SANMAR SPECIALITY CHEMICALS LIMITED,CHENNAI vs. ITO (OSD), CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-15, Chennai, dated 15.02.2016 and pertains to assessment year 2004-05.

Sh. R. Vijayaraghavan, the Ld.counsel for the assessee, submitted that the first issue arises for consideration is disallowance of `9,17,500/- said to be paid to M/s PriceWaterhouseCoopers.

On the contrary, Shri V. Sreenivasan, the Ld. Departmental Representative, submitted that even though the assessee claimed the payment of professional fees paid to M/s PriceWaterhouseCoopers, the assessee could not produce bills for `9,17,500/-, therefore, the Assessing Officer restricted the allowance only to the extent of the amount for which the bills were produced. According to the Ld. D.R., the balance amount of `9,17,500/- was rightly disallowed by the Assessing Officer, therefore, the CIT(Appeals) confirmed the same.

We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the assessee could not produce bills for payment of `9,17,500/- to M/s PriceWaterhouseCoopers. In the absence of any supporting bills to prove the payment of `9,17,500/-, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer.

The next ground of appeal is with regard to disallowance of `10,80,000/- towards payment made to Dawn Consulting.

On the contrary, Shri V. Sreenivasan, the Ld. Departmental Representative, submitted that he is placing reliance on the observation made by the CIT(Appeals).

We have considered the submissions made by the Ld.counsel for the assessee and the Ld. Departmental Representative and perused the relevant material available on record. The Assessing Officer disallowed the claim of the assessee on the ground that expenditure incurred by the assessee was not for earning of income. The Assessing Officer has also found that it can be allowed only in the hands of amalgamated company and not in the hands of assessee-company. M/s Bangalore Genei Pvt. Ltd. was said to be merged with M/s Sanmar Electronics Corporation Ltd. Therefore, even if the claim of the assessee was accepted, it has to be allowed only either in the hands of M/s Bangalore Genei Pvt. Ltd. or in the hands of M/s Sanmar Electronics Corporation Ltd., being the amalgamating company and amalgamated company respectively. It is not known how the expenditure was claimed in the hands of the present assessee. We have also carefully gone through the judgment of the Apex Court in Bombay Dyeing And Manufacturing Co. Ltd. (supra). In the case before the Apex Court, a company, namely, Nawrosjee Wadia Ginning and Pressing Company was amalgamated with assessee-company before assessment. Therefore, the Apex Court found that the expenditure incurred towards professional charges of the solicitors firm for services rendered in connection with amalgamation was in the course of carrying on the assessee’s business and therefore, deductible as revenue expenditure. In the case on our hand, admittedly Bangalore Genei Pvt. Ltd. was said to be merged with M/s Sanmar Electronics Corporation Ltd. Therefore, the expenditure if any has to be claimed in the hands of M/s Sanmar Electronics Corporation Ltd. and not in the hands of the assessee- company. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

In the result, the appeal filed by the assessee is dismissed.