ACIT, Sonepat V. M/s. Atlas Cycles (Haryana) Ltd., Sonepat

ITA 1603/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0729 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 19-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AASTHA LAKSHMI
• Keywords: Gift; Depreciation; Business expenditure; Commercial expediency; Revenue expenditure; TDS
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: A, NEW DELHI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER I TA NO. 1 603 /DEL/ 2015 AY: 20 11 - 12 ACIT SONEPAT CIRCLE SONEPAT VS . ATLAS CYCLES (HARYANA) LTD. ATLAS ROAD SONEPAT PAN: AABCA8412C (AP PELLANT) (RESPONDENT) DEPARTMENT BY : SMT. AASTHA LAKSHMI, SR.D.R. ASSESSEE BY : SH. SALIL AGGARWAL, ADV. SH . SAILESH GUPTA, C.A. S H . MADHUR AGGARWAL, ADV. DATE OF HEARING : 0 6 /03/2019 DATE OF PRONOUNCEMENT : 28 /03/2019 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER THE PRESENT APPEAL HAS BEEN FILED BY REVENUE AGAINST ORDER DATED 05/01/15 PASSED BY LD. CIT (A) ROHTAK FOR ASSESSMENT YEAR 2011 - 12 ON FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A ) HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF RS. 1,60,88,065/ - WHICH WAS MADE BY THE A.O ON ACCOUNT OF INTEREST ATTRIBUTABLE TO ADVANCE MADE TO SH.ARUN KUMAR. THE A.O HAD DISALLOWED INTEREST OF RS 1,60,88,065/ - AS INTEREST ATTRIBUTABLE AT 12% O N RS. 13,40,67,214/ - WHICH HAS BEEN ADVANCE TO SH ARUN KUMAR OUT OF INTEREST BEARING FUNDS OF THE COMPANY. ITA 1603/DEL/2015 AY:2011 - 12 ACIT VS. ATLAS CYCLES (HARYANA) LTD. 2 2. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION OF RS.79,100/ - UNDER THE SUB - HEAD MARRIAGE GIFT AND ADDITION OF RS.3,13,136/ - UNDER THE SUB - HEAD SUBSCRIPTION EXPENSES AS THESE EXPENSES WERE PERSONAL IN NATURE. 3. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION OF RS.2,00,000/ - UNDER THE CONSULTANCY EXPENSES AND ADDITION OF RS.1,07,116/ - BEING EXPENSES INC URRED IN ADVERTISEMENT IN HINDUSTAN TIMES ON THE ANNIVERSARY OF LATE. SH. JANKI DAS S KAP UR WHICH WERE PERSONAL IN NATURE AND NOT FOR THE BUSINESS PURPOSE. 4. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION OF RS.2,21,978/ - UNDER THE S UB HEAD GLOW SHINE BOARD EXPENSES .SINCE THE NORMAL LIFE OF GLOW SHINE BOARD IS OF THREE YEARS AND THE EXPENSES INCURRED ON GLOW SHINE BOARD ARE DEBITED DURING THE YEAR UNDER CONSIDERATION WHICH IS NOT ALLOWABLE. THE LD.CIT(A) HAS ALSO ERRED IN LAW IN DELE TING THE ADDITION OF RS . 5,00,000/ - UNDER THE HEAD WORKER AND STAFF, WELFARE FOR WHICH NO BILLS OR VOUCHERS WERE FURNISHED DURING THE ASSESSMENT PROCEEDINGS. 5. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION OF RS . 4,00,000/ - OUT OF FOR EIGN TRAVEL EXPENSES OF RS . 1,13,78,091/ - . IT IS OBSERVED THAT MOST OF FOREIGN TRAVEL EXPENSES ARE IN CONNECTION OF FOREIGN TRAVELLING OF THE KAPOOR FAMILY WHO ARE TOP MANAGEMENT OF THE COMPANY. THE LD.CIT(A) HAS ALSO ERRED IN DELETING THE ADDITION OF RS. 8 8,468/ - UNDER THE HEAD ENTERTAINMENT WINE & BEER BEING PERSONAL IN NATURE AND RS.75,000/ - UNDER THE SUB HEAD PRIZE AND REWARDS WHICH REMAINED UNEXPLAINED AND UN VOUCHED. 6. THE LD.CIT(A) HAS ALSO ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION OF RS 3,00,000/ - UNDER THE HEAD SALES PROMOTION BEING U N - VOUCHED AND FOR WHICH NO BILLS WERE FURNISHED. 2. BRIEF FACTS OF CASE ARE AS UNDER : A SSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.3,67,83,740/ - ON 30/09/11 ELECTRONICALLY. THE CASE WAS SELECTED FOR SCRUTINY AND SUBSEQUENTLY NOTICE UNDER SECTION 143(2) ALONG ITA 1603/DEL/2015 AY:2011 - 12 ACIT VS. ATLAS CYCLES (HARYANA) LTD. 3 WITH QUESTIONNAIRE WAS ISSUED. IN RESPONSE TO STATUTORY NOTICES, REPRESENTATIVE OF ASSESSEE APPEARED BEFORE LD.AO AND FILED REQUISITE DETAILS , BOOKS OF ACCOUNTS ALONG WITH BILLS , V O UCHERS WHICH WERE EXAMINED BY LD.AO ON TEST CHECK BASIS. 2.1. LD.AO OBSERVED THAT ASSESSEE WAS HAVING 5 UNITS NAMELY U NIT I : SONEPAT U NIT, U NIT II : S AHIBABAD U NIT, U NIT III : M ALANPUR D ISTRICT BHIND, (MP), ATLAS S TEEL T UBE I NDUSTRIES, BAWAL , D ISTRICT R I WARI AND ATLAS A UTO I NDUSTRIES, RASOI. LD.AO OBSERVED THAT ASSESSEE IS A MANUFACTURER OF BICYCLES AND BICYCLE PARTS , INCLUDING STEEL TUBES. HE OBSERVED THAT TOTAL TURNOVER AS PER AUDITED ACCOUNTS WAS DECLARED AT RS.7,65,18,94,2 2 6 AND GROSS PROFIT AT RS.87 ,46,11,510/ - YIELDING GP RATE AT 11.43%. IN PRECEDING YEARS GP RATE WAS 11.41% AND DURING FINANCIAL YEAR 2008 - 09 GP RATE WAS DECLARED AT 11.40%. LD. AO ACCORDINGLY ACCEPTED GP RATE DECLARED BY ASSESSEE. 2.2 . ON FURTHER SCRUTINY LD. AO MADE FOLLOWING DI SALLOWANCES: 14 A DISALLOWANCE RS. 34, 76, 537/ - I NTEREST ATTRIBUTABLE TO ADVANCE RECOVERABLE RS . 1,60,88, 065/ - MISCELLANEOUS EXPENSES ACCOUNT - RS. 5,95,236/ - ADVERTIS EMENT AND SALES PROMOTION - RS. 3,29,094/ - WORKERS AND STAFF WELFARE - RS. 5,00,000/ - TRAVELLING EXPENSES - RS. 4,00,000/ - ENTERTAINMENT WINE AND BEER - RS. 88,468/ - PRI C E AND REWARDS - RS. 75,000/ - SALES PROMOTION/BUSINESS PROMOTION EXPENSES - RS. 3,00,000/ - ITA 1603/DEL/2015 AY:2011 - 12 ACIT VS. ATLAS CYCLES (HARYANA) LTD. 4 2.3. AGGRIEVED BY ADDITIONS MADE BY LD.AO, ASS ESSEE PREFERRED APPEAL BEFORE LD.CIT(A) WHO DELETED MOST OF ADDITIONS MADE BY LD.AO. 3. AGGRIEVED BY ORDER OF LD.CIT(A) REVENUE IS IN APPEAL BEFORE US NOW. 4. GROUND NO. 1 RAISED BY REVENUE IS AGAINST DELETING ADDITION OF RS.1,60,88,065/ - , MADE ON ACC OUNT OF INTEREST ATTRIBUTABLE TO ADVANCE MADE TO SH.ARUN KUMAR. 4.1. AT OUTSET LD. CO UNSEL SUBMITTED THAT ISSUE STANDS SQUARELY COVERED BY ORDER OF THIS T RIBUNAL IN ASSESSEES OWN CASE FOR A SSESSMENT Y EAR 2003 - 04 TO 2010 - 11 WHEREIN TRIBUNAL HAS ADJUDICATED THIS ISSUE IN FAVOUR OF ASSESSEE BY HOLDING THAT SAID AMOUNT HAS BEEN EMBEZZLED BY SH.ARUN KUMAR AND THEREFORE QUESTION OF CHARGING INTEREST OR FOREGOING INTEREST DO NOT ARISE. LD. C OUNSEL RELIED UPON PAGE 10 - 44 OF PAPER BOOK WHEREIN THIS ISSUE HAS BEEN DEALT WITH I N PRECEDING ASSESSMENT YEARS BY OBSERVING AS UNDER: 2.3. THE LD. AR SUBMITTED THAT THE AMOUNTS WERE NOT ADVANCES BUT PERTAIN TO AMOUNTS WITHDRAWN THROUGH EMBEZZLEMENT AND FRAUD CONDUCTED BY SH. ARUN KAPOOR AGAINST WHICH FIRS HAVE ALSO BEEN LODGED. IT WAS SUBMITTED THAT SINCE THE ASSESSEE HAS NOT GIVEN THESE AMOUNTS OUT OF ITS OWN FREE WILL BUT THE SAME HAVE BEEN TAKEN THROUGH FRAUD, THE AO HAS BEEN WRONG IN CONCLUDING THAT SUCH AMOUNTS HAVE BEEN DIVERTED BY THE ASSESSEE FOR T HE NON BUSINESS PURPOSES. IT WAS SUBMITTED THAT THE COMPANY HAS TERMINATED THE SERVICES OF SH. ARUN KAPOOR AND LEGAL RECOURSE HAS BEEN TAKEN TO RESOLVE THE ISSUE. IT WAS ALSO SUBMITTED THAT THE COMPANY HAD SURPLUS FUNDS AMOUNTING TO RS. 105.94 AS ON 31ST M ARCH, 2002, ITA 1603/DEL/2015 AY:2011 - 12 ACIT VS. ATLAS CYCLES (HARYANA) LTD. 5 THEREFORE, THE AOS CONCLUSION THAT INTEREST BEARING FUNDS HAVE BEEN UTILIZED IS ALSO FACTUALLY INCORRECT. 2.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE RECORDS. ATLAS CYCLES (HARYANA) SONEPAT PAGE 6 OF 70 IT IS SEEN THAT T HE LD. CIT (APPEALS) HAS EXAMINED THE ISSUE IN DETAIL IN HIS ORDER FOR AY 2006 - 07 AND HAS AGREED WITH THE AFORESAID CONTENTIONS OF THE ASSESSEE. THE COPIES OF FIRS HAVE ALSO BEEN PLACED ON RECORD AND THE CONTENTION OF THE ASSESSEE ABOUT HAVING SURPLUS FUND S AS ON 31.03.2002 IS ALSO CORRECT. HENCE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT (APPEALS) AND UPHOLD THE SAME. 4.2. FURTHER WE REFER TO OBSERVATIONS OF L D.CIT(A) IN PARA 3.6 AT PAGE 9 REGARDING LD.AOS OMISSION, THAT THESE FUNDS WERE OUT OF INTEREST - BEARING FUND IS NOT CORRECT, AS ASSESSEE IN YEAR WHEN ADVANCES WERE MADE, HAD INTEREST - FREE FUNDS OF ITS OWN, AMOUNTING TO RS.105.94 CRORES BEING SHARE CAPITAL, SECURITIES PREMIUM, FREE RESERVES, DEBENTURE REDEMPTION RESERVE AND ACCUMULATED DEPRECIATION RESERVE. THERE HAS BEEN NOTHING CONTRARY TO THE AFORE STATED OBSERVATIONS BY LD.CIT(A) AND BY THIS T RIBUNAL IN PRECEDING ASSESSMENT YEARS THAT HAS BEEN BROUGHT ON RECORD BY LD.AO OR LD.DR FOR YEAR UNDER CONSIDERATION. 4.3. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN ANALOGY APPLIED BY LD.CIT(A) IN DELETING ADDITION. THIS GROUND THEREFORE RAISED BY REVENUE STANDS DISMISSED. 5. GROUND NO.2 HAS BEEN RAISED BY REVENUE AGAINST DELETING ADDITION OF RS.79,100/ - UNDER HEAD MARR IAGE GIFT AND ADDITION OF RS.3,13, 136/ - UNDER SUB - HEAD SUBSCRIPTION EXPENSES . 5.1 . LD. SR. DR SUBMITTED THAT THESE EXPENSES ARE NOT DIRECTLY RELATED TO BUSINESS ACTIVITY OF ASSESSEE AND , THEREFORE , CANNOT BE ITA 1603/DEL/2015 AY:2011 - 12 ACIT VS. ATLAS CYCLES (HARYANA) LTD. 6 ALLOWED AS EXPENSE S . HE REFERRED TO OBSERVA TIONS OF LD.AO WHEREIN LD.AO CALLED FOR EXPLANATION AS TO WHY EXPENSES SHOULD NOT BE DISALLOWED. IT WAS OBSERVED BY LD.AO THAT MARRIAGE EXPENSES WERE PAID AS SHA GUN ON MARRIAGE CEREMONIES OF CLOSE RELATIVES OF EMPLOYEES, DEALERS AND SUPPLIERS OF COMPANY. LD. SR. DR SUBMITTED THAT THESE EXPENSES DO NOT FALL WITHIN CATEGORY OF CORPORATE SOCIAL RESPONSIBILITY AS DEFINED UNDER SECTION 135 OF THE COMPANIES A CT, 2013, IN ORDER TO BE CLAIMED AS AN EXPENDITURE UNDER SECTION 37 (1) OF THE A CT. 5.2. ON THE CONTRARY LD. C OUNSEL SUBMITTED THAT ASSESSEE BEING A P UBLIC L IMITED C OMPANY IS MANAGED BY NUMBER OF E XECUTIVES WHO TAKE CARE OF DAY - TO - DAY RUNNING OF COMPANY AND ARE OFTEN INVITED IN THEIR PERSONAL CAPACITY ON BEHALF OF COMPANY. IT HAS BEEN SUBMITTED BY LD.C OUNSEL THAT SUCH INVITATION S ARE RECEIVED DUE TO BUSINESS RELATION S WITH CLIENTS AND EMPLOYEES OF COMPANY. LD. C OUNSEL SUBMITTED THAT SUCH BUSINESS EXPEDIENCY CANNOT BE IGNORED. 6. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RE CORDS PLACED BEFORE US . 7. LD.C OUNSEL PLACED RELIANCE ON DECISION OF THIS T RIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1978 - 79 IN ITA NO. 4393/ D EL/1982 PLACED AT PAGE 1 - 20 OF PAPER BOOK 2, WHEREIN IT HAS BEEN OBSERVED THAT MARRIAGE GIFTS TO DEPENDENTS OF EMPLOYEE S ARE GIVEN IN ACCORDANCE WITH SCHEME LAID DOWN BY COMPANY. IT HAS BEEN OBSERVED THAT THESE EXPENSES ARE INCURRED TOWARDS MARRIAGE GIFTS TO FAMILY MEMBERS/DEPENDENTS OF STAFF/DE ALERS ARE NORMAL BUSINESS COURTESY INCURRED IN COURSE OF RUNNING BUSINESS. IT HAS ITA 1603/DEL/2015 AY:2011 - 12 ACIT VS. ATLAS CYCLES (HARYANA) LTD. 7 ALSO BEEN OBSERVED THEREIN THAT THESE EXPENSES ARE INCURRED BY WAY OF STAFF WELFARE AND ALLOWABLE AS REVENUE EXPENDITURE ON GROUND OF COMMERCIAL EXPEDIENCY AND TO DEVELOP GOOD RELATIONSHIP WITH EMPLOYEES/DEALER S SO AS TO FURTHER BUSINESS INTEREST OF ASSESSEE. THERE IS NOTHING CONTRARY THAT HAS BEEN BROUGHT ON RECORD BY LD.SR.D.R. 8. RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THIS T RIBUNAL IN ASSESSEES OWN CASE FOR ASSES SMENT YEAR 1978 - 79 (SUPRA) , WE DO NOT FIND ANY INFIRMITY WITH VIEW TAKEN BY LD.CIT(A) AND SAME IS UPHELD . 9. AS REGARDS SUBSCRIPTION FEES OF RS.3,16,136/ - , IT HAS BEEN SUBMITTED BY LD. C OUNSEL THAT ISSUE HAS BEEN ALLOWED BY THIS T RIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007 - 08, 2008 - 09 AND 2009 - 10, COPIES OF ORDER OF TRIBUNAL PLACED AT PAGES 10 - 44 OF PAPER BOOK 1 . 9.1 . WHEREAS LD. SR. DR SUBMITTED THAT THESE EXPENSES INCURRED ARE PERSONAL IN NATURE AND THEREFORE ARE NOT ALLOWABLE EXPENSES. 10. IT IS OBSERVED THAT THESE SUBSCRIPTION FEES ARE IN FORM OF PAYMENT MADE TOWARDS GYMKHANA C LUB AND OTHER ASSOCIATION S WHICH ARE BEING PROVIDED TO SR.E XECUTIVES OF THE COMPANY TO ENTERTAIN DEALERS/SUPPLIERS AND OTHER BUSINESS ASSOC IATES. IT IS FURTHER OBSERVED THAT OUT OF TOTAL CLAIM OF RS.7,57,673/ - , LD.AO HAS ONLY DISALLOWED RS.3,16,136/ - ON THE GROUND THAT THEY ARE PERSONAL IN NATURE. THERE HAS BEEN NO BASIS THAT HAS BEEN ATTRIBUTED BY LD.AO FOR AN AD - HOC DISALLOWANCE. IT IS OBS ERVED THAT THESE EXPENSES HAVE BEEN REGULARLY INCURRED BY ASSESSEE IN ITA 1603/DEL/2015 AY:2011 - 12 ACIT VS. ATLAS CYCLES (HARYANA) LTD. 8 PRECEDING ASSESSMENT YEARS WHICH HAS BEEN ALLOWED AS BUSINESS EXPENSES. THERE ARE A SERIES OF JUDGEMENTS PASSED BY HONBLE SUPREME COURT AND HIGH COURTS HOLDING SUBSCRIPTION FEES PAID TO CLUBS ON BEHALF OF EMPLOYEES ARE INCURRED FOR BUSINESS PURPOSES AND ARE ALLOWABLE EXPENSES. WE THEREFORE DO NOT FIND ANY INFIRMITY WITH VIEW TAKEN BY LD. CIT (A). ACCORDINGLY THIS GROUND RAISED BY REVENUE STANDS DISMISSED . 11. GROUND NO. 3 IS IN RESPECT OF DELETING ADDITION OF RS. 2 LAKH S UNDER CONSULTAN CY EXPENSES AND ADDITION OF RS. 1,07,116/ - BEING EXPENSES INCURRED IN ADVERTISEMENT IN HINDUSTAN TIMES ON THE ANNIVERSARY OF LATE SH. JANKI DAS S KAP U R. 12. LD. SR. DR SUBMITTED THAT OUT OF TOTAL CONSULTANCY EXPENSES OF RS.9,08,904/ - AN AMOUNT OF RS. 2 LAKH S HAS BEEN ADDED BACK TO THE INCOME, AS ASSESSEE FAILED TO ESTABLISH DETAILS OF SERVICES OBTAINED FROM THESE PERSONS. 13. ON THE CONTRARY LD. C OUNSEL SUBMITTED THAT AS PER THE COMPANY POLICY , EX - EMPLOYEES WERE ABSORBED WHO WERE SPECIALISED IN RESPECTIVE JOBS TO AVAIL BEST SERVICES AT LOWER COST. IT HAS ALSO BEEN SUBMITTED THAT TD S HAS BEEN DEDUCTED AGAINST PAYMENT MADE TO THESE EX - EMPLOYEES. 14. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. IT IS OBSERVED THAT ASSESSEE BEFORE LD. CIT(A) TABULATED NATURE OF SERVICES RENDERED BY THESE PERSO NNEL AND HAS ALSO SUBMITTED COPY OF APPOINTMENT LETTERS ALONG WITH FORM 16 A , WHEREIN TDS HAS BEEN DEDUC TED. ITA 1603/DEL/2015 AY:2011 - 12 ACIT VS. ATLAS CYCLES (HARYANA) LTD. 9 14.1. IN OUR CONSIDERED OPINION LD.AO HAS MADE AD - HOC DISALLOWANCE ON MERE SUR M ISES WHICH CANNOT BE ALLOWED. LD.CIT(A) HAS NOT RECORDED ANY INFIRMITY IN RESPECT OF THE SAME. W E DO NOT THEREFORE FIND ANY INFIRMITY WITH THE VIEW TAKEN BY LD.CIT(A) AND THE SAME IS UPHELD. 14.2 . INSOFAR AS EXPENSES TOWARDS ADVERTISEMENT IN HINDUSTAN TIMES IS CONCERNED, IT HAS BEEN SUBMITTED THAT SH. JANKI DASS KAPUR WHO WAS THE FOUNDER OF ASSESSEE, AND, IT WAS UNDER HIS ABLE LEADERSHIP THAT COMPANY ACHIEVED TREM ENDOUS GROWTH AND EXCELLENCE IN FIELD OF CYCLE MANUFACTURING. IT HAS BEEN SUBMITTED THAT THESE EXPENSES HAVE BEEN INCURRED IN LOVING MEMORY OF SH. JANKI DAS S KAP U R S DEATH ANNIVERSARY TO PAY TRIBUTE/HOMAGE O N BEHALF OF MANAGEMENT, STAFF AND WORKERS O F ALL 5 UNITS OF COMPANY. LOOKING INTO CAUSE , WE DO NOT FIND ANY INFIRMITY IN VIEW TAKEN BY LD. CIT (A) AND SAME IS UPHELD. ACCORDINGLY THIS GROUND RAISED BY REVENUE STANDS DISMISSED. 15. GROUND NO. 4 HAS BEEN RAISED BY REVENUE AGAINST DELETING AD DITION OF RS.2,21,978/ - UNDER SUB - HEAD G LOW SIGN B OARD EXPENSES AND RS.5,00,000/ - UNDER THE HEAD WORKER S AND STAFF WELFARE FOR WHICH NO BASIS OR VOUCHERS WERE FURNISHED DURING ASSESSMENT PROCEEDINGS. 15.1. LD. SR. DR PLACED RELIANCE UPON ORDER OF LD. AO. 15.2 . LD. C OUNSEL PLACING RELIANCE UPON OBSERVATIONS OF LD.CIT(A) SUBMITTED THAT THESE WERE AD - HOC DISALLOWANCES MADE BY LD.AO. HE SUBMITTED THAT ASSESSEE BEING ONE OF LARGEST MANUFACTURER AND ITA 1603/DEL/2015 AY:2011 - 12 ACIT VS. ATLAS CYCLES (HARYANA) LTD. 10 SELLER OF B I CYCLES IN INDIA ADVERTISED ITS PRODUCTS AND BRA ND ON GLOW SIGN BOARD , WHICH ARE DISPLAYED OUTSIDE SHOWROOMS OF DEALERS IN CITIES. HE THUS SUBMITTED THAT THESE ARE REVENUE IN NATURE AND EXPENSES HA VE BEEN ALLOWABLE FOR ASSESSMENT YEAR 1978 - 79 BY THIS T RIBUNAL IN ASSESSEES OWN CASE. 16 . WE HAVE PERU SED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. IN OUR OPINION GLOW SIGN BOARDS W ERE USED FOR PROMOTION OF ASSESSEES BUSINESS IN VARIOUS CITIES . IT IS OBSERVED THAT ASSESSEE HAS INCURRED THESE EXPENDITURE WITH AN OBJECTIVE TO FACILITATE BUSINESS PROMOTION AND NOT WITH AN OBJECT TO ACQUIRE ASSET OF ENDURING NATURE. 16.1. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN VIEW TAKEN BY LD. CIT(A) AND SAME IS UPHELD. 16.2 . INSOFAR AS EXPENSES INCURRED UNDER THE HEAD WORKER S AND STAFF WELFARE AMOUNTING TO RS.5 LAKH IS CONCERNED , IT IS OBSERVED THAT LD.AO HAS MADE AD - HOC DISALLOWANCE ON A LUMP - SUM BASIS WITHOUT POINTING ANY SPECIFIC VOUCHERS THAT IS INADMISSIBLE. IT HAS BEEN SUBMITTED THAT ASSESSEE BEING A PUBLIC LIMITED COMPAN Y IS SUBJECTED TO STATUTORY AUDIT AND TAX AUDIT UNDER SECTION 44 AB OF THE ACT AND NO ADVERSE COMMENT HAS BEEN MADE OUT BY LD.AO. UNDER SUCH CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY IN VIEW TAKEN BY LD.CIT(A) AS THERE IS NO CONTRARY OBSERVATION B Y LD.AO REGARDING VOUCHERS/BILLS MAINTAINED BY ASSESSEE IN RESPECT OF THESE EXPENSES. ACCORDINGLY THIS GROUND RAISED BY REVENUE STANDS DISMISSED. ITA 1603/DEL/2015 AY:2011 - 12 ACIT VS. ATLAS CYCLES (HARYANA) LTD. 11 17. GROUND NO.5 IS IN RESPECT OF DELETING ADDITION OF RS.4,00,000/ - OUT OF FOREIGN TRAVEL EXPENSES AMOUNTIN G TO RS.1,13,78,091/ - DELETING ADDITION OF RS.88,468/ - UNDER THE HEAD ENTERTAINMENT , W INE AND BEER, AND RS.75,000 / - UNDER THE SUB HEAD PRIZE AND REWARDS WHICH REMAINED UNEXPLAINED AND UNVOUCHED. 17.1. LD. SR. DR SUBMITTED THAT ASSESSEE FAILED TO FURNISH DETAILS OF BUSINESS PROCURED AS A RESULT OF FOREIGN VISITS AND HAS ALSO FAILED TO FURNISH COMPLETE DETAILS OF PERSONS TRAVELLED OUTSIDE INDIA. IT HAS ALSO BEEN SUBMITTED THAT FOREIGN TRAVEL HAS BEEN UNDERTAKEN BY KAPOOR FAMIL Y , WHO WERE TOP MANAGEMENT OF COMPANY. UNDER SUCH CIRCUMSTANCES AD - HOC DISALLOWANCE MADE BY LD.AO DESERVES TO BE UPHELD. 17.2. ON THE CONTRARY LD. .C OUNSEL SUBMITTED THAT ISSUE STANDS SQUARELY COVERED BY ORDER OF THIS T RIBUNAL FOR ASSESSMENT YEAR 2003 - 04 TO 2010 - 11 . 18. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 18.1 . IT IS OBSERVED THAT ADDITION OF FOREIGN TRAVEL EXPENSES HA S BEEN DELETED BY THIS T RIBUNAL ON GROUND THAT FBT HAS BEEN DULY PAID ON SUCH EXPENSES. FOR YEAR UNDER CONSIDERATION THERE IS NO SUCH CLARITY ARISES OUT OF ASSESSMENT ORDER NEITHER HAS LD. C OUNSEL SUBMITTED ANYTHING IN RESPECT OF THE SAME. FURTHER ON PERUSAL OF ORDER PASSED BY LD.AO , IT IS CATEGORICALLY CLEAR THAT FAMILY MEMBERS OF KA POOR FAMILY HAVE UNDERTAKEN FOREIGN TR AVEL . SINCE ASSESSEE HAS NOT PROVIDE D ANY DETAILS OF PERSON NEL ITA 1603/DEL/2015 AY:2011 - 12 ACIT VS. ATLAS CYCLES (HARYANA) LTD. 12 TRAVELLED ABROAD , WE DO NOT FIND ANY INFIRMITY IN DISALLOWANCE MADE BY LD.AO AND SAME IS UPHELD. 18.2. INSOFAR AS ADDITION ON ACCOUNT OF ENTERTAI NMENT W INE AND BEER IS CONCERNED , IT HAS BEEN SUBMITTED THAT ASSESSEE HAS 4000 DEALERS NATIONWIDE AND COMPANY EXECUTIVES NEED TO VISIT THESE DEALERS FROM TIME TO TIME SINCE COMPANY PRODUCTS CAN ONLY BE SOLD THROUGH NETWORK OF THESE D EALERS. THESE AMOUNTS ARE SPENT ON ENTERTAINMENT OF DEALERS , WHO ARE SELLING PRODUCT S OF THE COMPANY . FURTHER IT IS OBSERVED THAT LD.AO HAS NOT EXPRESSED REASON FOR DISALLOWANCE APART FROM SAYING THAT EXPENSES WERE NOT JUSTIFIED. 18.3 . IN OUR OPINION LD.A.O. MADE ADDITION ON MERE SURMISES AND THEREFORE DESERVES TO BE DELETED. WE DO NOT FIND ANY INFIRMITY IN THE VIEW TAKEN BY LD.CIT(A) A ND SAME IS UPHELD. 18.4. INSOFAR AS EXPENSES INCURRED UNDER THE HEAD PRI Z E AND REWARDS ARE CONCERNED, LD. C OUNSEL SUBMIT TED THAT THESE ARE CLUBBED WITH HEAD SALARY AND WAGES AND HAS BEEN PAID TO THEIR EMPLOYEES AS A MATTER OF COMPANY POLICY TO REWARD EXTRAORDINARY WORK DONE BY ITS EMPLOYEES. IT HA S ALSO BEEN OBSERVED THAT TD S HAS BEEN DEDUCTED ON THESE PAYMENTS. 18.5. I N OUR CONSIDERED OPINION SUCH PAYMENTS ARE VERY MUCH NECESSARY FOR LARGE MAGNITUDE BUSINESS CARRIED OUT BY ASSESSEE. WE THEREFORE DO NOT FIND ANY INFIRMITY IN VIEW TAKEN BY LD. CIT (A) AND SAME IS UPHELD. 18.6. ACCORDINGLY THIS GROUND RAISED BY REVENUE S TANDS PARTLY ALLOWED. ITA 1603/DEL/2015 AY:2011 - 12 ACIT VS. ATLAS CYCLES (HARYANA) LTD. 13 19. GROUND NO. 6 HAS BEEN RAISED AGAINST DELETING ADDITION OF RS.3 LAKH UNDER THE HEAD SALES PROMOTION . 19.1 . LD. SR. DR SUBMITTED THAT THESE EXPENSES HAVE BEEN FOUND TO BE UN - VOUCHED AND INADMISSIBLE IN NATURE BECAUSE OF WHICH A DDITION HAS BEEN MADE. 19.2. ON THE CONTRARY , LD. C OUNSEL SUBMITTED THAT THESE EXPENSES ARE INCURRED FOR BENEFITING BUSINESS AND INCREASING SALES OF COMPANY. IT HAS BEEN SUBMITTED THAT THESE ARE PAID TO DEALERS/EMPLOYEE S TO ACHIEVE DESIRED SALES. HENCE IT HAS BEEN SUBMITTED THAT THESE ARE REVENUE IN NATURE. 20. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF THE RECORDS PLACED BEFORE US. 20.1. ADMITTEDLY THESE EXPENSES ARE UN - VOUCHED AND ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY BILLS IN RESPECT OF SAME. UNDER SUCH CIRCUMSTANCES WE DO NOT FIND ANY REASON TO UPHOLD VIEW OF LD.CIT (A) AND SAME IS REVERSED AND ADDITION MADE BY LD.AO STANDS UPHELD. ACCORDINGLY THIS GROUND RAISED BY REVENUE STANDS ALLOWED . 21. IN THE RESULT APPEAL FILED BY REVENUE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 2 8 / 03/2019. S D / - S D / - (N.S. SAINI) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 2 8 T H MARCH, 2019 GMV ITA 1603/DEL/2015 AY:2011 - 12 ACIT VS. ATLAS CYCLES (HARYANA) LTD. 14 COPY FORWARDED TO: - APPELLANT RESPONDENT CIT CIT(A) DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES DATE DRAFT DICTATED ON 22/03/19 DRAFT PLACED BEFORE AUTHOR 2 6 /03/19 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : 2 8 / 0 3 / 1 9 FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.