DANI SHARES & STOCK P.LTD,MUMBAI vs. ITO 4(1)(2), NAVI MUMBAI

We heard the parties and perused the record. The assessee company is a member of BSE, engaged in the business of share trading, broking and investments. The first issue relates to the disallowance made

The Ld A.R submitted that the assessee is a company and hence the question of personal expenses does not arise in case of companies. In this regard, the assessee placed reliance on the decisions reported in 86 ITD 135(TM) and 135 ITD 270. However, we notice that the assessee has admitted that 10% of foreign travel expenses as related to the personal expenses of the directors, meaning thereby, the expenses to that extent could not be considered as having laid out for the purposes of business. Hence, we are of the view that the Ld CIT(A) was justified in sustaining the disallowance to the extent of 10% as admitted by the assessee.

The next issue relates to the disallowance of medical expenses incurred on the father of the director of the assessee company. The AO disallowed the same and the Ld CIT(A) has also confirmed the same. It was contended that the impugned expenses should be considered as having incurred wholly and exclusively for the purposes of business of the assessee company, since the father of the director has introduced many clients through whom the assessee has earned good amount of brokerage income. He further submitted that the assessee company has not paid any commission income to the father of the director and it has compensated him by undertaking to bear the medical expenses. The Ld A.R also invited our attention to pages 149-150 of the paper book, wherein

On the contrary, the Ld D.R submitted that the father of the director is neither a director nor employee of the assessee company. Further the claim of the assessee that the father of the director has introduced many clients was also not substantiated. Accordingly the Ld D.R submitted that the Ld CIT(A) was justified in confirming the disallowance.

Having heard rival contentions on this issue, we are of the view that there is no merit in the contentions of the assessee. It is an admitted fact that the father of the director is neither a director nor an employee of the assessee company. The ld A.R also admitted that the service agreement entered between the assessee and the director does not provide for incurring of medical expenses of the father of the director. Hence, legally there is no obligation on the part of the assessee to incur the impugned medical expenses. The claim of the assessee that the father of the director has introduced many clients was also not substantiated with documentary evidences. Under these set of facts, we are of the view that the Ld CIT(A) was justified in confirming the disallowance by holding that the same was not incurred wholly and exclusively for the purposes of business.

In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 3rd,Dec,2015. (संदीप गोसधई/SANDEEP GOSAIN) (बी.आर.बधस्करि/ B.R.BASKARAN) न्यधनयक सदस्य/Judicial Member ऱेखध सदस्य /Accountant Member मुंबई Mumbai; ददनांक Dated.. 3rd , Dec,2015 व.नि.स./ SRL, Sr. PS

DR, ITAT, Mumbai concerned 6. गार्ड पाईर / Guard file. आदेशानुसाय/ BY ORDER,सहामक ऩंजीकाय (Asstt.