ACIT,CC-1(2), Kolkata, Kolkata V. R T Fashion Pvt. Ltd., Kolkata

ITA 2180/KOL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8545 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 10-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: D S DAMLE
• Keywords: Gross profit estimation; Business income; Business expenditure
• Section: 143(3); 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.2180/KOL/2016 ( / ASSESSMENT YEAR: 2013-14) ACIT, CENTRAL CIRCLE-1(2), KOLKATA AAYAKAR BHAWANPOORVA, 110, SHANTIPALLY, 3 RD FLOOR, KOLKATA- 700107. VS. R T FASHION PVT. LTD. 39, K.K. TAGORE STREET, KOLKATA-700007 ./ ./PAN/GIR NO.: AACCR 9208 C (ASSESSEE) .. (REVENUE) ASSESSEE BY :SHRI SAURABH KUMAR, ADDL. CIT (DR) RESPONDENT BY : SHRI D.S.DAMLE, FCA / DATE OF HEARING : 17/01/2019 /DATE OF PRONOUNCEMENT : 10/04/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTA INING TO ASSESSMENT YEAR 2013-14, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-20, KOLKATA, WHICH IN TURN ARISES AN OUT A N ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), DATED 30.03.2015. 2.THE APPEAL FILED BY REVENUE, FOR ASSESSMENT YEAR 2013-14, IS BARRED BY LIMITATION BY 62 DAYS. THE REVENUE HAS MOVED A PETI TION REQUESTING THE BENCH TO CONDONE THE DELAY.WE HAVE HEARD BOTH THE PARTIES ON THIS PRELIMINARY ISSUE. R T FASHION PVT. LTD. ITA NO.2180/KOL/2016 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 2 22 2 HAVING REGARD TO THE REASONS GIVEN IN THE PETITION, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 3. GROUND NO. 1 RAISED BY THE REVENUE READS AS FOLL OWS: 1.THAT THE LD CIT(A) ERRED IN LAW AS WELL AS FACTS IN ENTERTAINING NEW FACTS IN FORM OF DEVIATED SALE, WHICH LEADS TO A DELETION OF RS. 1,71,20,924/- AND UNDER DISCLOSURE OF PROFIT ESTIMATED. 4. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE AS SESSMENT YEAR THE ASSESSEE COMPANY HAS DECLARED GROSS PROFIT OF RS.7,41,29,757 /- @ 12.05% ON THE TOTAL TURNOVER OF RS. 61,48,03,672/-. THE SAID GROSS PROF IT INCLUDES THE VALUE OF EXCESS STOCK OF RS. 5,43,26,026/- WHICH WAS DISCLOSED U/S 132(4) OF I.T. ACT, 1961, DURING THE COURSE OF SEARCH & SEIZURE OPERATION. AFTER DED UCTING THE ABOVE DISCLOSURE THE GROSS PROFIT REDUCED TO RS.1,98,03,725/- WHICH IS 3 .22% OF TOTAL TURNOVER. THE AVERAGE GROSS PROFIT RATIO OF LAST 3 YEARS WITH TUR NOVER IS 6%. FROM THE ABOVE FACTS, LD AO NOTED THAT THE ASSESSEE HAS REDUCED ITS GROSS PROFIT RATIO TO ADJUST THE DISCLOSED AMOUNT, WHICH WAS DISCLOSED AS AN ADDITIO NAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAS REDU CED ITS GROSS PROFIT RATIO BY 2.78%. THE ASSESSEE COMPANY COULD NOT OFFER ANY JUS TIFICATION FOR THE SAME. IN THESE CIRCUMSTANCES THE GROSS PROFIT RATIO @ 6% IS APPLIED FOR THE YEAR UNDER CONSIDERATION. THE DIFFERENCE AMOUNT OF RS. 1,70,91 ,542/- WHICH IS 2.78% ( 6% - 2.78%) OF THE TOTAL TURNOVER, THAT IS (2.78% OF RS. 61,48,03,672)WAS TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. THUS, AO MADE ADDITION OF RS.1,70,91,542/-. 5. AGGRIEVED THE STAND SO TAKEN BY THE ASSESSING OF FICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHO HAS DEL ETED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD . CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. THE LD. DR FOR THE REVENUE, HAS SUBMITTED BEFOR E US THAT AFTER DEDUCTING THE DISCLOSURE MADE DURING THE SEARCH, THE GROSS PROFIT REDUCED TO RS.1,98,03,725/- WHICH IS 3.22% OF TOTAL TURNOVER. THE AVERAGE GROSS PROFIT RATIO OF LAST 3 YEARS WITH R T FASHION PVT. LTD. ITA NO.2180/KOL/2016 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 3 33 3 TURNOVER IS 6%. THEREFORE, THE ASSESSEE HAS REDUCED ITS GROSS PROFIT RATIO BY 2.78% (6%-3.22%). THE ASSESSEE COMPANY COULD NOT OFFER AN Y JUSTIFICATION FOR THE SAME. IN THESE CIRCUMSTANCES THE GROSS PROFIT RATIO @ 6% IS APPLIED FOR THE YEAR UNDER CONSIDERATION BY THE AO TO COMPUTE THE DIFFERENCE A MOUNT OF RS. 1,70,91,542/-. THEREFORE, THE ADDITION MADE BY AO SHOULD BE SUSTAI NED. 7.ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESS EE DEFENDED THE ORDER PASSED BY THE LD CIT(A). 8. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIV AL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT IN THE I NSTANT CASE, THE ADDITION TO THE TUNE OF RS.1,70,91,542/- WAS MADE BY THE ASSESSING OFFICER AS UNDISCLOSED INCOME FOR LOW GROSS PROFIT RATIO. THE ASSESSING OF FICER NOTED THAT THE ASSESSEE HAD NEVER INCURRED LOSSES DURING THE PREVIOUS ASSES SMENT YEARS 2007-08 TO 2012- 13, AND HAD DECLARED INCOME RANGING FROM RS. 22LAKH S TO 33 LAKHS. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE COM PANY SUBMITTED BEFORE THE LD. ASSESSING OFFICER THAT THE DECREASE IN THE GROSS PR OFIT IS BECAUSE OF DISCOUNTED SALE RANGING FROM 40% TO 70% OF THEIR STANDARD PRICE LI ST. IT IS A REGULAR FEATURE OF THE BUSINESS THAT THE DISCOUNTED SALE IS ORGANIZED SEAS ONALLY EVERY YEAR. HOWEVER, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NOT P ROVED WHETHER THE DISCOUNTED SALE WAS ORGANIZED IN EARLIER YEARS AND THEREFORE T HE ASSESSING OFFICER MADE ADDITION. 9. WE NOTE THAT THE MAIN GRIEVANCE OF THE LD DR FOR THE REVENUE IS THAT THE ASSESSEE COMPANY DID NOT PRODUCE EVIDENCE TO EXPLAI N THE LOSS. WE NOTE THAT CONSIDERING THE NATURE OF BUSINESS THE DISCOUNTED S ALE IS A REGULAR FEATURE OF THE BUSINESS AND THE DISCOUNTED SALE IS ORGANIZED SEASO NALLY EVERY YEAR. THE AO WAS OF THE VIEW THAT THERE IS NO PROOF WHETHER THE ASSE SSEE HAS ORGANIZED THE DISCOUNTED SALE IN EARLIER YEARS OR NOT. HOWEVER, W E NOTE THAT ASSESSEE HAS SUBMITTED FOLLOWING EVIDENCES AND EXPLANATIONS BEFO RE THE LD AO AS WELL AS BEFORE THE LD CIT(A): R T FASHION PVT. LTD. ITA NO.2180/KOL/2016 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 4 44 4 1) THE ASSESSEE HAD FURNISHED COMPLETE BOOK RECORDS , PARTY-WISE PURCHASES AND SALES DETAILS BEFORE THE AO DURING THE ASSESSMENT P ROCEEDINGS. 2) THE AO DID NOT REJECT DETAILS FILED BY THE AR AN D BOOKS OF ACCOUNTS DURING THE ASSESSMENT PROCEEDINGS. 3) THERE WAS NO DISCOUNTED SALE BY THE ASSESSEE IN FY 2010-11 AND 2011-12. 4) PARTY-WISE DETAILS, SALES LEDGER AND SUPPORTING SALES INVOICES IN RESPECT OF THE SARIES SOLD DURING THE STOCK CLEARANCE PERIOD IN FI NANCIAL YEAR 201-13 AND ALSO THE CORRESPONDING PURCHASE INVOICES OF SUCH NON-MOVING STOCK PERTAINING TO FYS 2010-11 AND 2011-12 WAS FURNISHED BEFORE THE AO. 5) AFTER EXCLUDING THE 'COST AND SALE VALUE RELATAB LE TO OBSOLETE STOCK, THE GROSS PROFIT OF THE APPELLANT WAS RS.5,64,29,878/- IN REL ATION TO SALE VALUE OF RS.57,84,92,439/-; WHICH IS IN PERCENTAGE TERMS COM ES TO 9.75%. THUS, THE EFFECTIVE GP RATE OF THE APPELLANT FOR AY 2013-14 W AS 9.75% AND NOT 3.22% AS ALLEGEDLY CALCULATED BY THE ASSESSING OFFICER. WE NOTE THAT THE AO COULD NOT APPRECIATE THE SITUAT ION AND CIRCUMSTANCES UNDER WHICH DISCOUNTED SALES WERE MADE IN FY 2012-13. IT ALSO SEEMS THAT AO HAS NOT CONSIDERED THE FACT THAT DISCOUNTED SALE WAS NOT DO NE BY THE ASSESSEE IN PREVIOUS TWO FINANCIAL YEARS. THE AO HAS ALSO NOT CONSIDERED THE CORRESPONDING PURCHASES OF SAREES IN FY 2010-11 AND 2011-12, WHICH WERE SOL D ON DISCOUNT OF 40% TO 70% DURING THE PERIOD OF DISCOUNTED SALE. WE NOTE THAT THE ASSESSEE HAD EXPLAINED THE REASONS BEFORE THE ASSESSING OFFICER AND JUSTIFIED THE LOW GROSS PROFIT IN THE RELEVANT YEAR IN COMPARISON TO EARLIER YEARS. THE A SSESSEE ALSO SUBMITTED BEFORE THE ASSESSING OFFICER THE DETAILS OF OLD, NON-MOVIN G AND DEFECTIVE SAREES WHICH IS THE PART OF THE OPENING STOCK AS ON 01.04.2012 AND THE SALE STOCK CLEARANCE PERIOD WHICH WAS ALSO FURNISHED BEFORE THE ASSESSING OFFIC ER. 10. WE NOTE THAT AO MADE GROSS PROFIT ADDITION, BAS ED ON ESTIMATION, WITHOUT REJECTING BOOKS OF ACCOUNTS OF THE ASSESSEE.WE NOTE THAT THE AO COULD HAVE VENTURED INTO ESTIMATION ONLY AFTER REJECTING THE B OOKS OF ACCOUNTS OF THE ASSESSEE COMPANY U/S 145(3) OF THE ACT AND THEREAFTER BY MAK ING BEST JUDGMENT ASSESSMENT U/S 144 OF THE ACT. HERE IN THIS CASE, THE AO HAS N OT PASSED ANY ORDER U/S 144 OF R T FASHION PVT. LTD. ITA NO.2180/KOL/2016 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 5 55 5 THE ACT. THE AO THUS WITHOUT REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE HAS GONE FOR ESTIMATION ON SUSPICION AND CONJECTURES TH AT THE ASSESSEE MAY BE INFLATING ITS GROSS PROFIT RATIO. WHILE SCRUTINIZING THE PURC HASES AND SALES, IF THE PURCHASES CLAIMED ARE NOT HAVING ANY NEXUS TO THE BUSINESS OF THE ASSESSEE OR IF THERE IS DEFICIENCY IN THE VOUCHERS OR THERE IS NO BILLS SUP PORTING THE INCURRENCE OF PURCHASES/EXPENDITURE, AT THE MOST PURCHASE EXPENS ES TO THE EXTENT THAT ARE NOT SUPPORTED BY THE VOUCHERS CAN BE HELD TO BE NON-GEN UINE AND CAN BE DISALLOWED BY THE AO; AND ITEM-WISE THE AO COULD HAVE DISALLOWED THE PURCHASES AND SALES RATHER THAN GOING FOR DISALLOWANCE OF PERCENTAGE B ASIS.FOR THAT WE RELY ON THE JUDGMENT HON`BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS TELETRONICS DEALING SYSTEMS LTD (228 TAXMANN 194). THE RELEVANT FINDING S OF THE HIGH COURT IS REPRODUCED BELOW: 'IT IS THAT BY SECTION 145 OF THE INCOME TAX ACT, 1 961, THE ASSESSING OFFICER HAS TO RECORD SATISFACTION ABOUT CORRECTNES S OR COMPLETENESS OF THE ACCOUNT OF ASSESSEE OR WHERE ,THE METHOD OF ACCOUNT ING PROVIDED IN SUB- SECTION (1) OF SECTION 145 OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB- SECTION (2), HAVE NOT BEEN REGULARLY FOLLOWED BY TH E ASSESSEE, THEN, THE ASSESSING OFFICER MAY MAKE AN ASSESSMENT AS PROVIDE D IN SECTION 144. MR. TEJVEER SINGH SUBMITS THAT WHEN THE ASSESSEE WAS NO T COMING FORWARD, NOT GIVING ANY EXPLANATION THEN THE ASSESSING OFFICER C ANNOT BE FAULTED FOR RECORDING THAT HE IS NOT SATISFIED ABOUT CORRECTNES S OR COMPLETENESS OF ACCOUNT OF THE ASSESSEE. SUCH FINDING SHOULD NOT HA VE BEEN REVERSED BY THE TRIBUNAL. MORE SO, WHEN IT WAS UPHELD BY THE COMMIS SIONER OF INCOME TAX (APPEALS). IN RELATION TO THESE QUESTIONS WHAT WE F IND IS THAT THE ASSESSING OFFICER HAS BEEN FAULTED FOR NOT FOLLOWING SECTION 145(3) OF THE ACT. THE TRIBUNAL HAS HELD THAT BEFORE THE ASSESSING OFFICER ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, HE OU GHT TO HAVE GIVEN PROPER OPPORTUNITY TO THE ASSESSEE. THE BOOKS OF AC COUNT COULD NOT HAVE BEEN REJECTED CASUALLY. THE TRIBUNAL IN PARAGRAPH 5 HAS HELD THAT REJECTION OF BOOKS OF ACCOUNT WAS NOT ITSELF CORRECT. IT WAS NOT DONE BY GIVING PROPER OPPORTUNITY TO THE ASSESSEE. THE REJECTION IS HIGH HANDED, THERE WAS AN AFFIDAVIT FILED EVEN BEFORE THE COMMISSIONER OF INC OME TAX (APPEALS) AND THE REVENUE DID NOT CONTROVERT THE CONTENTS THEREOF . HOWEVER, THE ASSESSING OFFICER MADE ADDITION OF GROSS PROFIT AND THAT WAS A MATTER CLARIFIED BY THE ASSESSEE IN THIS AFFIDAVIT. THE CO MMISSIONER OF INCOME TAX HAS NOT UPHELD THIS GROSS PROFIT ADDITION. THE COMPARISON BY THE ASSESSING OFFICER AND BY LOOKING AT THE VERY DOCUME NT, NAMELY, THE PROFIT AND LOSS ACCOUNT WAS IMPROPER. THE MERITS OF ADDITI ON HAVE BEEN GONE, INTO IN PARAGRAPHS 5 AND 6 OF THE IMPUGNED 'ORDER. THE TRIBUNAL HAS TERMED THE APPROACH OF ASSESSING OFFICER AS UNFORTU NATE. IT IS TERMED AS ARBITRARY, HIGH HANDED AND CANNOT BE SUSTAINED. WIT HOUT EXAMINING THE BASIC PARAMETERS FOR REJECTION OF THE BOOKS OF ACCO UNTS THE REVENUE GOES IN APPEAL BEFORE THE TRIBUNAL, THIS IS WHAT IS FAUL TED BY THE TRIBUNAL. TO OUR MIND, THE COMPLAINT OF THE ASSESSEE BEFORE THE TRIB UNAL WAS WHOLLY JUSTIFIED. NOT ONLY DID THE ASSESSING OFFICER FAIL TO RECORD THE REQUISITE R T FASHION PVT. LTD. ITA NO.2180/KOL/2016 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 6 66 6 SATISFACTION IN TERM OF SECTION L45(3) BUT PROCEEDE D TO MAKE ADDITION AND THAT WAS ESTIMATE WHICH WAS ALSO NOT SOUND. IN SUCH CIRCUMSTANCES THE OTHER QUESTIONS ARE ALSO NOT SUBSTANTIAL QUESTIONS OF LAW ENABLING US TO INTERFERE IN OUR APPELLATE JURISDICTION. THE APPEAL IS DEVOID OF MERITS. IT IS DISMISSED. THEREFORE, BASED ON THE ENTIRETY OF THE FACTS AND C IRCUMSTANCES OF THE CASE AND THE CASE LAWS CITED ABOVE WE ARE OF THE VIEW THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). THAT BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A), HIS ORDER ON THIS ISSUE, IS HERE BY UPHELD AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 11. GROUND NO. 2 RAISED BY THE REVENUE RELATES TO A DDITION OF RS. 29,382/- ON ACCOUNT OF MEMBERSHIP FEE. 12. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE A SSESSMENT YEAR THEASSESSEE COMPANY HAS DEBITED AN AMOUNT OF RS. 29,832/- UNDER THE HEAD SUBSCRIPTION & MEMBERSHIP CHARGES. DURING THE ASSESSMENT PROCEEDI NGS, THE ASSESSEE COMPANY WAS REQUIRED TO FILE THE DETAILS OF EXPENSES AND EX PLANATION HOW THE SAME IS BUSINESS EXPENDITURE. NO PLAUSIBLE EXPLANATION HAS BEEN OFFERED BY ASSESSEE. THEREFORE, AO TREATED THAT THE MEMBERSHIP CHARGES O F RS. 29,832/- WERE PAID FOR THE BENEFIT OF THE DIRECTORS AND THEREFORE ARE OF P ERSONAL NATURE AND ACCORDINGLY, THE SAME WAS DISALLOWED AND ADDED TO THE TOTAL INCO ME OF THE ASSESSEECOMPANY . 13. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 14. BEFORE US, THE LD. DR HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY DISCUSSED IN OUR EARL IER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. ON THE OTHE R HAND THE LD. COUNSEL FOR THE ASSESSEE HAS DEFENDED THE ORDER PASSED BY THE LD CI T(A). 15. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RI VAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSE SSING OFFICER DISALLOWED THE SAID PAYMENT HOLDING THAT IT WAS NOT RELATED TO THE BUSINESS OF THE ASSESSEE BUT FOR R T FASHION PVT. LTD. ITA NO.2180/KOL/2016 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 7 77 7 THE PERSONAL BENEFIT OF THE DIRECTORS. THE COUNSEL SUBMITS BEFORE US THAT THE OBSERVATION OF THE ASSESSING OFFICER WAS WHOLLY CON TRADICTORY TO THE JURISDICTIONAL FACTS OF THE CASE. THE ASSESSEE IS ENGAGED IN THE B USINESS OF DEALING IN SAREES. THE ASSESSEE HAS OBTAINED MEMBERSHIP OF CERTAIN PRESTIG IOUS CLUB AT KOLKATA. CONSIDERING THE NATURE OF BUSINESS OF THE ASSESSEE COMPANY, IT IS ALSO NECESSARY FOR THE DIRECTORS TO INTERACT WITH SUPPLIERS, BROKE RS, AND CUSTOMERS IN ORDER TO FINALIZE DEALS AND MARKET & SELL THEIR PRODUCTS. TH E DIRECTORS OF THE ASSESSEE COMPANY ARE ALSO REQUIRED TO MAINTAIN CORDIAL BUSIN ESS RELATIONS WITH ITS BUSINESS ASSOCIATES. SUCH CLUBS PROVIDE A PERFECT PLATFORM F OR INTERACTIONS EXCHANGE OF INFORMATION AND TO CONDUCT BUSINESS. THE MEMBERSHIP & SUBSCRIPTION EXPENSES ARE THEREFORE WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPO SES AND ALLOWABLE AS DEDUCTION FROM THE BUSINESS PROFITS OF THE ASSESSEE. WE NOTE THAT VARIOUS COURTS HAVE HELD THAT MEMBERSHIP FEES PAID TO CLUBS OR ORGANIZATIONS IS REVENUE IN NATURE AND SHOULD BE ALLOWED AS BUSINESS EXPENSE IN COMPUTING BUSINESS INCOME. SOME OF THE RELEVANT DECISIONS ARE AS BELOW: CIT VS. GROZBECKERT ASIA LIMITED (351 ITR 196) (P&H HC) CIT VS. LUBRIZOL INDIA LTD. (37 TAXMANN.COM 294) (B OM HC) GUJRAT STATE EXPORT CORPN. (209 ITR 649) (GUJ HC) ATTENTION WAS FURTHER INVITED TO THE DECISION OF TH E HON`BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SUNDARAM INDUSTRIES LTD. (240 I TR 335). IN THAT CASE THE ASSESSEE COMPANY HAD PAID SUBSCRIPTION AMOUNTS TO R OTARY CLUB, GYMKHANA CLUB AND MYLAPORE CLUB WHICH WAS CLAIMED AS BUSINESS EXP ENDITURE. THE TRIBUNAL HELD THAT THE EXPENDITURE WAS NOT INCURRED FOR PERSONAL BENEFIT OF DIRECTOR BUT IN ORDER TO PROMOTE BUSINESS, THE HIGH COURT CONCURRED WITH THE VIEW OF THE TRIBUNAL AND HELD THE SUBSCRIPTION TO CLUB IS ALLOWABLE BUSINESS EXPENDITURE. SIMILAR VIEW WAS EXPRESSED BY THE BOMBAY HIGH COURT IN THE DECISION OF OTIS ELEVATOR CO. (INDIA) LIMITED (195 ITR 682). KEEPING IN VIEW FACTS OF THE CASE AND CASE LAWS CITED ABOVE, WE ARE OF THE VIEW THAT THERE IS NO INFIRMIT Y IN THE ORDER OF LD CIT(A). THAT BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASS ED BY THE LD. CIT(A), HIS ORDER ON THIS ISSUE, IS HEREBY UPHELD AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. R T FASHION PVT. LTD. ITA NO.2180/KOL/2016 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 8 88 8 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 10.04.2019 SD/- ( S.S.GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 10/04/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. ACIT, CENTRAL CIRCLE-1(2), KOLKATA 2. R T FASHION PVT. LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES