Amit Ghose, Kolkata V. DCIT,Cir-22, Kolkata, Kolkata

ITA 1412/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1399 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 01-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift; Depreciation; Business expenditure; Corroborative evidences; Revenue expenditure
• Section: 143(3); 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI ABY. T. VARKEY, JM & SHRI M. BALAGANESH, AM ] I.T.A NO. 1412/KOL/20 16 ASSESSMENT YEAR : 2010-1 1 AMIT GHOSE -VS- DCIT, CIRCLE-22, KOLKATA [PAN: ADXPG 4852 G] (FORMERLY JCIT, RANGE- 22, KOLKATA) (APPELLANT) ( RESPONDENT) FOR THE APPELLANT : SHRI MIRAJ D SHAH, AR FOR THE RESPONDENT : SHRI SAURABH KUMAR, ADDL . CIT SR. DR DATE OF HEARING : 21.02.2018 DATE OF PRONOUNCEMENT : 09.03.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-6, KOLKATA [IN SHORT THE LD CIT (A)] IN APPEAL NO.75/CIT(A)- 6/KOL/13-14 DATED 27.04.2016 AGAINST THE ORDER PAS SED BY THE JCIT, RANGE-55, KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 26.03.2013 FOR THE ASSESSME NT YEAR 2010-11. 2. THE GROUND NO. 1, 8 AND 10 RAISED BY THE ASSESS EE ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 3. DISALLOWANCE OF ADVERTISEMENT AND PUBLICITY EXPENSE S: RS. 202014/- BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESSEE IS A N UROLOGIST SURGEON DOING INDEPENDENT PRACTICE. FOR THE ASSESSMENT YEAR 2010-11, THE ASSE SSEE FILED HIS RETURN OF INCOME ON 30.09.2010 DECLARING TOTAL INCOME OF RS. 43,95,640/ -. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS, AUDITED ACCOUNTS, 2 ITA NO.1412/KOL/2016 AMIT GHOSE A.YR.2010-11 2 CONSOLIDATED PROFIT AND LOSS ACCOUNT ETC. AND THE S AME WERE VERIFIED BY THE LD. AO. THE ASSESSEE RUNS A CLINICAL LABORATORY NAMED THE OXF ORD CLINIC. THE LD. AO OBSERVED THAT THE ASSESSEE HAS DEBITED A SUM OF RS. 202014/- UNDER THE HEAD ADVERTISEMENT AND PUBLICITY. THE LD. AO SOUGHT TO VERIFY THE SAME AND ACCORDINGLY SHOW CAUSED THE ASSESSEE TO PROVE AS TO HOW THE SAID EXPENDITURE WO ULD BE TREATED AS AN EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IN RESPONSE TO THIS, THE ASSESSEE STATED THAT HE HAD PREPARED SEVERAL MEDICA L LITERATURES IN THE FIELD OF UROLOGY AND PUBLICIZED THE SAME IN VARIOUS NEWS PAPERS AND TV CHANNELS. THE LITERATURES ARE MEANT FOR GENERAL AWARENESS SO AS TO PROHIBIT AND C URE THE UROLOGICAL DISEASES. ALL THESE PUBLICATIONS WERE MADE ON BEHALF OF THE CLINI C AND THE CLINIC BEING A PROPRIETARY CONCERN OF THE ASSESSEE, THE PAYMENTS FOR THE SAME WERE MADE BY THE ASSESSEE, THE DETAILS OF THE SAME WERE FURNISHED AS UNDER: THE ASSESSEE SUBMITTED THAT THESE EXPENDITURES WERE INCURRED TO PUBLICIZE MEDICAL MATERIALS WITH A COMMON SENSE APPROACH SO THAT GENE RAL PEOPLE TAKE INTEREST TO THE DISEASE AND SOLUTION THEREON. IT WAS FURTHER SUBMIT TED THAT IT IS A COMMON KNOWLEDGE THAT TV PROGRAMMES IN PRASAR BHARATI LIKE HELLO DO CTOR BABU ARE VERY POPULAR AS IT ALLOWS THE PATIENTS/COMMON MAN TO INTERACT DIRECTLY WITH THE PANEL DOCTORS TO ASK QUESTIONS ABOUT THE DISEASE AS WELL AS PREVENTION T HEREOF. IT WAS FURTHER SUBMITTED THAT 3 ITA NO.1412/KOL/2016 AMIT GHOSE A.YR.2010-11 3 PRASAR BHARATI, BEING A GOVERNMENT ORGANIZATION, WI LL NEITHER ALLOW ANY PROGRAMME ON NATIONAL TELEVISION IN ORDER TO PROMOTE THE BUSINES S OF ANY DOCTOR, NOR RECEIVE ANY PAYMENT FOR ANY SERVICE CONNECTED WITH OFFENCE OR A NY ACT WHICH IS PROHIBITED BY LAW. FURTHER, THE NAME OF THE PUBLICATION AAJKAL SASTHA SUGGESTS THAT THE PUBLICATION IS NOT MEANT FOR ADVERTISEMENT OF ANY DOCTORS BUT A GENERA L DISCUSSION ON HEALTH ISSUES. THE LD. AO DID NOT AGREE TO THE CONTENTION OF THE ASSES SEE AND HELD THAT THE AMOUNT IN THE SUM OF RS. 202014/- IS DISALLOWABLE U/S 37(1) OF TH E ACT AS THE SAID EXPENSES ARE INCURRED IN VIOLATION OF PROVISIONS OF INDIAN MEDIC AL COUNCIL REGULATION ACT, 2002 AND ACCORDINGLY APPLIED THE EXPLANATION TO SECTION 37(1) OF THE ACT. THIS ACTION OF THE LD. AO WAS UPHELD BY THE LD. CIT(A). AGGRIEVED THE ASSESSEE IS APPEAL BEFORE US ON THE FOLLOWING GROUND: 2. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE DISA LLOWANCE OF RS. 2,02,014/- ON ACCOUNT OF ADVERTISEMENT AND PUBLICITY U/S 37(1) OF THE IT ACT, 1961. THE DISALLOWANCE WAS NOT CALLED FOR AND HENCE THE SAME BE REVERSED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THE ASSESSEE HAD MADE PAYMENTS TO PROGRESSIVE PUBLICITY SERVICE TO THE TUNE OF RS. 87,100/- TOWARDS ADVERTISEMENT IN SAPTAHIK BARTAMAN TOWARDS ADDRESSING THE PROBLEM CONNECTED WITH KIDNEY STONE AND PROSTATE GLAND. WE FIND THAT THE ASSESSEE HAS S PENT A SUM OF RS. 7914/- FOR ADVERTISEMENT ON ANANDABAZAR PATRIKA. WE FIND THAT THE ASSESSEE HAD SPENT RS. 11,000/- TOWARDS PUBLICATION ON HEALTH RELATED ISSU ES AND PAYMENT WAS MADE TO SRIJAN ADVERTISEMENT. THE ASSESSEE HAD MADE PAYMENT OF TEL ECAST FEE TO PRASAR BHARATI FOR HELLO DOCTOR BABU FOR RS. 20,000/-. THE ASSESSEE HAS ALSO PAID OF RS. 54,000/- TOWARDS CONCEPT, DESIGN AND SPACE FOR DISPLAY ARTIC LE IN AAJKAL SASTHA WHICH IS A HEALTH MAGAZINE WHEREIN THE GENERAL DISCUSSION IN H EALTH ISSUES WERE RECORDED. IN OTHER WORDS, THE ASSESSEE HAS PARTICIPATED IN DISSE MINATION OF KNOWLEDGE IN THE HEALTH MAGAZINE FOR THE GENERAL WELFARE OF THE PUBLIC AT L ARGE. EVEN THE TELECAST FEE TO PRASAR BHARTI, BEING A GOVERNMENT ORGANIZATION, IS MADE ONLY FOR INFORMING THE GENERAL 4 ITA NO.1412/KOL/2016 AMIT GHOSE A.YR.2010-11 4 PUBLIC AT LARGE ABOUT THE UROLOGICAL DISEASES AND N ECESSARY PREVENTIVE MEASURES TO BE TAKEN BY THE PUBLIC FOR NOT GETTING INVITED WITH TH ESE DISEASES.. WE ARE IN AGREEMENT WITH THE ARGUMENT ADVANCED BY THE LD. AR THAT PRASA R BHARATI, BEING A GOVERNMENT ORGANIZATION, WOULD NOT ALLOW ANY PROGRAMME ON NATI ONAL TELEVISION IN ORDER TO PROMOTE THE BUSINESS OF JUST A SINGLE DOCTOR LIKE A SSESSEE. WE ALSO HOLD THAT PRASAR BHARATI BEING A GOVERNMENT ORGANIZATION WOULD NOT R ECEIVE ANY FEE FOR ANY SERVICE CONNECTED WITH OFFENCE UNDER ANY ACT OR ANY LAW. IN OTHER WORDS, THEY WOULD NOT ENGAGE IN ANY ACTIVITY AND RECEIVE CONSIDERATION FO R THE ACT WHICH IS PROHIBITED BY LAW. WE ARE ALSO INCLINED TO ACCEPT THE ARGUMENT OF THE LD. AR THAT THE ASSESSEE HAD INCURRED EXPENSES TO EXPLAIN BY PUBLICIZING A GENER AL LITERATURE WITH IMAGE AND DIAGRAM OF HUMAN BODY TO MAKE AWARE OF THE UROLOGIC AL DISEASES INCLUDING ITS PREVENTION AND CURE, WHICH CANNOT BE MERELY TREATED AS ADVERTISEMENT OR PUBLICITY EXPENSES. 5. THE LD. AO HAD STATED THAT THE EXPENDITURE INCUR RED TOWARDS ADVERTISEMENT BY THE ASSESSEE IS IN VIOLATION OF PROVISION OF INDIAN MED ICAL COUNCIL REGULATION ACT, 2002 AND THEREBY IS A EXPENDITURE INCURRED FOR COMMITTIN G OFFENCE OR AN ACT WHICH IS PROHIBITED BY LAW. EVEN ASSUMING THAT THE ACT OF TH E ASSESSEE WOULD BE IN VIOLATION OF CODE OF ETHICS AS FORMULATED BY THE MEDICAL COUNCIL OF INDIA, THE SAME, IN OUR CONSIDERED OPINION, WOULD NOT GET COVERED UNDER THE AMBIT OF EXPLANATION TO SECTION 37(1) OF THE ACT, INASMUCH AS THE MEDICAL COUNCIL O F INDIA IS AN INDEPENDENT BODY AND NOT A DEPARTMENT UNDER THE MINISTRY OF HEALTH. THE INDIAN MEDICAL COUNCIL IS HOLDING REGULATORY POWERS ON ITS MEMBERS. THE GUIDELINES IS SUED BY THEM ARE FOR THE PURPOSE OF COMPLIANCE OF THE PROFESSIONAL ETHICS. SUCH GUID ELINES CANNOT BE EQUATED TO ANY LEGAL PROVISION HAVING STATUTORY FORCE/RECOGNITION. IN VIOLATION OF THE SAME, NO CIVIL SUIT IS MAINTAINABLE ON THE PERSON WHO HAS VIOLATED . HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE SAME WOULD NOT FALL UNDER THE AMBIT O F EXPLANATION 1 TO SECTION 37(1) OF THE ACT. THE GENUINENESS OF THE EXPENDITURE INCURRE D BY THE ASSESSEE HAS NOT BEEN 5 ITA NO.1412/KOL/2016 AMIT GHOSE A.YR.2010-11 5 DISPUTED BY THE REVENUE. WE FIND THAT THE INTENTION OF THE ASSESSEE DOCTOR IN THE INSTANT CASE IS APPARENTLY TO PREVENT DISEASE IN FU TURE BY MAKING PUBLIC AWARENESS. SUCH A PROACTIVE MEASURE TAKEN BY THE PERSON LIKE A SSESSEE SHOULD BE RATHER WELCOMED THAN TO CRITICIZE. IN THIS REGARD, IT WOULD BE REL EVANT TO GET INTO THE FOLLOWING CASE LAWS :- A) ARCH FINANCE LTD VS ACIT REPORTED IN (2007) 165 TAX MAN 188 (DELHI) ITAT DELHI D BENCH DATED 10.8.2007. THE HEAD NOTES ARE REPRODUCED BELOW:- SECTION 37(1) OF THE INCOME TAX ACT, 1961- BUSINESS EXPENDITURE ALLOWABILITY OF ASSESSMENT YEAR 2001-02 ASSESSEE, WHICH WAS A STO CK/SHARE BROKER AND WAS A MEMBER OF DELHI STOCK EXCHANGE PAID VARIOUS AMOUNTS AS PENALT Y ON ACCOUNT OF HIS LATE DELIVERY , SHORT DELIVERY, SHORT MARGIN ETC., TO NATIONAL STOC K EXCHANGE AND CLAIMED DEDUCTION OF SAME AS REVENUE EXPENDITURE WHETHER SINCE IMPUGNE D PAYMENTS MADE BY ASSESSEE WERE NOT FOR INFRACTION OF LAW, SAME WERE ALLOWABLE AS R EVENUE EXPENDITURE HELD, YES. B) GOLDCREST CAPITAL MARKETS LTD VS ITO REPORTED IN (2 010) 2 ITR (TRIB.) 355 (MUM) ITAT MUMBAI B BENCH DATED 21.1.2009. THE HEAD NOTE S ARE REPRODUCED BELOW:- SECTION 37(1) OF THE INCOME TAX ACT, 1961- BUSINESS EXPENDITURE ALLOWABILITY OF ASSESSMENT YEARS 2002-03 & 2003-04 FINE PAID BY ASSESSEE STOCK BROKER WHO WAS A MEMBER OF NSE, ON ACCOUNT OF UNFAIR TRADE PRACTICE AND UN-BUSINESS LIKE CONDUCT IS NOT FOR VI OLATION OF LAW AND HENCE, CANNOT BE DISALLOWED. THE MEMBERS OF NSE LTD ARE BOUND THROUGH THE ARTICL ES OF ASSOCIATION TO ABIDE BY THE RULES, REGULATIONS AND BYE-LAWS OF THE NSE LTD. NE VERTHELESS, SUCH RULES, REGULATIONS AND BYE-LAWS CAN BE CONSIDERED AS REGULATIONS FOR CONTR OLLING THE INTERNAL INTER SE OBLIGATIONS AND RIGHTS OF THE MEMBERS OF NSE LTD. THOUGH EVERY MEMBER OF NSE LTD WOULD BE OBLIGED TO ABIDE BY SUCH RULES AND REGULATIONS, A VIOLATION THEREOF CANNOT BE TREATED AS VIOLATION OF A STATUTORY LAW OR RULE. THE FINES AND PENALTIES L EVIED FOR VIOLATION ON ACCOUNT OF UNFAIR TRADING PRACTICE AS SPECIFIED IN 4.6 OF THE NSE RE GULATIONS AND UN-BUSINESS LIKE CONDUCT AS SPECIFIED IN IV(4)(E) OF THE NSE RULES CANNOT BE EQUATED WITH VIOLATION OF A STATUTORY RULE OR LAW. THUS, FINE PAID BY THE ASSESSEE STOCK BROKER WHO WA S A NSE MEMBER, ON ACCOUNT OF UNFAIR TRADE PRACTICE AND UN-BUSINESS LIKE CONDUCT , IS NO T FOR VIOLATION OF LAW AND, HENCE, CANNOT BE DISALLOWED. 6 ITA NO.1412/KOL/2016 AMIT GHOSE A.YR.2010-11 6 C) MASTER CAPITAL SERVICES LTD VS DCIT REPORTED IN (20 08) 23 SOT 60 (CHD.) (URO) ITAT CHANDIGARH A BENCH DATED 26.2.2007. IT WAS HE LD THAT : THE ASESSSEE INCURRED THE EXPENSE IN THE SHAPE OF FINES DURING NORMAL COURSE OF BUSINESS AND THERE WAS NO INFRACTION OF ANY STATUTORY LAW. IN THE TYPE OF BUSINESS OF THE ASSESSEE, IT IS BEYOND THE CONTROL OF SHARE BROKER TO KNOW IN AD VANCE THAT THE TRADING VOLUME WOULD INCREASE BEYOND THE FIXED EXPOSURE LIMIT BECAUSE TR ADING DEPENDS UPON THE MARKET TREND AND ON CERTAIN DATES THERE CAN BE EXTRAORDINARY INC REASE IN TRADING VOLUME. ON THAT INCREASED TRADING VOLUME, THE CONCERNED MEMBER ALSO EARNS INCOME IN THE SHAPE OF COMMISSION, ETC., WHICH IS TAXABLE. SO, THE FINE B Y THE SHARE BROKER WHICH WAS CORRELATED WITH THE INCREASE IN TRADING VOLUME , WHICH CROSS T HE FIXED EXPOSURE LIMIT, COULD NOT BE CONSIDERED AS AN INFRACTION OF LAW, ALTHOUGH IRREGU LARITIES WERE THERE. IN THE INSTANT CASE, FOR THE SAID IRREGULARITIES, THE ASSESSEE SUFFERED AND PAID THE FINE BUT THIS PAYMENT COULD NOT BE TERMED AS PENAL IN NATURE. SIMILARLY, LATE SUBMISSION OF MARGIN CERTIFICATE DUE TO COMPUTER SOFTWARE PROBLEM COULD NOT BE CONSIDERED A S INFRACTION OF LAW AND IF ANY FINE WAS PAID FOR SUCH LATE SUBMISSION, DUE TO UNAVOIDABLE C IRCUMSTANCES IN THE REGULAR COURSE OF BUSINESS THAT COULD NOT ALSO BE TERMED AS PENAL IN NATURE. SIMILARLY, FINE PAID FOR DELAY IN MAKING THE DELIVERIES OF SHARES DUE TO DEFICIENCIES IN THE DOCUMENTS LIKE NON-MATCHING OF SIGNATURES , ET., COULD NOT BE CONSIDERED AS PENAL IN NATURE. IRREGULARITIES OF THAT TYPE COULD NOT BE RULED OUT IN SUCH TYPE OF BUSINESS AND ANY FINE PAID FOR THOSE IRREGULARITIES COULD NOT BE CONSIDERED AS AN INFRACTION OF ANY LAW . SO, THE PAYMENTS MADE BY THE ASSESSEE IN THE REGULAR COURSE OF BUSINESS COULD NO T BE TERMED AS PENAL IN NATURE , PARTICULARLY WHEN THE ASSESSEE DID NOT COMMIT THOSE IRREGULARITIES INTENTIONALLY AND REGULARLY. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, IT WAS TO BE HELD THAT , ALTHOUGH SOME VIOLATIONS OF THE CONDITIONS PRESCRIB ED BY THE NSE WAS THERE, BUT THOSE VIOLATIONS OCCURRED IN THE REGULAR COURSE OF BUSINE SS AD SAME COULD NOT BE CONSIDERED AS INFRACTION OF ANY STATUTORY LAW. SO, THE EXPENSES INCURRED BY THE ASSESSEE IN REGULAR COURSE OF BUSINESS WERE ALLOWABLE. HENCE, THE IMPUGNED OR DERS WERE TO BE SET ASIDE. IN THE RESULT, THE APPEAL WAS TO BE ALLOWED. IN VIEW OF THE AFORESAID FINDINGS IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECE DENTS, WE HOLD THAT THE EXPENDITURE INCURRED IN THE SUM OF RS. 202014/- DESERVES TO BE ALLOWED AS BUSINESS EXPENDITURE OF THE ASSESSEE U/S 37(1) OF THE ACT. 7 ITA NO.1412/KOL/2016 AMIT GHOSE A.YR.2010-11 7 6. DISALLOWANCE OF PURCHASE OF GIFT ITEMS INCURRED THR OUGH CREDIT CARD:- RS. 90850/- THE ASSESSEE SUBMITTED THAT HE HAD INCURRED EXPENSE S OF RS. 90850/- FOR PURCHASE OF GIFT ITEMS FOR SENIORS AND OTHER DOCTORS WITH WHOM THE ASSESSEE HAD TO INTERACT TO DISCUSS LATEST TECHNIQUES, METHODS ETC WHILE CONDUC TING SURGERIES AND OTHER MEDICAL TREATMENTS. THE PURCHASE OF GIFT ITEMS WERE IN THE FORM OF GOLD ORNAMENTS, LEATHER GOODS, DRESS MATERIALS, SUITCASE AND OTHER UTILITY ITEMS ETC. THE ASSESSEE EXPLAINED THAT THE HE HAD ORGANIZED VARIOUS SEMINARS AND IN THE SA ID SEMINARS SEVERAL SENIOR DOCTORS AND FELLOW DOCTORS IN THE PROFESSION HAD PARTICIPAT ED AND HAD SHARED THEIR KNOWLEDGE AND WISDOM, TO WHOM GIFTS WERE GIVEN BY THE ASSESS EE IN THE PLACE OF FEES PAYABLE TO THEM FOR SHARING THEIR KNOWLEDGE. ACCORDINGLY, THE ASSESSEE ALSO EXPLAINED THAT THE PROFESSION REQUIRES CONTINUOUS UPDATION OF KNOWLEDG E AND LEARNING MODERN TECHNOLOGY. FOR THIS PURPOSE, THE MEETING WAS ARRA NGED WHEREIN THE DOCTORS WORKING ON THE SAME FIELD WERE INVITED. AS THE PARTICIPANTS ARE SUPER SPECIALISTS AND ENJOYED HIGH STATUS IN THE SOCIETY, IT WOULD BE DEMEANING O N THE PART OF THE ASSESSEE TO PAY FEES TO THEM. ACCORDINGLY, THE ASSESSEE IN LIEU OF FEES, THOUGHT IT FIT TO PROVIDE THEM CERTAIN GIFT ITEMS AS A TOKEN OF HIS LOVE AND AFFECTION AND AS A MATTER OF APPRECIABLE GESTURE, PRESENTED CERTAIN GIFT ITEMS COMPRISING OF VARIOUS GIFT ITEMS OF RS. 90850/- TO VARIOUS PERSONS. THE LD. AO HOWEVER HELD THAT THESE EXPENSE S ARE NOTHING BUT THE PERSONAL EXPENSES OF THE ASSESSEE AS THE SAME WERE INCURRED THROUGH CREDIT CARD OF THE ASSESSEE. ACCORDINGLY HE DISMISSED THE SAME AS NOT MEANT FOR BUSINESS PURPOSES, WHICH WAS UPHELD BY THE LD. CIT(A). AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND: 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN UPHOLDING THE DISAL LOWANCE OF RS. 90,850/- ON ACCOUNT OF EXPENSES INCURRED BY CREDIT CARD U/S 37( 1) OF THE IT ACT, 1961. THE DISALLOWANCE WAS NOT CALLED FOR AND HENCE THE SAME BE REVERSED. 8 ITA NO.1412/KOL/2016 AMIT GHOSE A.YR.2010-11 8 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THE PURCHASE OF GIFT ITEMS WERE INCURRED FOR HANDING OVER TO VARIOUS SUPER SPECIALI STS WHO HAD PARTICIPATED IN THE SEMINAR ORGANIZED BY THE ASSESSEE FOR THE PURPOSE OF UPDATION OF KNOWLEDGE THEREON. THIS, IN OUR CONSIDERED OPINION, IS AN EXPENDITURE INCURRED FOR THE PURPOSE OF PROFESSION OF THE ASSESSEE. WE ALSO FIND THAT THE A SSESSEE HAD GIVEN REASONABLE EXPLANATION AS TO WHY HE HAD PRESENTED GIFT ITEMS T O VARIOUS DOCTORS IN LIEU OF PAYMENT OF FEE. THE EXPLANATION GIVEN IS VERY LOGICAL. WE H OLD THAT THE EXPENDITURE IN THE SUM OF RS. 90,850/- WOULD HAVE TO BE ALLOWED AS A DEDUC TION U/S 37 OF THE ACT. ACCORDINGLY, GROUND NO. 3 RAISED BY THE ASSESSEE I S ALLOWED. 8. DISALLOWANCE OF ENTERTAINMENT EXPENSES RS. 11,096 /- THE ASSESSEE INCURRED A SUM OF RS. 11,096/- TOWARDS ENTERTAINING HIS SENIORS WHILE HOLDING THE SEMINAR. THESE EXPENSES WERE INCURRED O NLY TOWARDS DINNER EXPENSES AND THE SAME WERE TREATED AS PERSONAL EXPENDITURE OF TH E ASSESSEE BY THE LD. AO AND ACCORDINGLY DISALLOWED. THIS ACTION OF THE LD. AO W AS UPHELD BY THE LD. CIT(A). AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON TH E FOLLOWING GROUNDS: 4. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE DISA LLOWANCE OF RS. 11,096/- ON ACCOUNT OF ENTERTAINMENT EXPENSES U/S 37(1) OF THE IT ACT, 1961. THE DISALLOWANCE WAS NOT CALLED FOR AND HENCE THE SAME BE REVERSED. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THE ENTERTAINMENT EXPENSES OF RS. 11,096/- INCURRED BY THE ASSESSEE WERE ONLY FOR THE PURPOSE OF DINNER WHILE HOLDING MEETINGS WITH HIS SENIORS IN HOTELS FOR SKILL UPGRA DATION. THIS WOULD BE SQUARELY ALLOWABLE AS BUSINESS EXPENDITURE. IT IS NOT THE CA SE OF THE LD. AO THAT THE SAME ARE NOT SUPPORTED BY ANY BILLS OR VOUCHERS. ACCORDINGLY, TH E SAME IS ALLOWED AS DEDUCTION U/S 37 OF THE ACT AND HENCE THE GROUND NO. 4 RAISED BY THE ASSESSEE IS ALLOWED. 9 ITA NO.1412/KOL/2016 AMIT GHOSE A.YR.2010-11 9 10. DISALLOWANCE OF TRAVELLING EXPENSES- RS. 68,246/- BRIEF FACTS OF THIS ISSUE IS THAT THE LD. AO OBSERV ED THAT THE ASSESSEE HAD INCURRED FOREIGN TRAVEL EXPENSES TO THE TUNE OF RS. 68,246/ -, FOR WHICH DETAILS WERE SOUGHT BY THE LD. AO. THE ASSESSEE REPLIED THAT THE SAID EXPENDIT URE WAS INCURRED FOR ATTENDING MEDICAL CONFERENCE IN LONDON AS WELL AS MEETING DOC TORS AND SURGEONS IN LONDON. THE ASSESSEE ALSO EXPRESSED HIS INABILITY TO PRODUCE TH E EVIDENCES IN SUPPORT OF SUCH TRAVEL TO JUSTIFY THE CLAIM OF DEDUCTION. THE ASSESSEE ALS O STATED THAT HE WAS HIMSELF AT ONE POINT IN TIME WAS PART OF NHS OF U.K. AND ACCORDING LY IS WELL KNOWN TO DOCTORS IN U.K. THE MEDICAL PROFESSION BEING INTANGIBLE AND SKILL B ASED PROFESSION, THE ASSESSEE IN ORDER TO KEEP UPDATED WITH BEST AND LATEST PRACTICE S, HAD TO INTERACT WITH SENIORS AND OTHER DOCTORS AND DISCUSS LATEST METHODS, TECHNIQUE S, DISCOVERIES ETC. THE ENTIRE PAYMENTS WERE MADE BY THE ASSESSEE USING HIS CREDIT CARD WHICH CONTAINS NAME OF THE PLACE IN LONDON. HENCE, THE GENUINENESS OF THE EXPE NDITURE STAND PROVED. THE LD. AO WAS NOT SATISFIED WITH THIS REPLY AND ACCORDINGLY D ISALLOWED THE SAME IN THE ASSESSMENT WHICH WAS UPHELD BY THE LD. CIT(A). AGGRIEVED THE A SSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND: 5. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE DISA LLOWANCE OF RS. 68,246/- ON ACCOUNT OF TRAVEL EXPENSES U/S 37(1) OF THE INCOME TAX ACT, 1961. THE DISALLOWANCE WAS NOT CALLED FOR AND HENCE THE SAME BE REVERSED. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND TH AT THE ASSESSEE HAS ONLY MADE ORAL SUBMISSIONS TO JUSTIFY HIS CLAIM AND HAD NOT PRODUC ED ANY EVIDENCE IN SUPPORT OF HIS CLAIM OF VISITING U.K., LONDON FOR THE PURPOSE OF M EDICAL CONFERENCE AND MEETING SENIOR DOCTORS THEREON IN ORDER TO GET HIMSELF UPDA TED AND IMPROVE HIS SKILL. HENCE, WE HOLD THAT THE REVENUE HAD RIGHTLY DISALLOWED THE SA ID EXPENDITURE IN THE ASSESSMENT. ACCORDINGLY GROUND NO. 5 IS DISMISSED. 10 ITA NO.1412/KOL/2016 AMIT GHOSE A.YR.2010-11 10 12. DISALLOWANCE OF MEETING AND SEMINAR EXPENSES RS. 15,478/- THE LD. AO FROM THE CONSOLIDATED PROFIT AND LOSS AC COUNT FILED BY THE ASSESSEE OBSERVED THAT THE ASSESSEE HAS DEBITED RS. 15,478/- AS MEETI NG AND SEMINAR EXPENSES FROM THE DETAILS SUBMITTED BY THE ASSESSEE, THE LD. AO OBSER VED THAT THESE ARE PAYMENT OF CLUB BILLS I.E CALCUTTA CLUB AND THE BENGAL CLUB. THE ASSESSEE WAS SHOW CAUSED BY THE LD. AO AS TO WHY THE SAME SHOULD NOT BE TREATED AS PERSONAL EXPENSES IN NATURE. IN REPLY, THE ASSESSEE FILED EXPLANATION THAT HE HAD H ELD MEETINGS WITH SENIOR DOCTORS AT CLUBS FOR UPGRADATION OF HIS SKILL AND FROM THE DET AILS FILED, IT COULD BE FOUND THAT THESE ARE ONLY BILLS AND MONTHLY SUBSCRIPTION OF TWO CLUB S IN WHICH HE IS A MEMBER AND ACCORDINGLY THE SAID EXPENDITURES ARE WHOLLY AND EX CLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THE LD. AO HOWEVER DID NO T AGREE WITH THIS VIEW AND PROCEEDED TO DISALLOW THIS SUM OF RS. 15,478/- IN T HE ASSESSMENT WHICH WAS UPHELD BY THE LD. CIT(A). AGGRIEVED THE ASSESSEE IS IN APPEA L BEFORE US ON THE FOLLOWING GROUND: 6. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE DISA LLOWANCE OF RS. 15,478/- ON ACCOUNT OF MEETING & SEMINAR EXPENSES U/S 37(1) OF THE IT ACT, 1961. THE DISALLOWANCE WAS NOT CALLED FOR AND HENCE THE SAME BE REVERSED. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS A MEMBER OF CALCUTTA CLUB AND BENGAL CLUB. FROM THE D ETAILS SUBMITTED BEFORE THE LD. AO, IT WAS FOUND THAT THESE EXPENSES ARE INCURRED T OWARDS MONTHLY SUBSCRIPTION OF CLUB BILLS AND FOR MEAGER PORTION TOWARDS MEETING EXPENS ES OF DOCTORS ON CERTAIN OCCASIONS. IN OUR CONSIDERED OPINION THESE EXPENSES ARE WHOLLY AND EXCLUSIVELY MEANT FOR THE PURPOSE OF BUSINESS AND ARE SQUARELY ALLOWABLE AS D EDUCTION U/S 37(1) OF THE ACT. ACCORDINGLY, GROUND NO. 6 RAISED BY THE ASSESSEE IS ALLOWED. 11 ITA NO.1412/KOL/2016 AMIT GHOSE A.YR.2010-11 11 14. DISALLOWANCE OF CAR REPAIR EXPENSES RS. 1,60,000/ - THE LD. AO, ON GOING THROUGH THE DETAILS OF CAR MAI NTENANCE EXPENSES INCLUDED IN CAR EXPENSES IN THE PROFIT AND LOSS ACCOUNT OF THE ASSE SSEE, OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED SUPPORTING EVIDENCES IN SUPPORT OF EX PENSES CLAIMED FOR THE FOLLOWING PARTIES: ROYAL MOTORS RS. 38,310/- MARUTI LINK RS. 49,330/- BATTERY CENTRE RS. 7,250/- SAMANTA AUTOMOBILES RS. 65,110/- SINCE THE ASSESSEE COULD NOT PRODUCE EVIDENCE IN TH E FORM OF BILLS FOR THE AFORESAID EXPENSES, THE LD. AO PROCEEDED TO DISALLOW THE ENT IRE SUM OF RS. 1,60,000/- AND ADDED THE SAME WITH THE TOTAL INCOME OF THE ASSESSEE, WHI CH WAS UPHELD BY THE LD. CIT(A). AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON TH E FOLLOWING GROUND: 7. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN UPHOLDING THE DISAL LOWANCE OF RS. 1,60,000/- ON ACCOUNT OF CAR REPAIR EXPENSES U/S 37(1) OF THE INC OME TAX ACT, 1961. THE DISALLOWANCE WAS NOT CALLED FOR AND HENCE THE SAME BE REVERSED. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND TH AT THE ASSESSEE IS A DOCTOR BY PROFESSION AND RUNS A CLINIC. IT IS NOT IN DISPUTE THAT THE ASSESSEE MAINTAINS THREE CARS TO SUPPORT HIS PROFESSION AS WELL AS HIS CLINICAL ESTA BLISHMENTS. THE LD. AO HAD ALLOWED DEPRECIATION ON THESE CARS IN THE ASSESSMENT AND HE NCE IN OUR CONSIDERED OPINION, THERE IS NO REASON TO DISBELIEVE THE CAR MAINTENANCE EXPE NSES. ADMITTEDLY, THE ASSESSEE HAS NOT PRODUCED BILLS AND VOUCHERS FOR THE AFORESAID M AINTENANCE EXPENSES. BUT THE USAGE OF THESE CARS FOR THE PURPOSE OF BUSINESS OR PROFES SION IS NOT IN DISPUTE IN THE INSTANT CASE. HENCE, IN OUR CONSIDERED OPINION, DISALLOWANC E OF RS. 80,000/- TOWARDS THE SAME WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, GROUND NO. 7 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 12 ITA NO.1412/KOL/2016 AMIT GHOSE A.YR.2010-11 12 16. GROUND NO. 9 RAISED BY THE ASSESSEE IS WITH REG ARD TO CHARGING OF INTEREST U/S 234A, 234B, 234C AND 234D OF THE ACT WHICH ARE CONSEQUENT IAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 09.0 3.2018 SD/- SD/- [A.T. VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09.03.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. AMIT GHOSE, C/O, D J SHAH & CO, KALYAN BHAWAN, 2 , ELGIN ROAD, KOLKATA-700020. 2. DCIT, CIRCLE-22, KOLKATA (FORMERLY JCIT, RANGE-2 2, KOLKATA), 54/1, RAFI AHMED KIDWAI ROAD, KOLKATA-700016. 3. C.I.T(A)- , KOLKATA 4. C.I.T.- K OLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S 13 ITA NO.1412/KOL/2016 AMIT GHOSE A.YR.2010-11 13