Zuari Management Services Ltd. Vs DCIT (ITAT Panaji)
ITAT Panaji held that disallowance of audit fees is not justifiable since commencement of business operation is recognised under the Companies Act and expenditure was incurred wholly and exclusively for business. Accordingly, appeal allowed to that extent.
Facts- The case of the assessee was selected for scrutiny and an assessment u/s 143(3) of the Act was passed whereby returned NIL income with claim for c/f of BL and LTCL was accepted without variation.
Subsequently, the case of the assessee was subjected to revision u/s 263 of the Act. AO reconsidered the factual material & submission of the appellant a fresh and reframed an assessment u/s 143(3) r.w.s. 263 of the Act wherein three additions were made first time i.e. disallowance of ₹3,56,51,678/- u/s 36(1)(iii) r.w.s. 37(1) of the Act representing interest paid to Holding company on deposits received from it, which in turn advanced to subsidiary without the payment of interest (interest waived off); disallowance of Audit fees/remuneration of ₹82,725/- u/s 37(1) of the Act being not related to business activities of the assessee and a miscellaneous expenses of ₹68,279/- incurred towards ROC Charges, legal & other expenses etc., was disallowed u/s 37(1) for the want of documentary evidence & in absence of corroborative explanation etc.
