per the agreement dated 10.04.20008 with M/s.
Annamalai University, the assessee has responsibility of conducting distance education at different places of the country, for which it had appointed certain liaisoning officers, paid remuneration to them was shown as “curriculum supervisory expenses”. While making the assessment for assessment year 2012-13, the Assessing Officer found that the assessee claimed “curriculum supervisory expenses” at Rs. 46,58,000/-. It explained that this payments were made to the supervisors who actually monitor the performance of the associates. One of such person is appointed for every centre to look after the conduct of the centre and report any deficiency of the performance of the associates etc. Since, the scope of work done by the so called monitors, their ability and the definition of monitoring is not explained, the AO disallowed the entire sum. Aggrieved, the assessee filed an appeal before the Ld. CIT(A).
Before the Ld. CIT(A), the assessee pleaded that in the assessment made for assessment year 2010-11, the AO has disallowed 25% of the claim and in assessment year 2011-12, he disallowed the entire amount. The ITAT in its order in has confirmed the disallowance of such expenses @ 25% and hence, pleaded before the Ld. CIT(A) that the :- 3 -: 25% and justice to be rendered.
The Ld. CIT(A) held that since the genuineness of the curriculum expenses is not explained before the Assessing Officer, the assessee’s claim is not sustainable and hence, dismissed the appeal. Aggrieved, the assessee filed this appeal pleading that the assessee is solely responsible for the conduct of the course which necessitated for incurring the impugned expenditure and the Ld. CIT(A) failed to appreciate the fact that the incurring of such expenditure is sine qua non for the assessee company etc.
At the time of hearing, none appeared from the assesse’s side, though the hearing notice was served on assessee on 12.07.2018 and its acknowledgement was placed on the record. The Ld. DR furnished a copy of this Tribunal decision in dated 10.02.2016 and relied on the orders of the lower authorities.
We heard the Ld. DR and perused the relevant material. As stated above, this issue is recurrent one. It is seen from the order of this Tribunal in the assessee’s own case for assessment year 2011-12, that the Assessing Officer disallowed 25% of the expenditure in assessment year 2010-11, however, in assessment year 2011-12, he disallowed the entire claim. On an appeal, the Ld. CIT(A) has observed that the assessee company has a responsibility of conducting the distance education at different places of the country for which it had appointed certain liaisoning officers, the remuneration
:- 4 -: paid to them was shown as “curriculum development expenses” which were made at different places at different times. The disallowance was primarily made for want of necessary evidences and the assessee failed to furnish the details and evidences to prove that the expenses claimed are genuine. In the circumstances, he came to the conclusion that the disallowance of expenses for want of details and evidences required and accordingly directed the AO to disallow 25%.
The facts remains same for this assessment year also. The entire sum received by the assessee is towards the same business. When the assessee has received income, it must incur expenditure also. However, it could not prove the genuineness to the satisfaction. In the circumstances, a reasonable disallowance could be made unless otherwise there is a finding that the assessee has not rendered any service at all. There is no such finding. In the facts and circumstances, we deem it fit as held in earlier years, that a disallowance of 25% of the assessee’s claim would meet the ends of justice and accordingly we sustain the disallowance to the extent of 25% of the claim of Rs. 46,58,000/-. To this extent, the assessee’s appeal is partly allowed.
In the result, the assessee’s appeal is treated as partly allowed.
Order pronounced on Thursday, the 27th day of September, 2018 at Chennai.