DEEPAK C DALAL, MUMBAI V. ITO 12(1)(4), MUMBAI

ITA 3086/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2651 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 04-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 04-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANILKUMAR DHONDIAL
• Keywords: Business expenditure; Revenue expenditure
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH , MUMBAI BEFORE SHRI SHAILEND RA K UMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER . ITA. NO. 3086 / M UM /20 1 2 (ASSESSMENT YEAR: 2 00 7 - 0 8 ) MR. DEEPAK C. DALAL 18 - B, RAJ ABAHADUR MANSION, 8, HAMAM STREET, FORT, MUMBAI - 400023 APPELLANT VS. INCOME - TAX OFFICER 12(1) ( 4 ) , AAYAKAR BHAVAN, M. K. MARG, MUMBAI 400 023 RESPONDENT PAN: AA C P D 9382Q / BY APPELLANT : SHRI NEELKANTH KHANDELWAL , A.R. / BY RESPONDENT : SHRI ANIL KUMAR DHONDIA L , D.R. / DATE OF HEARING : 0 8 . 1 0.2015 / DATE OF PRONOUNCEMENT : 30 . 1 0 .201 5 I T A NO . 3086 / M UM / 1 2 A.Y. 0 7 - 0 8 [ MR. DEEPAK C. DALAL VS. IT O ] PAGE 2 ORDER P ER SHAILENDRA KUMAR YADAV, J . M: THIS APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME - TAX (APPEALS) - 2 1 , MUMBAI , DATED 0 1 . 0 3 . 20 1 2 FOR A.Y. 200 7 - 0 8 ON FOLLOWING GROUNDS: 1. THE COMMISSIONER OF INCOME - TAX (APPEALS) - 21, MUMBAI (HEREINAFTER REFERRED TO AS THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE INCOME - TAX OFFICER 12(1)(4), MUMBAI (HEREINAFTER REFERRED TO AS THE ASSESSING OFFICER) IN DISALLOWING A SUM OF RS 10,04,416 BEING CLUB MEMBERSHIP FEES ON THE GROUND THAT THE SAME IS PERSONAL EXPENDITURE AND CANNOT BE ALLOWED AS EXPENSE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE APPELLANT CONTENDS THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT NOT TO HAVE UPHELD THE DISALLOWAN CE OF THE SAID EXPENSE INASMUCH AS THE SAID SAME IS A NECESSARY BUSINESS EXPENDITURE AND HENCE, THE DISALLOWANCE REQUIRES TO BE DELETED. 2. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING FOREIGN TRAVEL EXPENSES OF RS 8,0 4,552 BY TREATING THE SAME TO BE PERSONAL IN NATURE. THE APPELLANT CONTENDS THAT ON THE FACTS AND IN LAW, TH E CI T(A) OUGHT NOT TO HAVE UPHELD THE DISALLOWANCE OF THE SAID EXPENSE INASMUCH AS THE SAID EXPENSE IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PUR POSE OF BUSINESS AND HENCE, THE DISALLOWANCE REQUIRES TO BE DELETED. 3. CIT (A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING 10 PER CENT OF TELEPHONE EXPENSES ON THE GROUND THAT THE EXPENDITURE IS INCURRED FOR PERSONAL PURPOSE. I T A NO . 3086 / M UM / 1 2 A.Y. 0 7 - 0 8 [ MR. DEEPAK C. DALAL VS. IT O ] PAGE 3 T HE APPELLANT CONTENDS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT NOT TO HAVE UPHELD THE DISALLOWANCE OF THE SAID EXPENSE AND HENCE, THE DISALLOWANCE REQUIRES TO BE DELETED. THE APPELLANT, IN THE ALTERNATIVE, CONTE NDS THAT THE DISALLOWANCE IS ON A HIGHER SIDE AND REQUIRES TO BE REDUCED. 4. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN CHARGING INTEREST UNDER SECTIONS 234A, 234B AND 234C OF THE ACT. THE APPELLANT CONTENDS THAT THE ASSESSIN G OFFICER OUGHT NOT TO HAVE CHARGED THE IMPUGNED INTEREST UNDER SECTIONS 234A, 234B AND 234C INASMUCH AS - (A) THE ASSESSING OFFICER HAS NOT GIVEN AN OPPORTUNITY TO THE APPELLANTS BEFORE CHARGING THE SAID INTEREST AS REQUIRED BY THE PRINCIPLES OF NATURE JUSTICE, (B) THE CHARGING OF INTEREST IS NOT IN ACCORDANCE WITH LAW. 2. FIRST ISSUE IS WITH REGARDS TO ALLOWABILITY OF RS.10,04,416/ - BEING CLUB MEMBERSHIP FEES. LEARNED AUTHORIZED REPRESENTATIVE POINTED OUT THAT THIS ISSUE IS COVERED IN FAVOUR OF A SSESSEE VIDE ORDER OF HONBLE BOMBAY HIGH COURT IN CASE OF OTIS ELEVATOR CO. (INDIA) LTD. VS. CIT [1992] 195 ITR 682 (BOM.), WHEREIN IT HAS BEEN HELD THAT PAYMENT OF CLUB FEES MADE TO PROMOTE BUSINESS INTERESTS IS ALLOWABLE EXPENDITURE AND SIMILAR VIEW HAS BEEN TAKEN BY ITAT, MUMBAI H BENCH IN CASE OF LUBRIZOL INDIA PVT. LTD. VS. ACIT IN ITA NO. 2848/MUM/2008 FOR A.Y. 2004 - 05. NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLEDGE ON BEHALF OF I T A NO . 3086 / M UM / 1 2 A.Y. 0 7 - 0 8 [ MR. DEEPAK C. DALAL VS. IT O ] PAGE 4 REVENUE. FACTS BEING SIMILAR, SO, FOLLOWING SAME REASONING, CLUB MEMBERSHIP FEE IS ALLOWED AS REVENUE EXPENDITURE. ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 3 . NEXT ISSUE IS WITH REGARDS TO DISALLOWANCE OF FOREIGN TRAVEL EXPENSES OF RS.8,04,552/ - BY TREATING THE SAME TO BE PERSONAL IN NATURE. ASSESSEE CLAIMED SAID SUM TOWARDS FOREIGN TRAVEL EXPENSES. ASSESSING OFFICER NOTICED THAT EXPENSES WERE INCURRED FOR TRAVELLING TO USA, DUBAI AND THAILAND. THE ISSUE OF FOREIGN TRAVEL IS NOT IN DISPUTE BUT ITS NEXUS WITH ASSESSEES BUSINESS WAS DOUBTED. SO, SAME WAS DISALLO WED, WHICH WAS CONFIRMED BY CIT(A). THE STAND OF ASSESSEE BEFORE US IS THAT EXPENDITURE FOR FOREIGN TRAVEL WAS FOR BUSINESS PURPOSE. ON OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 3.1 AFTER GOING THROUG H RIVAL SUBMISSIONS AND MATERIAL ON RECORD, WE FIND THAT THERE IS NOTHING ON RECORD THAT ASSESSEE S FOREIGN TRIP HAS NEXUS WITH BUSINESS OF ASSESSEE . THE LATEST MARKET TRENDS, GLOBAL TRENDS AND DEVELOPMENT IN BUSINESS OF SECURITIES AND STOCK EXCHANGE WERE READILY AVAILABLE IN INDIA ITSELF BY USING INFORMATION TECHNOLOGY AND FOR THAT PURPOSE; THERE WAS NO NEED FOR MAKING FOREIGN TRAVEL. ACCORDINGLY, ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING THE SAME. WE UPHOLD THE SAME. 4 . NEXT ISSUE IS WITH REGARD S TO DISALLOWANCE OF 10% OUT OF TELEPHONE EXPENSES ON THE GROUND THAT THE EXPENDITURE IS I T A NO . 3086 / M UM / 1 2 A.Y. 0 7 - 0 8 [ MR. DEEPAK C. DALAL VS. IT O ] PAGE 5 INCURRED FOR PERSONAL PURPOSE. TAKING ALL FACTS AND CIRCUMSTANCES INTO CONSIDERATION, WE RESTRICT THE DISALLOWANCE 5%. LAST ISSUE IS WITH REGARDS TO INTEREST U/S 234A , 234B AND 234C OF ACT WHICH IS CONSEQUENTIAL. 5 . AS A RESULT, APPEAL FILED BY ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 30TH DAY OF OCTO BER , 201 5 . SD/ - SD/ - ( RAJESH KUMAR ) (SHAILENDRA KUM AR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI : DATED 30 / 1 0 /2015 S.K.SINHA / COPY OF ORDER FORWARDED TO: - 1 . / REVENUE 2 . / ASSESSEE 3 . / CONCERNED CIT 4 . - / CIT (A) 5 . , , / DR, ITAT, MUMBAI 6 . / GUARD FILE. BY ORDER / , / , , STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 0 8 . 1 0.2015 2) DI RECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 0 9 . 1 0.2015 4) DATE OF CORRECTION 5) DATE OF FURTHER CORRECTION 6) DATE OF FINAL SIGN BY MEMBERS 7) ORDER UPLOADED ON