The ACIT, Circle-1(1), Baroda V. Gujarat State Fertilizers & Chemicals Ltd., Baroda

ITA 1413/AHD/2014

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2473 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA A GARWAL
• Keywords: Business expenditure
• Section: 37

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO. 1413/AHD/2014 / ASSESSMENT YEAR: 2010-11 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 1(1), BARODA VS. GUJARAT STATE FERTILIZERS & CHEMICALS LTD., PO: FERTILIZER NAGAR, DIST : BARODA - 391750 [PAN : AAACG 7996 C] / (APPELLANT) / (RESPONDENT) REVENUE BY : SMT. APARNA AGARWAL, CIT-DR ASSESSEE BY : SHRI SANJAY R. SHAH, AR ! / DATE OF HEARING : 25/10/2019 / DATE OF PRONOUNCEMENT: 05/12/2019 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF T HE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A)-I, BARODA DATED 28. 02.2014 PASSED FOR ASSESSMENT YEAR 2010-11. THIS APPEAL WAS DECIDED B Y THE TRIBUNAL VIDE ORDER DATED 01.08.2018 ALONG WITH APPEAL OF THE ASS ESSEE I.E. ITA NO. 1403/AHD/2014. THE REVENUE FILED A MISCELLANEOUS A PPLICATION BEARING NO.137/AHD/2019 PLEADING THEREIN THAT THE GROUND NO .2 RAISED BY THE REVENUE REMAINED UNDECIDED. ACCORDINGLY, THE MISCEL LANEOUS APPLICATION OF THE REVENUE WAS ACCEPTED BY THE TRIBUNAL VIDE OR DER DATED 07.08.2019 AND THIS APPEAL IS RESTORED QUA GROUND NO. 2 FOR ADJUDICATION. 2. IN GROUND NO.2, REVENUE HAS PLEADED THAT THE LEA RNED CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF CLUB MEMBERSH IP FEES. ITA NO. 1413/AHD/2014 ACIT VS. GUJARAT STATE FERTILIZERS & CHEMICALS LTD FOR AY: 2010-11 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER HAS DISALLOWED CONTRIBUTION OF RS.3,00,000/- TOWARDS CL UB MEMBERSHIP. WHILE DELETING THE DISALLOWANCE, CIT(A) HAS OBSERVED AS U NDER:- 5.1 AGAIN THE RELEVANT PART OF SUBMISSION (I.E. SY NOPSIS OF SUBMISSION) OF THE APPELLANT AS FILED DURING THE COURSE OF APPELLA TE PROCEEDING IS ALSO REPRODUCED HEREUNDER FOR REFERENCE: DISALLOWANCE OF CONTRIBUTION OF RS.3,00,000 PAGE 16 / PARA 9.0 SUBMISSION DATED 24/01/2013 BEFORE THE AO & ANNEXURE Y THEREOF. APPELLANT HAD MADE INCURRED EXPENDITURE OF RS. 3,00,000 BEING CONTRIBUTION TO GANDHINAGAR GYMKHANA AS CORPORATE MEMBERSHIP FEES. THE AFORESAID CORPORATE MEMBERSHIP HAS BEEN BOUGHT BY THE APPELLANT FOR ITS SENIOR EMPLOYEES AND ACCORDINGLY, IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. SINCE, THE AFORESAID EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS AND ACCORDINGLY, IS ALLOWABLE AS BUSINESS EXPENDITURE UNDER SECTION 37 OF THE ACT. RELIANCE IS PLACED ON FOLLOWING JUDGMENTS: A. CIT V. INFOSYS TECHNOLOGIES LTD. (2012) 349 ITR 610 (KAR.) B. CIT V. INFOSYS TECHNOLOGIES LTD. (2012) 349 ITR 606 (KAR.) C. DCIT V. BANC. OF AMERICA SECURITIES (INDIA) (P.) LTD. (2011) 128 ITO 386 (MUM. ITAT) 5.2 WITH REGARD TO DISALLOWANCE OF ABOVE MEMBERSH IP FEES OF RS.3,00,000/-, THE SUBMISSION OF THE APPELLANT IS FOUND TO BE TENA BLE. IN MY OPINION EXPENSES RELATED TO CONTRIBUTION TO THE CLUB AS COR PORATE MEMBERSHIP FEES ARE OF REVENUE NATURE. THE CASE LAWS RELIED UPON BY THE APPELLANT IN ITS ABOVE SUBMISSION HAS BEARING ON THE CASE OF THE APPELLANT . IN VIEW OF THIS THE ADDITION OF RS.3,00,000/- AS MADE BY THE AO IS HERE BY DELETED. THUS THE GROUND OF APPEAL NO. 6 OF THE APPELLANT IS ALLOWED. 4. AT THE VERY OUTSET, LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THIS ISSUE IS COVERED BY THE JUDGMENT OF HONBLE KA RNATAKA HIGH COURT IN ITA NO. 1413/AHD/2014 ACIT VS. GUJARAT STATE FERTILIZERS & CHEMICALS LTD FOR AY: 2010-11 3 THE CASE OF CIT VS. INFOSYS TECHNOLOGIES LTD, REPOR TED IN (2012) 349 ITR 610 (KAR.). HE PLACED ON RECORD COPY OF THIS JUDGMENT. HE ALSO PUT RELIANCE UPON THE JUDGMENT OF HONBLE PUNJAB AND HARYANA HIG H COURT IN THE CASE OF CIT, PATIALA VS. GROZ BECKERT ASIA LTD. THIS DE CISION IS REPORTED IN (2013) 31 TAXMANN.COM 155 (P&H). HE PLACED ON RECORD COPY OF THIS DECISION ALSO. HE ALSO RELIED UPON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT STATE EXPORT CORPN. LTD. VS. CIT, REPORT ED IN (1994) 204 ITR 649 (GUJ.). 5. THE UNANIMOUS OPINION OF ALL THE HIGH COURTS IN THE ABOVE JUDGMENTS AS WELL AS THE JUDGMENTS REFERRED BEFORE THE LEARNED CIT(A) IN THE FINDINGS EXTRACTED SUPRA IS THAT THE EXPENDITUR E INCURRED FOR OBTAINING CLUB MEMBERSHIP IN THE SHAPE OF ENTRANCE FEE IS AN ALLOWABLE EXPENDITURE. THEREFORE, WE ARE OF THE VIEW THAT LEARNED CIT(A) H AS NOT COMMITTED ANY ERROR IN DELETING THE DISALLOWANCE. WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL; ACCORDINGLY, IT IS REJECTED. ORDER PRONOUNCED IN THE COURT ON 5 TH DECEMBER 2019 AT AHMEDABAD. SD/- S D/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 05/12/2019 BIJU T., SR.PS ! &'( )( / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! # / CONCERNED CIT 4. # ( ) / THE CIT(A) 5. & ! , ! , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD ITA NO. 1413/AHD/2014 ACIT VS. GUJARAT STATE FERTILIZERS & CHEMICALS LTD FOR AY: 2010-11 4 1. DATE OF DICTATION- 04.12.2019.. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .04.12.2019.. OTHER MEMBER 05.12.2019. 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. - 05.12.2019. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 05.12.2019 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK05. 12.2019 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER 8. DATE OF DESPATCH OF THE ORDER