Mehta Desai Consultants, Ahmedabad V. The Dy.CIT, Circle-5, Baroda

ITA 1960/AHD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6338 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 27-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH MEENA
• Assessee Lawyers: ANIL R SHAH
• Keywords: Gift

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA NO. 1960/AHD/2014 / ASSESSMENT YEARS: 2010-2011 MEHTA DESAI CONSULTANTS 105-16, POLO VIEW APRTS., POLO GROUND VADODARA 390 023. PAN : AAQFM 6879 D VS DCI, CIR.5 BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI ANIL R. SHAH, AR REVENUE BY : SHRI RAJESH MEENA, SR.DR / DATE OF HEARING : 01/01/2018 /DATE OF PRONOUNCEMENT : 01/01/2018 PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL AGAINST ORDER OF THE LD.CIT(A )-V, BARODA DATED 27.5.2014 PASSED FOR THE ASSTT.YEAR 2010-11. 2. IN THE SOLE SUBSTANTIAL GROUND OF APPEAL, ASSESS EE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.4,96,961/- OUT OF BUSINESS PROMOTION EXPENSES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-FI RM WAS ENGAGED IN PROVIDING CONSULTANCY SERVICE. IT HAS FILED ITS RE TURN OF INCOME ON 22.9.2010 DECLARING TOTAL INCOME AT RS.30,59,170/-. THE ASSESSEE AT THE ITA NO. 1960 /AHD/2014 - 2 - RELEVANT TIME WAS PROVIDING CONSULTANCY SERVICES TO ABB LTD. SERVICE WAS IN RESPECT OF COMPLIANCE OF LABOUR AND INDUSTRI AL LAW I.E. PAYMENT OF PF AND ESI ETC. THE ASSESSEE HAS DEBITED AN EXPEND ITURE OF RS.6,62,614/- UNDER THE BUSINESS PROMOTION EXPENSES. THE LD.AO H AS REPRODUCED DETAILS OF SUCH EXPENDITURE AND OBSERVED THESE WERE INCURRED ON SMALL ITEMS WHICH HAVE BEEN ALLEGED TO HAVE BEEN GIVEN AS GIFT. THE AO WAS OF THE VIEW THAT SINCE THE ASSESSEE HAS ONLY SINGLE CLIENT, IT WAS NOT REQUIRED TO GIVE GIFTS IN THE SHAPE OF SARI AND OTH ER DRESS MATERIAL, IPOD ETC. HE DISALLOWED EXPENDITURE CLAIMED BY THE ASSE SSEE. 4. ON APPEAL, THE LD.CIT(A) HAS ALLOWED EXPENDITURE TO THE EXTENT OF 25%. IN THIS WAY, THE LD.CIT(A) AS CONFIRMED DISALL OWANCE AT RS.4,96,961/- OUT OF TOTAL EXPENDITURE INCURRED BY THE ASSESSEE AT RS.6,62,614;-. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH RECORD CAREFULLY. A PERUSAL OF THE CIT(A) S ORDER WOULD INDICATE THAT IN PRINCIPLE THE LD.CIT(A) HAS ACCEPT ED THE EXPENDITURE WERE INCURRED FOR THE PURPOSE OF BUSINESS. BUT ONL Y 25% OF SUCH EXPENDITURES WERE CONSIDERED AS INCURRED FOR THE PU RPOSE OF BUSINESS. REST OF THE EXPENDITURE WERE TREATED BY THE LD.CIT( A) AS OF PERSONAL NATURE. ON DUE CONSIDERATION OF THE FACTS, WE FIND THAT THE LD.CIT(A)HAS NOT ASSIGNED ANY REASONS AS TO HOW 75% OF THE EXPEN DITURE WERE TO BE TREATED AS INCURRED FOR PERSONAL PURPOSE. THE CASE OF THE ASSESSEE IS THAT THOUGH IT HAS ONLY ONE CLIENT, IT WAS LOCATED AT DI FFERENCE PLACES, AND THE ASSESSEE HAS BEEN PROVIDING SERVICES AT DIFFERENT L OCATIONS. THEREFORE, IT HAS TO INCUR EXPENDITURE FOR MAINTAINING CORDIAL RE LATIONS. TAKING INTO ITA NO. 1960 /AHD/2014 - 3 - CONSIDERATION NATURE OF ITEMS PURCHASED BY THE ASSE SSEE, AND GIVEN AS GIFTS, WE ARE OF THE VIEW THAT ENDS OF JUSTICE WOUL D MEET IF 50% OF THE EXPENDITURE ARE TREATED AS FOR THE BUSINESS PURPOSE . ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 1 ST JANUARY, 2018. SD/- SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 01/01/2018