Patra Enterprisers, Cuttack V. ACIT, Circle-1(2), Cuttack

ITA 350/CTK/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7187 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 08-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 22-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: J M PATTNAIK
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO. 350 /CTK/2016 ASSESSMENT YEAR : 2007 - 08 M/S. PATRA ENTERPRISES, , PALASH KUMAR PATRA, MALGODOWN, CUTTACK VS. ACIT, CIRCLE 1 (2), CUTTACK PAN/GIR NO. ABAPP 0976 F (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI J.M.PATTNAIK, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 08 /03 / 2017 DATE OF PRONOUNCEMENT : 08 /03 / 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 20.6.2016 , FOR THE ASSESSMENT YEAR 2007 - 08 . 2. GROUND NOS.1,4 & 5 OF THE APPEAL ARE GENERAL IN NATURE AND HENCE, REQUIRES NO SEPARATE ADJUDICATION BY ME. 3. IN GROUND NO.3 O F THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN DISALLOWING PUJA EXPENSES INCURRED BY THE ASSESSEE FIRM. 2 ITA NO. 350/CTK/2016 ASSESSMENT YEAR :2007 - 08 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD DEBITED A SUM OF RS. 1 ,32,101/ - TOWARDS DONATION AND PUJA EXPENSES. IN THE OPINION OF THE ASSESSING OFFICER, THE SAID EXPENSES WERE NOT INCIDENTAL TO THE BUSINESS OF THE ASSESSEE. HENCE, HE DISALLOWED DEDUCTION FOR THE SAME. 5. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY FOLLOWING THE DECISION OF CHHATISGARH HIGH COURT IN THE CASE OF HIRA FERRO ALLOYS LTD VS. DCIT, (2009) 227 CTR 508 (CHH ), WHEREIN, IT WAS HELD THAT PUJA EXPENSES INCURRED BY THE ASSESSEE ARE NOT INCIDENTAL TO THE BUSINESS OF THE ASSESSEE AND SHOULD NOT BE ALLOWED U/S.37 OF THE ACT. 6. BEFORE ME, LD AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT PUJA EXPENSES WERE INCURRED BY THE ASSESSEE FOR THE WELFARE OF THE STAFF OF THE ASSESSEE AND RECREATION OF STAFF AND HENCE, WAS INCIDENTAL TO THE BUSINESS OF THE ASSESSEE AND, THEREFORE, DEDUCTION FOR THE SAME SHOULD BE ALLOWED. 7. ON THE OTHER HAND, LD DEPARTMENTAL REPRESE NTATIVE RELIED ON THE ORDERS OF LOWER AUTHORITIES. 8. I FIND THAT HONBLE P&H HIGH COURT IN THE CASE OF ATLAS CYCLE INDUSTRIES LTD. VS. COMMISSIONER OF INCOME TAX, 134 ITR 458 (P&H ) HAS HELD THAT NO CURBS CAN BE PLACED ON THE DISCRETION OF THE ASSESSEE TO PROVIDE THE TYPE OF RECREATION, WHICH, ACCORDING TO IT , WOULD 3 ITA NO. 350/CTK/2016 ASSESSMENT YEAR :2007 - 08 BEST ADVANCE THE INTERESTS OF THE BUSINESS. IF THE RECREATION PROVIDED, EVEN IF IT IS IN THE NATURE OF RELIGIOUS ACTIVITIES, HAS DIRECT NEXUS WITH THE WELFA RE OF A CLASS OF THE WORKERS ENGAGED BY THE ASSESSEE, IT IS WHOLLY IMMATERIAL IF THE RECREATION PROVIDED IS DIRECTLY OR INDIRECTLY CONNECTED WITH THE RELIGIOUS TEN ETS OF A SECTION OF THE SOCIETY. FURTHER, THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF B RIJRAMAN DAS & SONS VS. COMMISSIONER OF INCOME TAX , 142 ITR 509 (ALL) HAS HELD THAT GANESH PUJA EXPENSES, WHICH ARE INCURRED BY HINDU TRADERS IN A CUSTOMARY WAY AT THE TIME OF MAHURAT OR OPENING OF THEIR ACCOUNT BOOKS ON THE AUSPICIOUS OCCASION OF DIWALI ARE TO BE TREATED AS EXPENDITURE LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE ASSESSEE'S BUSINESS AND, THEREFORE, ALLOWABLE U/S.37(1) OF THE ACT, 1961. STILL FURTHER, THE C BDT CIRCULAR NO.13/A/20/68 - IT(A - II ) DATED 3.10.1968 HAS STATED THAT AS T HE EXPENSES INCURRED ON THE OCCASION OF DIWALI AND MAHURAT ARE IN THE NATURE OF BUSINESS EXPENDITURE, IT HAS BEEN DECIDED NOT TO LAY DOWN ANY MONETARY LIMITS FOR THE PURPOSE OF THEIR ALLOWANCE IN THE INCOME - TAX ASSESSMENTS SUBJECT TO THE INCOME - TAX OFFICER BEING SATISFIED THAT THE EXPENSES ARE ADMISSIBLE AS A DED UCTION UNDER THE LAW AND ARE NOT EXPENSES OF A PERSONAL, SOCIAL OR RELIGIOUS NATURE. 9. W HERE THERE ARE CONTRARY DECISIONS OF HONBLE HIGH COURTS ON AN ISSUE AND NONE OF WHICH IS HONBLE JURISDICTIONAL HIGH COURT, THEN THE DECISION IN FAVOUR OF THE ASSES SEE SHOULD BE FOLLOWED IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., 88 ITR 192 (SC). IN VIEW OF ABOVE, RESPECTFULLY FOLLOWING THE DECISIONS OF 4 ITA NO. 350/CTK/2016 ASSESSMENT YEAR :2007 - 08 HONBLE PUNJAB & HARYANA HIGH COURT AND ALLAHABAD HIGH COU RT , I SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE ADDITION OF RS.1,32,101/ - MADE ON PUJA EXPENSES AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE 10 . GROUND NO.3 OF THE APPEAL RELATES TO DISALLOWANCE OF PROFESSIONAL TAX AT RS.2,500/ - . 11 . THIS GROUND WAS NOT PRESSED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE DURING THE COURSE OF HEARING. HENCE, THIS GROUND IS DISMISSED AS NOT PRESSED. 12 . IN TH E RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 08 /03 /2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 08 /03 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : M/S. PATRA ENTERPRISES, , PALASH KUMAR PATRA, MALGODOWN, CUTTACK 2. THE RESPONDENT :ACIT, CIRCLE 1 (2), CUTTACK 3. THE CIT(A) CUTTACK 4. PR.CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//