Case Law Details
DCIT Vs Max Medical Services ltd. (ITAT Delhi)
The issue under consideration is whether disallowance of the expenses only on the basis that there was reduction in the sharing of the revenue in comparison to the earlier years is justified in law?
ITAT states that the AO made the disallowance of the expenses only on this basis that there was reduction in the sharing of the revenue in comparison to the earlier years, no other reasons has been given. In the instant case, it is also noticed that there was increase in the income earned by the assessee in comparison to the earlier year i.e. 53% more than the preceding year as is evident from the chart furnished by the assessee before the ld. CIT(A), which shows that even after reduction in the percentage of share, the assessee earned more revenue in comparison to the earlier year. In the present case, the AO did not point out any defect in the books of account maintained by the assessee in the regular course of business, it was also not brought on record that any of the expenses was not incurred wholly and exclusively for the purpose of the business. The AO made the disallowance only on the basis of surmises and conjecture which is not tenable in the eyes of law. Moreover, the AO did not bring anything on record to substantiate that by reducing the percentage of share of fee, the assessee was looser in terms of earning the revenue and that the extra expenses were incurred by the assessee in the same ratio in which the revenue sharing was reduced. The contention of the assessee that the reduction in the fees from leasing of equipments/maintenance of the office building was on account of business exigency, had not been rebutted at any stage. ITAT, therefore, settled in favour of the assessee.
FULL TEXT OF THE ITAT JUDGEMENT
This bunch of four appeals filed by Revenue are against orders of CIT(A)-6, Delhi dated 11.01.2017, 14.06.2017, 02.04.2018 and 23.10.2018 relating to assessment years 2012-13 to 2015-16 respectively against the order passed under section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).
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