Apr 112021
 

Facts of the case:

The assessee in a development office of LIC. The issue that arises here is – whether the incentive bonus received by DO-LIC is a salary income. If so, whether amount so received by him is entitled to a separate deduction?

Whether 30 periods of incentive bonus were to be excluded from the definition of ’emoluments’ under section 17?

Whether incentive bonus being salary, the assessee was entitled to any deduction excess/different from standard deduction allowable under section 16(1)?

Analysis of fact:

Whether any expenditure is allowable in the computation of income or any receipt has to be added to income only after providing for the expenditure is a matter to be found in the statute, that is, the income-tax Act. The scheme of the Act is compartmentalization of income under various heads and computation of the taxable portion strictly in accordance with the formula of deductions, rebates, and allowances provided therein.

The first step in this regard is to identify the head under which the income is assessable and Deductions and allowances are specific for each head of income.

The definition of “salary” under section 15 of the Income-tax Act, 1961, is so wide and is only an inclusive one taking in all receipts from the employer in the form of wages, commission, bonus, profits in lieu of or into the employee towards consideration for services rendered in the course of employment comes within the description of “salary” which includes perquisites as well. The definition of salary as provided under section 15 is reproduced below:

  1. The following income shall be chargeable to income-tax under the head “Salaries”—

(a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not;

(b) any salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer though not due or before it became due to him;

(c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year.

Explanation 1.—For the removal of doubts, it is hereby declared that where any salary paid in advance is included in the total income of any person for any previous year it shall not be included again in the total income of the person when the salary becomes due.

Explanation 2.—Any salary, bonus, commission, or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as “salary” for the purposes of this section.

  1. For the purposes of sections 15and 16 and of this section,—

(1) “salary” includes—

(i) wages;

(ii) any annuity or pension;

(iii) any gratuity;

(iv) any fees, commissions, perquisites, or profits in lieu of or in addition to any salary or wages;

(v) any advance of salary;

(a) any payment received by an employee in respect of any period of leave not availed of by him;

(vi) the annual accretion to the balance at the credit of an employee participating in a recognized provident fund, to the extent to which it is chargeable to tax under rule 6 of Part A of the Fourth Schedule;

(vii) the aggregate of all sums that are comprised in the transferred balance as referred to in sub-rule (2) of rule 11 of Part A of the Fourth Schedule of an employee participating in a recognized provident fund, to the extent to which it is chargeable to tax under sub-rule (4) thereof; and

(viii) the contribution made by the Central Government or any other employer in the previous year, to the account of an employee under a pension scheme, referred to in section 80CCD;

 

Meaning of bonus to DO-LIC:

The incentive bonus is a percentage of the premium received by the LIC of India for the business canvassed through the Development Officers,

It is not the reimbursement of any expenditure and is not even linked to expenditure, if any, incurred by the Development Officers.

Further, in cases where the remuneration otherwise receivable by the Development Officers is in excess of 20 percent of the net premium, then the Development Officer is not entitled to any incentive bonus.

Conclusion:

It is an additional payment and is nothing but a salary coming within the meaning of section 15 of the Act and the Development Officer is not entitled to any deduction over and above the standard deduction.

Apr 082021
 

Computation of salary income of a Czech national employed with Skoda Auto AS, a company incorporated in Czechoslovakia and is currently under deputation to Skoda Auto India (P.) Ltd:

Income tax return filed on : 31-7-2006,

Basic Salary:

Bonus:

Total Salary:                                                 

Rs. 47,31,650

Rs. 8,81,760

Rs. 56,13,410

Deductions:

  • Hypothetical-tax : 20,21,281
  • Social security charges: 9,23,498
Net Salary: Rs. 26,68,631
Taxable allowances:

Taxable perquisite:

Rs. 17,74,558

Rs. 25,79,856

Taxable income under the head salary: Rs. 70,23,050

The explanation for deduction of social security charges: As regards the social security contribution, it was explained that Skoda a.s. has made a contribution to the social security plan for the assessee in the home country.

It is admitted position that domestic law of the Czech Republic lays down a compulsion whereby all citizens of the Czech Republic are required to contribute to the social security plan, regardless of the fact whether they are working in the Czech Republic or any other place.

 

There is a thin diving line between diversion of income and application of income as explained below:

Diversion of income: Income is received by a person other than the person who is entitled to it. The recipient, later on, diverts the income under a pre-existing title to the person who is actually entitled to it. It is the diversion of income by overriding title.

In such cases, income is not taxable in the hands of the person who first receives it. The tax is payable by the person to whom income is diverted by overriding title.

 

Application of income: Income is received by the person who is actually entitled to it. He is made chargeable to tax.

 

In order to decide whether a particular payment is a diversion of income or application of income, it has to be seen whether the disbursement of income is a result of the fulfillment of an obligation on him or whether income has been applied to discharge an obligation?

 

In the first case income is not taxable in the hands of the assessee but in the latter case same consequences to law not follow and income is taxable in the hands of the assessee recipient.

 

Analysis of present case and conclusion:

In the above case, the assessee had no discretion in the matter of social security charges contributions and the assessee does not have any enforceable right over it.

Also, no benefits accrued to the assessee, under this social security plan, in the relevant financial year.

Thus the payment is not taxable as the employee does not have a present enforceable vested right in the contribution.

Also, in the case of Gallotti Raoul v. Asstt. CIT, it was highlighted that only net income was chargeable to tax after adjustment of the French social security charges as was the assessee’s case.

Thus, the facts of this case show that the amount to the extent of the social security plan never reaches the assessee as his income, and, therefore not taxable.

Also, the non-existence of provision for deduction either under section 16 of the Income-tax Act or in the tax treaty between India and the appellant’s home country is immaterial in this case.

Apr 032021
 

Computation of salary income of a Czech national employed with Skoda Auto AS, a company incorporated in Czechoslovakia and is currently under deputation to Skoda Auto India (P.) Ltd:

Income tax return filed on : 31-7-2006,

Basic Salary: Rs. 47,31,650
Bonus: Rs. 8,81,760
Total Salary: Rs. 56,13,410

Deductions:

  • Hypothetical-tax : 20,21,281
  • Social security charges: 9,23,498
Net Salary: Rs. 26,68,631
Taxable allowances:

Taxable perquisite:

Rs. 17,74,558

Rs. 25,79,856

Taxable income under the head salary: Rs. 70,23,050

 

Meaning of the term tax equalization policy and hypothetical tax:

This deduction on account of hypothetical-tax liability is made under tax equalization policy, which, in substance, restricts the tax liability of an employee in India to the tax liability which the employee would have incurred in their home country. For example:

Particulars Tax liability which the employee would have incurred in his home country,i.e Czech republic in the present case Tax liability of an employee in India Impact analysis
Tax rate 20 percent of salary income 30 percent of salary Actual tax liability paid by the employer company. (it is the employee tax bill is paid by the employer and same will be taxable under the head salary income as a prerequisite of employee)
Whether tax equalization policy applicable Yes As tax rate in the country of employment is more.
Tax liability to be borne by the employer 10 percent of salary

(Being 30% tax in India Less 20% tax in home country)

This is the tax liability of employer company under the term of employment and also paid employer company and hence, not a prerequisite income of the assessee employee.
Tax liability to be paid to employee assessee 20 percent of salary income 20 percent of salary income Hypothetical tax bill under the tax equalization policy of the employer company and reimbursed by an employee to the employer under the term of employment. Thus, income to this extent never accrue to an employee but received by him as an employer has already paid taxes at increased rates. Thus, this amount needs to be deducted while computing a taxable perquisite.
The net effect of the policy tax equalization tax equalization Objective achieve

 

Thus, what is deducted on account of hypothetical-tax is not a reduction of basic salary, but it is only restricting the tax liability of the employee as borne by the employer.

 

When a deduction to be made from the salary on account of hypothetical-tax, whether this deduction to be allowed while computing the basic salary or is it to be allowed at the stage of computing perquisite of tax on the salary being borne by the employer?

 

The hypothetical-tax liability thus only reduces the tax prerequisite of the employee and not his income. The deduction, therefore, should be made at the stage of computing the tax prerequisite and not the basic salary.

 

The view, that hypothetical-tax is not one of the three deductions permissible under section 16, and, accordingly, the deduction cannot be granted on account of hypothetical-tax from the basic salary is wrong as the hypothetical tax is not a tax liability and thus not an income of the assessee employee.

 

The explanation for deduction of hypothetical tax: This deduction was on account of hypothetical-tax under tax equalization policy and, in accordance with Tribunal’s decision in the case of Jaidev H. Raja v. Dy. CIT [IT Appeal No. 2021 (Mum.) of 1998], taxable base salary is to be reduced by the amount of hypothetical-tax.

 

In the case of Jaydev H. Raja (supra), as per the tax equalization policy framed by the employer company i.e., Coca Cola India Inc., employees were guaranteed a net of tax salary and the company was to bear all actual taxes imposed on the employee’s assignment income. The employees had to reimburse the company that part of the total tax liability which he would have paid had if he worked in Atlanta.

 

Thus, the deduction on account of hypothetical-tax is justified because the liability of the employer will be restricted only to the extent of additional liability over and above what would have arisen had the appellant been in the Czech Republic. Therefore, the amount of Rs. 20,21,281. which has been reduced as hypothetical-tax, is not accrued to the appellant at all and the same is not taxable.

Apr 022021
 
The Bihar Minimum wages have been revised from 1st Apr 2021 to 30th Sep-2021
SOURCES: PRAKASH CONSULTANCY SERVICES
Mar 302021
 
Total rental income

Standard Deduction @ 30%

Interest on borrowed capital

Rs 9,00,000/-

Rs 2,70,000/-

Rs 21,62,120/-

Loss under the head House Property Rs 15,32,120/-

 

Details of rent income and issue involved: The above rent was, on the basis of a field inquiry by the Assessing Officer (AO), found to be from the assessee’s major son, Roman Pathan, and major daughter, Neha Pathan, residing thereat along with the assessee’s other family members. Nobody would, charge rent (for residence) from his own son and daughter, particularly considering that both are unmarried and living together with their family at its’ self-owned abode. The arrangement was therefore regarded merely as a tax-reducing device adopted by the assessee, liable to be ignored. Is this sufficient ground to ignore the rental income and treat the house property as a self-occupied property, and restrict the claim of interest u/s. 24(b) to Rs. 1,50,000?

 

Facts to be considered:

The arrangement is highly unusual, particularly considering that the rent is in respect of a self-owned property (i.e., for which no rent is being paid), which constituted the family’s residence, with, further, the assessee’s son and daughter being unmarried. That, however, is not conclusive of the matter.

Being a private arrangement, not involving any third party, not informing the cooperative housing society may also not be of much consequence.

However, due to its unusual nature, it raises a doubt about the genuineness of the arrangement and needs a further investigation of the matter with respect to:

  • What is the total area, as well as its composition/profile?
  • Quantum of rent received per se the proportionate area leased out?
  • How many family members, besides the assessee (the owner) and the two tenants, are residing thereat?
  • Has the area let been specified, allowing private space (a separate bedroom each) to son and daughter,
  • Who would, in any case, be also provided access to or user of the common area – specified or not so in the agreement/s, kitchen, balcony, living area, bathrooms, etc.
  • How has the rent been received, e., in cash or through bank and, further, been sourced, i.e., whether from the assessee (or any other family member) or from the capital/income of the tenants.
  • If the arrangement was a subsisting/continuing one or confined to a year or two, strongly suggestive of, in that case, a solely tax-motivated exercise?

 

In the instant case, the assessee’s major son and daughter are financially independent (or substantially so), with independent incomes, sharing the interest burden of their common residence with their father. And, as such, instead of transfer of funds to him per se, have regarded, by mutual agreements, the same as rent, as that would, apart from meeting the interest burden to that extent, also allow tax saving to the assessee-father.

 

How to claim an interest in such case u/s 24 of income tax act treating the same as against both a self-occupied and a let out property:

The house property, is, in view of the rent agreements, both a self-occupied and a let-out property. The interest claimed (Rs. 21.62 lakhs) is qua the entire property, which therefore cannot be allowed in full against the rental income, which is qua a part of the house property. The assessee’s interest claim therefore cannot be allowed in full and shall have to be suitable proportioned.

For adjusting the above interest amount, in the instant case, in view of the joint residence, be that no area (portion) is specified in the rental agreements. The number of family members living jointly; their living requirements – which may not be uniform; the fair rental value of the property, etc., are some of the parameters which could be considered for the purpose.

 

Conclusion:

Thus, a genuine arrangement cannot be disregarded as the same results or operates to minimize the assessee’s tax liability.

Mar 242021
 

The assessee is in the business of film distribution in the name of M/s Sukrit Pictures. The assessee has paid an amount of Rs.2 crores as Minimum Guarantee Royalty (MGR) and has not deducted TDS. The Assessing Officer held that the payment would fall within the definition of “Royalty” and failure to deduct TDS as per Section 194J of the Income Tax Act, 1961 would attract provisions of Section 40(a)(ia) of the Act.

Whether the amount paid as MGR would attract Section 194J?

The provisions of section 194J of the Act with relation to “Royalty” are as per the Explanation 2 to Clause (vi) of sub-section (1) of section 9 reads as under:

Explanation 2.—For the purposes of this clause, “royalty” means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head “Capital gains”) for—

(i) the transfer of all or any rights (including the granting of a license) in respect of a patent, invention, model, design, secret formula or process or trademark or similar property;
(ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trademark or similar property;
(iii) the use of any patent, invention, model, design, secret formula or process or trademark or similar property;
(iv) the imparting of any information concerning technical, industrial, commercial, or scientific knowledge, experience, or skill;
(iva) the use or right to use any industrial, commercial, or scientific equipment but not including the amounts referred to in section 44BB;]
(v) the transfer of all or any rights (including the granting of a license) in respect of any copyright, literary, artistic or scientific work including films or videotapes for use in connection with television or tapes for use in connection with radio broadcasting, but not including consideration for the sale, distribution or exhibition of cinematographic films; or
(vi) the rendering of any services in connection with the activities referred to in sub-clauses (i) to [(iv), (iva) and] (v).”

What is GMR? – A film distributor pays an amount as Minimum Guarantee Royalty (MGR) for the purchase of theatrical distribution rights. It is worthwhile to note that in such a case, copyright is always with the producer, and the distributor is only given the right to the exhibition of cinematographic films.

Analysis of facts:

Clause (v) of Explanation 2 to section 9(1) consists of two different transactions as given below:

Inclusive Part Non – Inclusive part
Transfer of all or any rights (including the granting of a license) in respect of any:

1.      copyright,

2.      literary,

3.      artistic or

4.      scientific work including

5.      films or videotapes for use in connection with television or

6.      tapes for use in connection with radio broadcasting.

Consideration for the sale distribution or exhibition of cinematographic films

 

It is wrong to hold that what the assessee purchased is copyrights and hence liable to TDS. In fact, the copyrights are always with the producer. The distributor is only given the right exhibition of cinematographic films. Hence, such transactions do not attract the provisions of TDS.

Moreover, the minimum guarantee amount which is paid by the distributor for acquiring the exhibition rights of a movie is a fixed expenditure for the distributor that is paid to producers irrespective of the fact whether the film generates a profit or incurs losses. Hence, the payments made by the assessee do not fall under the term “Royalty” and do not attract the provisions of TDS.

Hence, TDS is not liable to deduct on MGR.

Mar 232021
 

The Government of Madhya Pradesh has issued the Draft (Madhya) Social Security Code Rules, 2006 in the suppression of the following Rules:

• Madhya Pradesh Employees Insurance Court Rules, 1963.

• Madhya Pradesh Employees State Insurance (Medical Benefits Services System) Rules, 1959.

• Madhya Pradesh Supplies to the Hospitals established under the scheme of employees, estate insurance rules, 1981.

• Madhya Pradesh workmen’s compensation rules, 1962.

• Madhya Pradesh workmen’s compensation (Occupational diseases) rules, 1963.

• Madhya Pradesh maternity benefit rules, 1965.

• Payment of Gratuity (Madhya Pradesh) Rules, 1973

• Madhya Pradesh Building and other construction workers (regulation of employment and conditions of service) rule, 2002.

The following are the objectives:

• The Draft Rules provide for the registration of establishments required to pay provident funds, employees’ insurance benefits to workers, payment of various benefits such as insurance, gratuity, and maternity benefits.

• The Draft Rules also provide for Aadhaar-based registration of construction workers, unorganized workers, and gig and platform workers. Migrant construction workers will be entitled to benefits in the state where they are working.

•• The Draft Rules provide that there shall be a crèche facility in every establishment with 50 or more women employees. Further, it provides detailed procedures for the application and payment of gratuity.

All persons likely to be affected thereby and the notice is hereby given that the said draft rules will be taken into consideration after the expiry of a period of 45 days. Objections and suggestions if any may be addressed to the labor commissioner of Madhya Pradesh at dslabourmp@mp.gov.in and lcmpwelfare@mp.gov.in.

Notification:- Madhya Pradesh Social Security Code Rules 2020

 

SOURCES: PRAKASH CONSULTANCY SERVICES

Mar 222021
 

An addition of Rs. 11 lakhs made by the Assessing Officer as deemed dividend under section 2(22)(e ) of the Act. However, the assessee has challenged the sustenance of the addition of Rs. 4,55,250 as deemed dividend under section 2(22)( e) in respect of loans received from the following companies :

(a) Taneja Builders Pvt. Ltd. (TBPL)

(Holding more than 50% share capital & Director)

Rs. 75,750
(b) Panchsheel Properties Pvt. Ltd. (PPPL)

(Director of the company)

Rs. 19,500
(c) Tera Construction Pvt. Ltd. (TCPL)

(Holding more than 52.8% share capital)

Rs. 3,60,000
Rs. 4,55,250

Deemed dividend under income tax act:

Explanation 2 to section 2(22) accumulated profits shall always include all profits of the company to date of payment of dividend and cannot merely be taken as accumulated profits on the last date of previous accounting year as business profits earned by company accrues from day to day and not only at end of the year when accounts are finalized

Therefore, once the amount is advanced to extent of which the company possesses accumulated profits, on the date of advance itself it becomes income in form of deemed dividend under section 2(22)(e).

The provision of section 2(22)( e) and Explanation 2 thereto are extracted herein:—

“Section 2(22)(e): Any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) [made after 31-5-1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares not being shares entitled to a fixed rate of a dividend of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten percent of the voting power or to any concern in which such shareholder is a member or a partner and in which he has a substantial interest (hereafter in this clause referred to as the ‘said concern’)] or any payment by any such company on behalf or for the individual benefit, of any such shareholder, to the extent to which the company, in either case, possesses accumulated profits;

** ** **

Explanation 2.—The expression ‘accumulated profits’ in sub-clauses (a), (b), (d ), and (e), shall include all profits of the company up to the date of distribution or payment referred to in those sub-clauses, and in sub-clause (c) shall include all profits of the company up to the date of liquidation, [but shall not, where the liquidation is consequent on the compulsory acquisition of its undertaking by the Government or a corporation owned or controlled by the Government under any law for the time being in force, include any profits of the company prior to three successive previous years immediately preceding the previous year in which such acquisition took place].”  

 

Analysis and conclusion:

The assessee was having a substantial shareholding in three companies, namely, ‘TBL’, ‘PPPL’, and ‘TCPL’. He had taken advances from these three companies.

Whether amount taken from the company shall be treated as advances taken for the business of company or loan and/or an advance of an employee?

The assessee was also a director in these three companies and to achieve the objectives of the company, he had to supervise the transaction of sale and purchase of properties and had to make handy payments in substantial sums for acquiring, maintaining, refunding, and selling the properties. He was, therefore, required to keep a sufficient amount in his saving bank account to meet the urgent needs.

If the amount remained unutilized for one or two months, it was deposited back in the companies account through cheque.

On perusal of accounts of the assessee in the books of said company, it nowhere revealed that the amount was advanced for the purpose of the business of the company. The assessee was not able to substantiate such a claim.

An assertion that the amount advanced by the company was for the purpose of the business of the assessee, could not be accepted in the absence of any corroborative material.

Thus, the amount was rightly treated as loans and advances within the meaning of section 2(22)(e ).

 

Also, said companies were possessing accumulated profits on the date of payments of loans/advances so what is the amount assessable as a deemed dividend?

The issue was as to what was the amount assessable as such.

  • The amount assessable could not exceed the accumulated profits possessed by these companies. As per Explanation 2, the expression ‘accumulated profits’ in sub-clause (e) of section 2(22) shall include all profits of the company up to the date of distribution or payment referred to in this clause.
  • The expression ‘accumulated profits’ shall mean profits in the commercial sense and not assessable or taxable profits liable to be taxed as income.
  • It is wrong to merely take the accumulated profits as appearing under the head ‘Reserves and surplus’ as per the accounts of those companies only or their taxable profits.
  • There is no provision that only the cash balance available to the company on the date of payment is to be treated as deemed dividend. Thus, the contention of the assessee that the amounts were invested in real estate and, hence, to be reduced from the accumulated profits, was also wrong.
  • Further, the contention raised by the assessee was that accumulated profits mean the balance on the last date of the previous accounting year and could not include current profits in which advance was made, was also wrong.
  • The contention that closing balance in the loans and advances were to be treated as a deemed dividend and the re-payments received from the loans and advances will reduce the quantum to a deemed dividend. There is no such provision under section 2(22)(e ), which suggests that only the outstanding balance at the end of the year is to be treated as deemed dividend.
  • Once the amount is advanced to the extent of which the company possesses accumulated profits, on the date of advance itself it becomes income in the form of deemed dividend under section 2(22)(e).

 

Hence, said the payment was treated as deemed dividend as per section 2(22)( e), read with Explanation 2 to said section. It was also not in dispute that the assessee was holding substantial shares in the said companies. Thus, the amount of loans and advances to such shareholder to the extent the company was possessing accumulated profits could be assessed as income by way of deemed dividend as per section 2(22)(e ).

Mar 192021
 

For the computation of capital gain under Section 48 of the Income-tax Act, 1961

Expenses claim to have spent on construction and/or renovation of property Rs 1,70,000/-

In support of its claim, the assessee filed a bill of the said amount issued by one ‘S’

However, it was found to be bogus and the signature stated therein was not of ‘S’

Now the question arises:

Whether genuineness of any claim is not proven merely on the production of some paper but only when same is substantiated?

Whether since there was nothing on record to suggest that sum in question was paid by the assessee so as to claim the cost of improvement of property sold is sufficient ground to disallow the said expenses?

Detail facts


The assessee sold his share of house property. While computing capital gains, the assessee claimed to have spent a sum of Rs. 1,70,000 on account of construction/renovation of property sold. In support of its claim, the assessee filed a bill of the said amount issued by one ‘S’. The Assessing Officer while verifying the bill in respect of alleged renovation found that same was bogus. The Assessing Officer, accordingly, disallowed the said amount. The Commissioner (Appeals), however, allowed the claim of the assessee.

Analysis of facts


Liability to prove that expanses claimed to be genuine:

  • The onus was upon the assessee to prove that particular deduction was admissible.
  • It also depends on him to lead evidence in that regard.

Issue No 1 -> The amount was stated to be spent on some civil nature and in the parking area. However, details of such renovation work were not filed.

Issue No 2 -> The bill issued by ‘S’ was found to be bogus. The signature stated therein was not of ‘S’.

Issue No 3 -> The amount stated in the bill was also not paid to date.

Thus, there was nothing on record to suggest that the sum of Rs. 1,70,000 was paid by the assessee so as to claim the cost of improvement of property sold.

It is wrong to say that once the voucher for expenditure was produced, the expenses should have allowed the same. The allowability of the expenditure do not depend upon the mere production of voucher but such voucher should also be authentic and genuine and not merely a piece of paper.

The genuineness of any claim is not proven merely on the production of some paper but only when the same is to be substantiated. The creditworthiness of the claim having not been established rather the ungenuineness nature of the claim having been proved by the Assessing Officer, he was justified in disallowing Rs. 1,70,000 as cost of improvement of the property.

One more revealing fact was that when the expenditure was incurred for the whole of the property, the assessee had claimed the entire expenses as its own expenses, whereas the assessee was only having one-fourth share of the same. This also proved in the approach of the assessee in claiming bogus expenses and, consequently, reduced his tax liability.

Conclusion


Merely because the signature in an invoice is not matching does not amount to the expenditure to be bogus. Whether expenses claim are genuine or is a matter of fact and entire transaction cycle (need of expenses, quotation, billing, receiving, payment and benefits from the expenses), justification of claim and approach of the assessee in making such claim shall be looked after before disallowing the expenses.