M/s. Shree Bahubali Stock Broking Ltd., (Formerly known as Shree Bahubali International Limited), Kolkata V. ITO, Ward - 5(1), Kolkata

ITA 2612/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4943 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-12-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 18-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: MANOJ KATARUKA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH KOLKATA BEFORE SHRI S. S. GODARA, JM & DR. A.L. SAINI, AM ITA NO.2612/KOL/2018 (ASSESSMENT YEAR: 2013-14) M/S SHREE BAHUBALI STOCK BROKING LTD. (FORMERLY KNOWN AS SHREE BAHUBALI INTERNATIONAL LIMITED) JUTE HOUSE, 2 ND FLOOR, 12, INDIA EXCHANGE PLACE, KOL-1. VS. ITO, WARD-5(1), KOLKATA ./ ./PAN/GIR NO. : AAECS4019E ( /APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY : SHRI MANOJ KATARUKA, DR RESPONDENT BY : SMT. RANU BISWAS, ADDL. CIT / DATE OF HEARING : 19/12/2019 /DATE OF PRONOUNCEMENT : 21/02/2020 / O R D E R PER DR. A. L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2013-14 IS DIRECTED AGAINST THE ORDER PASSED BY COMMISSIONER OF INCOME TAX(APPEALS)-2, KOLKATA IN APPEAL NO.10439/CIT(A)-2/2016-17 WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ACTION OF THE LD. CIT(A) TO CONFIRMING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF SALES PROMOTION EXPENSES FOR RS.24,15,400/-IS CONTRARY TO THE MATERIAL EVIDENCES ON RECORDS AND THE ADDITION MADE BAD IN LAW. 2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ACTION OF THE LD. CIT(A) TO CONFIRMING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF SALES PROMOTION EXPENSES OF RS.24,15,400/- IS ARBITRARY, EXCESSIVE AND ILLEGAL. 3) THAT THE ASSESSMENT FRAMED BY THE AO AND PARTY CONFIRMED BY THE LD. CIT(A)IS UNJUST, ILLEGAL, ARBITRARY AND EXCESSIVE. ITA NO.2612/KOL/2018 M/S SHREE BAHUBALI STOCK BROKING LTD. 2 4) THAT THE ABOVE GROUNDS OF APPEAL WILL BE ARGUED IN DETAIL AT THE TIME OF HEARING AND THE APPELLANT CRAVE LEAVE TO SUBMIT ADDITIONAL GROUNDS OF APPEAL, IF ANY, AND/OR ALTER, VERIFY, MODIFY OR RECTIFY ANY GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 3. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE SCRUTINY PROCEEDINGS, A.O NOTICED FROM THE PROFIT AND LOSS A/C THAT ASSESSEE HAS DEBITED AN AMOUNT OF RS.89,17,970/- ON ACCOUNT OF SALES PROMOTION EXPENSES. THE ASSESSEE INCURRED EXPENSES OF RS. 24,15,400/- FOR A DINNER ARRANGEMENT IN TAJ BENGAL, A FIVE STAR HOTEL ALSO WHICH INCLUDED IN THE TOTAL AMOUNT OF RS.89,17,970/-. AT THE TIME OF SCRUTINY PROCEEDING THE A/R OF THE ASSESSEE STATED THAT DINNER PARTY WAS THROWN FOR SUB BROKERS AND THE CLIENTS OF THE ASSESSEE. HOWEVER, A.O NOTICED THAT NO SUCH DINNER PARTY FOR 850 PERSONS WAS THROWN IN THE PREVIOUS YEAR 2011-12 THOUGH THE VOLUME OF BUSINESS AS WELL PROFIT WERE SUBSTANTIALLY HIGHER IN THE LAST F. Y. 2011-12. THE A.O ALSO NOTICED THAT THESE SALES PROMOTION EXPENSES FOR F.Y 2012-13 HAS BEEN SHOWN BY THE ASSESSEE MORE THAN DOUBLE THE PREVIOUS YEAR. THEREFORE, A.O HELD THAT THE PAYMENT FOR DINNER PARTY FOR RS.24,15,400/- IS NOTHING BUT A PERSONAL EXPENDITURE, HENCE A.O MADE ADDITION OF RS.24,15,400/-. 4. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHO HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERSUED THE MATERIALS AVAILABLE ON RECORD. LD. DR FOR THE REVENUE REITERATED THE STAND TAKEN BY ASSESSING OFFICER, WHEREAS LD. COUNSEL FOR THE ASSESSEE RELIED ON THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). WE NOTE THAT THE AO HAS MADE THE ENTIRE DISALLOWANCE OF SALES PROMOTION EXPENSES PAID TO TAJ BENGAL FOR BOOKING FOR DINNER PARTY FOR SUB- BROKERS, BUSINESS ASSOCIATES AND CLIENTS ORGANIZED BY THE ASSESSEE. THE AO SHOULD HAVE CONSIDERED THE NATURE OF THE BUSINESS OF THE ASSESSEE AND THE DIRECT RELATIONSHIP OF THE PARTIES. THE ASSESSEE HAS INCURRED THESE EXPENSES TO MAINTAIN BUSINESS RELATIONSHIP. THE BOARD RESOLUTION PASSED BY THE COMPANY CLEARLY SHOWS ABOUT INCURRING THESE EXPENSES. THE LETTER ISSUED BY THE COMPANY TO THE ITA NO.2612/KOL/2018 M/S SHREE BAHUBALI STOCK BROKING LTD. 3 HOTEL AND ACCEPTED BY THE MANAGER OF THE HOTEL ALSO MENTIONED THE BUSINESS RELATION OF THE DINNER. IT IS PURELY A BUSINESS TRANSACTION NECESSARY FOR THE CARRYING ON OF THE BUSINESS. WE NOTE THAT A.O HAS FRAMED ASSESSMENT U/S 143(3) AND BOOKS OF ACCOUNTS WERE NOT REJECTED. THE ASSESSEE INCURRED THESE EXPENSES FOR BUSINESS PURPOSES. THE ASSESSING OFFICER HAS NOT DOUBTED THE GENUINENESS OF THESE EXPENSES. THEREFORE, CONSIDERING THE FACTUAL POSITION NARRATED ABOVE, WE DELETE THE ADDITION OF RS.24,15,400/-. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21/02/2020. SD/- (S. S. GODARA) SD/- (A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED: 21/02/2020 RS, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT- M/S SHREE BAHUBALI STOCK BROKING LTD. 2. / THE RESPONDENT.- ITO, WARD-5(1), KOLKATA 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. [ / GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR, I.T.A.T, KOLKATA BENCHES, KOLKATA .