M/s. Sridevi Dairy Farms (P) Ltd, Bangalore V. DCIT, Bangalore

ITA 1097/BANG/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57527 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: FARAHAT HUSSAI QURESHI CI TII
• Assessee Lawyers: P C CHADAGA ITP
• Keywords: Business income
• Section: 37

Judgement Text

PAGE 1 OF 4 ITA NO.10 97/BANG/2010 1 INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B BEFORE SHRI N K SAINI, ACCOUNANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.1097/BANG/2010 (ASST. YEAR 2007-08) M/S SRIDEVI DAIRY FARMS (P) LTD., NO.356, 24 TH B CROSS, 9 TH MAIN II STAGE, BANASHANKARI, BANGALORE-70. PA NO.AAACCS6259A THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), BANGALORE. (APPELLANT) (RESPONDENT) DATE OF HEARING : 06.03.20 12 DATE OF PRONOUNCEMENT : 09.03.2012 APPELLANT BY : SHRI P C CHADAGA, ITP RESPONDENT BY : SHRI FARAHAT HUSSAI QURESHI, CI T-II O R D E R PER GEORGE GEORGE K : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. CIT (A)-VI, BANGALORE, DATED 22 ND JULY, 2010. THE RELEVANT ASSESSMENT YEAR IS 2007-08. 2. THE SOLITARY ISSUE THAT ARISES FOR OUR CONSIDERA TION IS WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE A SSESSING OFFICERS DISALLOWANCE OF RS.2 LAKHS CLAIMED TOWARDS FESTIVAL EXPENSES. PAGE 2 OF 4 ITA NO.10 97/BANG/2010 2 3. BRIEFLY STATED THE FACTS ARE AS FOLLOWS:- THE ASSESSEE IS A COMPANY. IT IS DERIVING INCOME FROM BUSINESS AS WELL AS FROM AGRICULTURE. FOR THE CONC ERNED ASSESSMENT YEAR, RETURN OF INCOME WAS FILED ON 13.11.2007 DECLA RING NIL INCOME AND INCOME FROM AGRICULTURE AT RS.19,64,687/-. THE ASSESSEE HAD DEBITED TO ITS P&L ACCOUNT A SUM OF RS.3,20,000/- A S FESTIVAL EXPENSES. THE ASSESSING OFFICER WHILE COMPLETING T HE SCRUTINY ASSESSMENT DISALLOWED A SUM OF RS.2 LAKHS ON THE GR OUND THAT THE SAID EXPENDITURE WAS EXCESSIVE. THE RELEVANT OBSERVATIO N OF THE ASSESSING OFFICER READS AS FOLLOWS:- IT IS SEEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAS DEBITED A SUM OF RS.3,20,000/- IN THE PROFIT & LOSS ACCOUNT TOWARDS FESTIVAL EXPENSES. IT WAS STATED BY THE ASSESSEES REPRESENTATIVE THAT THE SAME RELATES TO POOJA EXPENSES ON FESTIVE OCCASIONS. HOWEVER, AS THE EXPENSES CLAIMED ARE EXCESSIVE, AN AMOUNT OF RS.2 LAKHS IS DISALLOWED AND ADDED TO THE INCOME DECLARED. 4. THE ASSESSEE BEING AGGRIEVED CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE DISALLOWANCE OF RS.2 LAKHS. THE CIT( A) WAS OF THE VIEW THAT THE BUSINESS INCOME DISCLOSED WAS NOMINAL COMP ARED TO AGRICULTURAL INCOME AND THE ASSESSING OFFICER WAS R EASONABLE IN ALLOWING THE EXPENSES TO THE TUNE OF RS.1,20,000/-. PAGE 3 OF 4 ITA NO.10 97/BANG/2010 3 6. THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFOR E US. 7. THE LEARNED AR SUBMITTED THAT THE EXPENSES WERE INCURRED FOR CELEBRATION OF FESTIVALS. IT WAS SUBM ITTED THAT ALL THE EMPLOYEES OF THE COMPANY WOULD PARTICIPATE IN THESE C ELEBRATIONS, WHICH IN TURN, WOULD MOTIVATE THE EMPLOYEES TO WORK WITH ZEAL FOR INCREASING THE ASSESSEES PRODUCTION. THIS KIND OF GET-TOGETHER, IT WAS SUBMITTED, WAS ORGANIZED TO BRING ABOUT A FEELI NG OF ONENESS AMONG THE EMPLOYEES AND MANAGEMENT OF THE ASSESSEE C OMPANY. THEREFORE, IT WAS ARGUED THAT THE CLAIM OF THE ASSE SSEE WAS JUSTIFIED ON THE GROUND THAT IT WAS A STAFF WELFARE MEASURE. THE LEARNED AR ALSO RELIED ON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SASSOON J DAVID V CIT (118 ITR 261) AND CONTENDE D THAT IT IS FOR THE ASSESSEE TO DECIDE AS TO WHETHER ANY EXPENDITURE SHOULD BE INCURRED IN THE COURSE OF ITS BUSINESS. 8. THE LEARNED DR ON THE OTHER HAND ARGUED THAT TH E BUSINESS INCOME DISCLOSED BY THE ASSESSEE IS NOMINAL AND IN COMPARISON, AN EXPENSES OF A SUM OF RS.1,20,000/- W AS ALLOWED AS A DEDUCTION UNDER SECTION 37 OF THE ACT, WHICH IS REA SONABLE AND JUSTIFIED ON THE FACTS OF THIS CASE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. THE ASSESSEE HAD DEBITED IN T OTAL A SUM OF RS.3,20,000/- UNDER THE HEAD FESTIVAL EXPENSES. THE DETAILS OF THESE EXPENSES ARE NOT FORTHCOMING EVEN BEFORE US. HOWEVER, WE FIND PAGE 4 OF 4 ITA NO.10 97/BANG/2010 4 THE AUTHORITIES HAVE DISALLOWED A SUM OF RS.2 LAKHS SOLELY FOR THE REASON THAT THE SAID EXPENSES ARE EXCESSIVE. SINCE THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE DETAILS WITH REFERENCE TO THESE EXPENSES, WE FEEL THAT THE INCOME TAX AUTHORITIES A RE JUSTIFIED IN DISALLOWING A PORTION OF THE EXPENSES AS EXCESSIVE. HOWEVER, WE FIND THE DISALLOWANCE TO THE TUNE OF RS.2 LAKHS IS NOT R EASONABLE AND SOME RELIEF IS TO BE GIVEN. IN THE INTEREST OF JUSTICE, WE FEEL THE DISALLOWANCE ON THIS COUNT IS TO BE RESTRICTED TO R S.1,50,000/- INSTEAD OF RS.2 LAKHS MADE BY THE ASSESSING OFFICER AND SUST AINED BY THE CIT(A). ACCORDINGLY, THE ASSESSEE GETS A RELIEF OF RS.50,000/-. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH DAY OF MARCH, 2012. SD/- SD/- (N K SAINI) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER COPY TO:- 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONC ERNED 4. THE CIT(A) CONCERNED 5. THE DR 6. GF MSP/- BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.