Shree Baidyanath Ayurved Bhawan Pvt Ltd, Kolkata V. Addl C.I.T Rg - 12,kolkata, Kolkata

ITA 1225/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4976 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 26-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2013
• Court: TRIBUNAL
• Department Lawyers: NILOY BARAN SOM
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI M. BALAGANES H, AM] I.T.A NO.1225/KOL/2013 ASSESSMENT YEAR: 2006-07 SHREE BAIDYANATH AYURVED BHAWAN PVT. LTD. VS. ASS TT. COMMISSIONER OF INCOME-TAX, (PAN: AAECS5408D) RANGE-12, KOLKATA. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 26.04.2016 DATE OF PRONOUNCEMENT: 29.04.2016 FOR THE APPELLANT: SHRI NAVIN TAPARIA, COMPANY SE CRETARY FOR THE RESPONDENT: SHRI NILOY BARAN SOM, JCIT , SR. DR ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XII, KOLKATA VIDE APPEAL NO. 212/XII/R-12/08-09 DATED 15.03.2013. ASSESSMENT WA S FRAMED BY ADDL. CIT CIRCLE-12, KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 31.12. 2008. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS A GAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF TELEPHONE EXPENSES AT RS.6.20 LACS. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.2: 2. THAT LD. CIT(A)-XII, KOL FAILED TO UNDERSTAND THE CIRCUMSTANCES OF THE FACT AND WAS WRONG AND UNJUSTIFIED IN HIS APPROACH FOR CONFIRMING THE DISA LLOWANCE OF FOREIGN TRAVELING EXPENSES TO THE EXTENT OF RS.6,20,000/- AS THE SAME WAS BEING DISAL LOWED BY ADDL CIT RANGE-12, KOL WHICH HAS BEEN ALLOWED BY HIS PREDECESSOR IN EARLIER YEARS. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO HAS MADE DISALLOWANCE AS THE AS SESSEE COULD NOT FILE ANY DETAIL OR COULD NOT PROVE THESE EXPENSES THAT THE SAME ARE RELATABLE TO ASSESSEES BUSINESS. ACCORDING TO AO, THE FOREIGN TRAVELLING EXPENSES HAS BEEN INCURRED FOR T HE FAMILY MEMBERS OF THE DIRECTORS OF THE ASSESSEE COMPANY. BEFORE CIT(A) ALSO ASSESSEE COULD NOT SUBMIT ANY THING. NOW BEFORE US IN ASSESSEES PAPER BOOK ASSESSEE HAS FILED DETAILS WH ICH WERE NOT AVAILABLE BEFORE THE LOWER AUTHORITIES AND EVEN THE ASSESSEE IS UNABLE TO PROV E THE BUSINESS NEXUS WITH THIS FOREIGN TRAVEL BY ASSESSEE OR ITS FAMILY MEMBERS. IN THE ABSENCE OF THIS, WE FEEL THAT THIS ISSUE NEEDS REEXAMINATION AT THE LEVEL OF THE A.O. THE ASSESSE E IS FREE TO FILE EVIDENCE IN SUPPORT OF ITS 2 ITA NO.1225/KOL/2013 SHREE BAIDYANATH AYURVED BHAWAN P. LTD. A Y 2006-07 CLAIM FOR FOREIGN TRAVEL EXPENSES AND ALSO PROVED T HE BUSINESS NEXUS SO THAT THE AO CAN ADJUDICATION PROPERLY. IN TERM OF THE ABOVE, THIS ISSUE IS SET ASIDE TO THE FILE OF THE AO AND IS ALLOWED FOR STATISTICAL PURPOSES. 4. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) IN DISALLOWING THE EXPENSES TO THE EXTENT OF RS.1,30,905/-. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.3: THAT THE LD. CIT(A)-X,KOL FAILED TO ANALYZE THE NA TURE OF THE EXPENSES INCURRED UNDER THE HEAD MISCELLANEOUS EXPENSES AND WAS NOT JUSTIFIED IN DIS ALLOWING THE EXPENSES TO THE EXTENT OF RS.1,30,905/- WHICH HAS BEEN ALLOWED BY HIS PREDECE SSOR IN EARLIER YEARS. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO HAS DISALLOWED THE MISCELLANEOU S EXPENSES FOR THE REASON THAT THE EXPENSES ARE NOT RELATABLE TO ASSESSEES BUSINESS ACTIVITIES . LD. AR SUBMITTED THAT THE EXPENSES HAD BEEN INCURRED FOR OPERATING FIVE BRANCHES ON ACCOUNT OF PUJA EXPENSES, BAKSISH AND ENTERTAINMENT EXPENSES WHICH IS ESSENTIAL FOR BUSINESS OPERATION OF THE BRANCHES. CIT(A) IN ABSENCE OF COMPLETE DETAILS RESTRICTED THE MISC. EXPENSES TO R S. 2 LACS AND DISALLOWED THE REMAINING AMOUNT I.E. RS.1,30,905/-. WE FIND THAT THE CIT(A) RESTRI CTED THE MISC. EXPENSES TO RS. 2 LACS FOR WANT OF DETAILS. BUT HE OBSERVED THAT THE MISC. EXPENSES ARE INHABITABLE FOR THE RUNNING OF ANY BUSINESS ORGANIZATION. HENCE, IN THE INTEREST OF J USTICE, WE RESTRICT THE DISALLOWANCE AT 20% OF THE ADDITION OF RS.3,30,905/-, WHICH COMES TO RS. 6 6,180/- THIS GROUND OF APPEAL OF ASSESSEE IS PARTLY ALLOWED. 6. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) IN DISALLOWING THE DIRECTORS CLUB FEES TO THE EXTENT OF RS.80,129/-. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.4: 4. THAT LD. CIT(A)-XII, KOL WAS ALSO IRRATIONAL I N HIS APPROACH FOR DISALLOWING THE DIRECTORS CLUB FEES TO THE EXTENT OF RS.80,129/- WHICH HAS BEEN AL LOWED BY HIS PREDECESSOR IN EARLIER YEARS. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO HAS DISALLOWED THE DIRECTORS CL UB EXPENSES FOR THE REASON THAT THE EXPENSES ARE PURELY FOR PERSONAL USE OF THE DIRECTORS. LD. AR SUBMITTED THAT THE EXPENSES HAD BEEN INCURRED FOR ENTERTAINING THE CUSTOMERS AND DEVELOP AWARENESS ABOUT COMPANYS PRODUCTS. CIT(A) RESTRICTED THE DISALLOWANCE TO RS.90,000/- B Y OBSERVING THAT THE EXPENSES ON CLUBS FOR BUSINESS PROMOTION CANNOT BE RULED OUT. WE FIND TH AT CIT(A) HAS ACKNOWLEDGED THAT THE EXPENSES ON CLUBS FOR BUSINESS PROMOTION CANNOT BE RULED OUT BUT WITHOUT ANY BASIS HE RESTRICTED THE DISALLOWANCE TO RS.90,000/-. IN EARLIER YEARS ALSO THE EXPENSES WERE ALLOWED. HENCE, WE 3 ITA NO.1225/KOL/2013 SHREE BAIDYANATH AYURVED BHAWAN P. LTD. A Y 2006-07 REVERSE THE ORDER OF CIT(A) AND DELETE THE ADDITION OF RS.90,000/- AS CONFIRMED BY CIT(A). THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED. 8. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.04.2016 SD/- SD/- (M. BALAGANESH) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29TH APRIL, 2016 JD. (SR. P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHREE BAIDYANATH AYURVED BHAWAN PVT. LT D. 1, GUPTA LANE, KOLKATA-700 006. 2. RESPONDENT ACIT, RANGE-12, KOLKATA. 3. CIT(A) , KOLKATA 4. CIT , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .