M/s Mallige Medical Centre Pvt. Ltd., Bangalore V. JCIT, Bangalore

ITA 400/BANG/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9547 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 28-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Keywords: Business expenditure; Revenue expenditure
• Section: 37(1); 250; 37; 6

Judgement Text

PAGE 1 OF 12 ITA NO.400/BANG/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B' BEFORE SHRI K P T THANGAL, VICE PRESIDENT AND SHRI N L KALRA, A.M. ITA NO.400/BANG/09 (ASST. YEAR 2005-06) M/S MALLIGE MEDICAL CENTRE PVT. LTD., NO.31/32, CRESCENT ROAD, BANGALORE-1. - APPELLANT VS THE JOINT COMMISSIONER OF INCOME TAX, RANGE-5, BANGALORE. - RESPONDENT APPELLANT BY : SHRI S PARTHASARATHI RESPONDENT BY : SMT. V S SREELEKHA O R D E R PER N L KALRA : THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF LEARNED CIT(A)-II, BANGALORE DATED 11TH MARCH, 2 009. 2. THE GROUNDS OF APPEAL RAISED BY THE APPELLANT AR E AS UNDER:- I) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE TUITION FEE PAID FOR HIGHER EDUCATION OF DR. GAURI SRIRAM WAS FOR THE PURPOSE OF BUSINESS OF THE APPELLANT AND THUS THE EXPENDITURE INCURRED WAS INCIDENTAL TO CARRY ON THE PROFESSIONAL ACTIVITIES OF THE PAGE 2 OF 12 ITA NO.400/BANG/2009 2 APPELLANT COMPANY AND THUS OUGHT TO HAVE ALLOWED THE SAME AS REVENUE EXPENDITURE. II) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE MERE FACT THAT THE PAYEE IS THE DAUGHTER OF MANAGING DIRECTOR WOULD NOT DISQUALIFY THE CLAIM OF THE APPELLANT SINCE SHE IS ALREADY UNDER THE EMPLOYMENT OF THE APPELLANT COMPANY AS A QUALIFIED DOCTOR AND FURTHER STUDIES TO BE MADE BY HER WOULD BE OF ADVANTAGE TO THE APPELLANT COMPANY AS THERE ARE NO QUALIFIED DOCTORS IN THE FIELD IN ITS PROFESSIONAL ACTIVITY AND THUS LIABLE TO BE ALLOWED AS REVENUE EXPENDITURE U/S 37(1) OF THE ACT. III) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE CLAIM OF THE APPELLANT WAS SUPPORTED BY SEVERAL JUDICIAL PRONOUNCEMENT AND ACCORDINGLY THIS DISALLOWANCE IS OPPOSED TO LAW AND LIABLE TO BE CANCELLED. 3. DURING THE COURSE OF PROCEEDINGS, THE AO NOTICE D THAT THE ASSESSEE HAS DEBITED A SUM OF RS.5 LAKHS T OWARDS FEE PAID FOR THE HIGHER EDUCATION OF DR. GAURI SRIRAM I N THE FIELD OF RADIO DIAGNOSIS WITH MANIPAL UNIVERSAL LEARNING PRI VATE LIMITED ATTACHED TO MANIPAL HOSPITAL, BANGALORE. DR. GAURI SREERAM IS THE DAUGHTER OF DR. A C SRIRAM AND MRS. KALA SRIRAM WHO ARE THE MANAGING DIRECTOR AND EXECUTIVE DIRECTOR OF THE COMPANY RESPECTIVELY. BEFORE THE AO IT WAS CONTENDED THAT T HE SPONSORING OF DR. GAURI SRIRAM FOR HIGHER EDUCATION WILL LEAD TO SPECIALIZATION OF RADIOLOGICAL INVESTIGATIONS AND O N ACCOUNT OF ACUTE SHORTAGE OF SUCH PROFESSIONALS IN THIS FIELD, SERVICES OF DR. GAURI SRIRAM AFTER COMPLETION OF HER HIGHER STU DIES WILL BE PAGE 3 OF 12 ITA NO.400/BANG/2009 3 OF GREAT HELP TO THE COMPANY. DR. GAURI SRIRAM COMM ITTED TO WORK FOR THE COMPANY AFTER COMPLETION OF HER HIGHER STUDIES. THE AMOUNT WAS PAID DIRECTLY AS TUITION FEE TO THE I NSTITUTION. IT WAS THEREFORE STATED THAT THE AMOUNT DEBITED IS REVENUE EXPENDITURE. IT WAS ALSO CONTENDED THAT THERE IS N O CASE FOR DISALLOWING THE EXPENDITURE U/S 40A(2)(B) AS THE EX PENDITURE WAS FOR THE FUTURE BENEFIT OF THE COMPANY. IN SUPPO RT OF THE CLAIM, THE ASSESSEE RELIED ON THE FOLLOWING DECISIO NS:- I) CIT V KOHINOOR PAPER PRODUCTS 226 ITR 220 (MADHYA PRADESH) II) HINDUSTAN ALUMINIUM CORPORATION LIMITED V CIT 159 ITR 673 (CALCUTTA) III) SAKAL PAPERS PRIVATE LIMITED V CIT 114 ITR 256 4. THE ASSESSING OFFICER NOTICED THAT THERE ARE SUBSEQUENT DECISIONS OF VARIOUS HIGH COURTS WHICH H AVE HELD THAT EXPENSES OF THE NATURE REFERRED TO ABOVE ARE N OT ALLOWABLE. THE LEARNED AO HAS REFERRED TO THE DECI SION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF M SUBRAMAN IAM BROTHERS V CIT 250 ITR 769. THE HON'BLE MADRAS HIG H COURT HAS DISSENTED THE DECISION OF HON'BLE MADHYA PRADESH HIGH COURT. THE HON'BLE MADRAS HIGH COURT IN THE CASE O F CIT V RKKR STEELS PRIVATE LIMITED 258 ITR 306 HELD THAT EXPENDITURE ON EDUCATION OF SON OF DIRECTOR IS NOT DEDUCTIBLE. THE LEARNED AO ALSO REFERRED TO THE OBSERVATION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF RKKR STEEL S PVT. LTD. PAGE 4 OF 12 ITA NO.400/BANG/2009 4 (SUPRA) IN WHICH IT WAS OBSERVED THAT IF THE LOGIC OF THE ASSESSEE IN ALLOWING THE EXPENDITURE IS TO BE ACCEP TED THEN IN EVERY FAMILY OWNED BUSINESS, ALL THE EXPENDITURE INCU RRED IN BRINGING UP THE CHILDREN WHO MAY LATER ON GIVEN A RO LE IN THE BUSINESS AS PARTNERS OR DIRECTORS COULD BE CLAIMED AS BUSINESS EXPENDITURE IN TRAINING THE PROSPECTIVE EMPLOYEES AN D DIRECTORS OF THE BUSINESS. THE LEARNED AO THEREFORE DISALLOW ED THE EXPENDITURE OF RS.5 LAKHS. 5. BEFORE THE LEARNED CIT(A), THE ASSESSEE FILED C OPY OF THE RESOLUTION PASSED BY THE BOARD OF DIRECTORS A ND ALSO COPY OF THE LETTER ADDRESSED TO DR. GAURI SRIRAM SPO NSORING HER FOR THE POST-GRADUATE COURSE. DR. GAURI SRIRAM ALS O GAVE AN UNDERTAKING THAT SHE WILL WORK FOR THE COMPANY ON CO MPLETION OF THE COURSE. HOWEVER, THE LEARNED CIT(A) FELT THAT THE AO HAS GIVEN SOLID REASONS FOR DISALLOWING THE CLAIM BY REF ERRING TO THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CA SE OF RKKR STEELS LTD. THE LEARNED CIT(A) ALSO REFERRED TO THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V HINDUSTAN HOSIERY INDUSTRIES 209 ITR 383. IN VIEW O F THE DECISIONS OF THE HON'BLE BOMBAY HIGH COURT AND HON'B LE MADRAS HIGH COURT, THE LEARNED CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 6. DURING THE COURSE OF PROCEEDINGS BEFORE US, THE LEARNED AR HAS FILED A PAPER BOOK CONTAINING 6 PAGE S. PAGE NO.1 PAGE 5 OF 12 ITA NO.400/BANG/2009 5 AND 2 CONTAIN THE EXTRACT FROM THE MINUTES OF THE B OARD MEETING HELD ON 17TH FEBRUARY, 2005. THE LEARNED AR DREW OUR ATTENTION TO SUCH MINUTES IN WHICH IT HAS BEEN MENT IONED THAT IT IS THE POLICY OF THE ORGANIZATION TO ENCOURAGE THE E MPLOYEES OR THEIR CHILDREN TO CONTINUE STUDIES IN MEDICAL RELAT ED OR MANAGEMENT RELATED FIELDS. ALL THOSE WHO WISH TO S TUDY NURSING COURSES ARE GIVEN FREE SEAT IN THE NURSING COLLEGE RUN BY THE MANAGEMENT WITH A CONDITION THAT THEY HAVE TO SERVE THE APPELLANT FOR A PERIOD OF TWO YEARS AFTER COMPLETING THE COURSE. DURING THE BOARD MEETING, THE CHAIRMAN EXPLAINED TH AT THE FIELD CHOSEN BY DR. GAURI SRIRAM IS THE MOST REQUIRE D ONE AND THE HOSPITAL WILL BE BENEFITED IMMENSELY ONCE SHE I S ON THE SERVICE OF THE HOSPITAL. HOWEVER, FOR TAKING DECIS ION, THE PARENTS OF DR. GAURI SRIRAM REQUESTED DR. R M VARMA , DIRECTOR TO CONSIDER THE PROPOSAL AND TAKE THE DECISION ON T HIS ISSUE BECAUSE THE PARENTS ARE INTERESTED PARTIES. DR. VA RMA HAD A DETAILED DISCUSSION WITH DR. GAURI SRIRAM AND AFTER THAT HE RECOMMENDED THAT THE SPONSORSHIP CAN BE CONSIDERED BY THE COMPANY ON THE CONDITION THAT DR. GAURI SRIRAM WILL HAVE TO GIVE A WRITTEN UNDERTAKING THAT SHE WILL WORK IN THE HOS PITAL FOR A MINIMUM PERIOD OF 4 YEARS. ACCORDINGLY, THE RESOLUTI ON WAS PASSED TO SPONSOR DR. GAURI SRIRAM FOR PURSUING HER POST- GRADUATE STUDIES IN THE FIELD OF RADIO DIAGNOSIS WI TH KATHMANDU UNIVERISTY AT MANIPAL HOSPITAL, BANGALORE. A SUM OF RS.5 LAKHS PER YEAR FOR 3 YEARS WAS AUTHORIZED TO BE GIVEN AS S PONSORSHIP FEE. THEREAFTER, THE LEARNED AR DREW OUR ATTENTION TO THE PAGE 6 OF 12 ITA NO.400/BANG/2009 6 UNDERTAKING GIVEN BY DR. GAURI SRIRAM. IN THE UNDER TAKING, SHE HAS MENTIONED THAT SHE WILL SERVE FOR 4 YEARS AFTER COMPLETING HER STUDIES AND IN CASE SHE FAILS TO WORK FOR 4 YEAR S, THEN THE COMPANY WILL BE REIMBURSED BY HER THE FEES AND OTHER EXPENSES. THE LEARNED AR RELIED ON THE DECISIONS WHICH WERE R EFERRED BY THE APPELLANT BEFORE THE AO. LOOKING TO THE POLICY OF THE COMPANY AND THE BENEFIT TO BE DERIVED BY THE COMPANY O N ACCOUNT OF ACQUIRING HIGHER KNOWLEDGE BY DR. GAURI S RIRAM, THE LEARNED AR SUBMITTED THAT THE EXPENDITURE IS AN ALL OWABLE EXPENDITURE. 7. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. THE LEARNED DR DR EW OUR ATTENTION TO THE DECISIONS OF VARIOUS HIGH COURTS M ENTIONED BY THE LEARNED CIT(A) IN HIS ORDER. THE LEARNED DR AL SO DREW OUR ATTENTION TO THE DECISION OF THE JURISDICTIONAL HIG H COURT IN THE CASE OF MAC EXPLOTEC (P) LTD. V CIT 286 ITR 378. I N THE CASE BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT, THE S ON OF TWO DIRECTORS (SPOUSES) OF THE ASSESSEE COMPANY WAS SENT ABROAD FOR TRAINING IN GENERAL MANAGEMENT. THE EXPENDITUR E WAS HELD BY HON'BLE HIGH COURT AS INCURRED FOR THE BENEFIT FO R THE PURPOSE OF PERSONAL GAIN AND NOT FOR THE PURPOSE OF BUSINESS. 8. THE LEARNED AR IN HIS COUNTER REPLY SUBMITTED TH AT THE FACTS IN THE INSTANT CASE ARE DISTINCT FROM THE FACTS OF THE CASE DECIDED BY THE HON'BLE JURISDICTIONAL HIGH COUR T. IN THE PAGE 7 OF 12 ITA NO.400/BANG/2009 7 CASE BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT, THE PERSON WHO WAS SENT FOR TRAINING IN GENERAL MANAGEMENT WAS ONLY AN UNDER-GRADUATE WITHOUT ANY SPECIAL OR TECHNICAL QUAL IFICATION. IN THE INSTANT CASE, DR. GAURI SRIRAM WAS ALREADY HA VING MBBS DEGREE AND WAS QUALIFIED. SHE SELECTED A COURSE, W HICH WAS BENEFICIAL TO THE BUSINESS OF THE ASSESSEE COMPANY. IT WAS THEREFORE SUBMITTED THAT THE EXPENDITURE SHOULD BE ALLOWED. 9. WE HAVE HEARD BOTH THE PARTIES. IT IS AN UNDISPUTED FACT THAT DR. GAURI SRIRAM IS THE DAUGHE R OF DR. A C SRIRAM AND MRS. KALA SRIRAM, WHO WERE MANAGING DIRE CTOR AND EXECUTIVE DIRECTOR OF THE APPELLANT COMPANY. AT THE RELEVANT TIME WHEN THE BOARD RESOLUTION WAS PASSED, IT IS ME NTIONED THAT DR. GAURI SRIRAM WAS WORKING IN THE HOSPITAL AS A D UTY DOCTOR. NOTHING HAS BEEN MENTIONED AS SINCE WHEN SHE WAS WO RKING IN THE HOSPITAL OF THE APPELLANT COMPANY. THE COMPANY A UTHORIZED TO GRANT A SUM OF RS.5 LAKHS PER YEAR FOR THREE YEARS AS SPONSORSHIP FEE. WE ARE NOT AWARE AS TO WHETHER DR . GAURI SRIRAM IS TO INCUR ANY OTHER EXPENDITURE EXCEPT SPON SORSHIP FEE FOR PURSUING HER FURTHER STUDIES. THE AO HAS D ISALLOWED THE EXPENDITURE U/S 40A(2)(B). 10. SECTION 40A STARTS WITH A NON-OBSTANTE CLAUSE MEANING THEREBY THAT ANYTHING TO THE CONTRARY CONTAINE D IN SECTION 30 TO 38 WILL BE APPLICABLE WHILE CONSIDERI NG THE AMOUNTS AS DEDUCTIBLE U/S 40A OF THE I T ACT. IT I S TRUE THAT PAGE 8 OF 12 ITA NO.400/BANG/2009 8 IN THE GROUNDS OF APPEAL, THE APPELLANT HAS SUBMITT ED THAT THE EXPENDITURE IS ALLOWABLE U/S 37 BUT NO ARGUMENTS WE RE PLACED BEFORE US TO SAY THAT SECTION 40A IS NOT APPLICABLE. 11. THE HON'BLE JURISDICTIONAL HIGH COURT HAS CONSIDERED ALL THE DECISIONS WHICH WERE REFERRED TO BY THE APPELLANT BEFORE THE ASSESSING OFFICER. AFTER REFE RRING THOSE JUDGEMENTS, THE HON'BLE JURISDICTIONAL HIGH COURT O BSERVED VIDE PARA 10 TO 12 AS UNDER:- '10. NONE OF THE JUDGMENTS ARE APPLICABLE TO THE GIVEN CIRCUMSTANCES. THE BUNDLE OF FACTS WOULD POINT OUT THAT THE ASSESSEE IS NOT ENTITLED FOR ANY BENEFITS IN TERMS OF THE IT LAWS PARTICULARLY IN TERMS OF S.37 OF THE IT ACT. ANY EXPENSES ON THE FACTS OF THIS CASE WOULD RESULT IN PROVIDING THE BENEFIT FOR THE PURPOSE OF PERSONAL GAIN AND NOT FOR THE PURPOSE FOR WHICH THE SECTION IS MEANT FOR IN THE CASE ON HAND. WE WOULD BE FAILING IF WE DO NOT REFER TO THE THREE JUDGMENTS CITED BY THE REVENUE. 11. IN FACT, THE MADRAS HIGH COURT IN TWO JUDGMENTS NAMELY, CIT V RKKR STEELS (P) LTD. (2002) 178 CTR (MAED) 172 : (2002) 258 ITR 306 (MAD) AND M SUBRAMANIAM BROS. V CIT (2001) 170 CTR (MAD) 527 : (2001) 250 ITR 769 (MAD) HAS CHOSEN TO CONSIDER A SIMILAR ISSUE. THE MADRAS HIGH COURT IN THE CASE OF CIT V RKKR STEELS (P) LTD. (SUPRA) HAS CHOSEN TO REFER TO ITS EARLIER DECISION IN (2001) 170 CTR (MAD) 527 : (2001) 250 ITR 769 (MAD) (SUPRA). AFTER PAGE 9 OF 12 ITA NO.400/BANG/2009 9 REFERRING THE MADRAS HIGH COURT HAS CHOSEN TO HOLD AS UNDER:- ' IT WAS CANVASSED FOR THE ASSESSEE BEFORE THE TRIBUNAL THAT THE FACT THAT RAJIV RAI WAS THE SON OF THE DIRECTOR OF THE COMPANY SHOULD NOT BE HELD AGAINST HIM AND THE EXPENDITURE INCURRED ON HIS TRAINING WAS IN FACT, AN EXPENDITURE WHICH WAS TO THE BENEFIT OF THE COMPANY AS HE SUBSEQUENTLY BECAME A DIRECTOR. IF THIS LOGIC WERE TO BE ACCEPTED, IN EVERY FAMILY OWNED BUSINESS, ALL THE EXPENDITURE INCURRED IN BRINGING UP THE CHILDREN WHO MAY LATER ON BE GIVEN A ROLE IN THE BUSINESS AS PARTNERS OR DIRECTORS COULD BE CLAIMED AS BUSINESS EXPENDITURE INCURRED IN TRAINING THE PROSPECTIVE EMPLOYEES AND DIRECTORS OF THE BUSINESS. THE EXPENDITURE PERMISSIBLE FOR DEDUCTION IS EXPENDITURE THAT IS WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSES OF THE BUSINESS. THE EXPENDITURE WHICH A FATHER INCURS OUT OF HIS NATURAL LOVE AND AFFECTION FOR HIS CHILDREN IN MEETING THE COST OF THEIR EDUCATION CANNOT BECOME A BUSINESS EXPENDITURE MERELY BECAUSE HE IS ALSO THE OWNER OR A DIRECTOR OF A PAGE 10 OF 12 ITA NO.400/BANG/2009 10 BUSINESS IN WHICH THE SON OR DAUGHTER SUBSEQUENTLY TAKES PART'. 12. WE ARE IN AGREEMENT WITH THE VIEWS EXPRESSED BY THE MADRAS HIGH COURT. THE REVENUE IS ALSO SUPPORTED BY THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF CIT V HINDUSTAN HOSIERY INDUSTRIES (1994) 209ITR 383 (BOM.). THE BOMBAY HIGH COURT IN SIMILAR CIRCUMSTANCES HAS RULED THAT THERE EXISTS NO NEXUS BETWEEN EXPENDITURE AND BUSINESS OF ASSESSEE AND THE EXPENDITURE INCURRED. 12. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT V BHARAT EARTH MOVERS LTD. 155 ITR 321 HAD A N OCCASION TO CONSIDER THE ALLOWABILITY OF EXPENDITURE INCURRED BY HAL ON TRAINING OF THE OFFICERS. SUCH OFFICERS OF HAL WER E TAKEN OVER BY THE BEML AS THE COMPANY TOOK OVER THE BUSINESS FRO M HAL. IN THE CASE BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT, THE TRIBUNAL HELD THAT EXPERIENCE GAINED BY THE OFFICERS TAKEN OVER BY BEML IS AN ASSET ON IDENTICAL NATURE AND HAS BEEN INCURRED IN EARLIER YEARS. THE HON'BLE JURISDICTIONAL HIGH COUR T UPHELD THE REASONING OF THE TRIBUNAL. THE BENEFIT ACCRUING TO DR. GAURI SRIRAM AS A RESULT OF HIGHER DEGREE ON ACCOUNT OF S PONSORSHIP FEE BEING PAID BY THE APPELLANT COMPANY WILL NOT ACCR UE TO THE ASSESSEE COMPANY BECAUSE SUCH BENEFITS WILL BELONG T O DR. GAURI SRIRAM IN HER INDIVIDUAL CAPACITY. EVEN IF A PERSON ACQUIRES A PROFESSIONAL DEGREE THROUGH HUF FUNDS BUT THE PROFI T ARISING FROM THE EXERCISE OF SUCH PROFESSIONAL DEGREE WILL NOT ACCRUE PAGE 11 OF 12 ITA NO.400/BANG/2009 11 TO THE HUF BECAUSE THE GAINS OF LEARNING BELONGS TO AN INDIVIDUAL. IT HAS BEEN FURTHER NOTICED THAT DR. G AURI SRIRAM WAS GIVEN A SALARY OF RS.30,000/- PER MONTH WHEN SH E COMPLETED THE DEGREE THOUGH EARLIER SHE WAS DRAWING A SALARY OF ONLY RS.20,000/- PER MONTH. THUS, THERE WAS A 50 % INCREASE IN THE SALARY. THERE IS NO CORRESPONDING BENEFIT TO THE APPELLANT COMPANY IN SPENDING THE SUM ON ACCOUNT OF SPONSORSHIP FEE. 13. EXPENDITURE U/S 40A CAN BE DISALLOWED IF IN TH E OPINION OF THE ASSESSING OFFICER THE EXPENDITURE IS EXCESSIVE OR UNREASONABLE (A) HAVING REGARD TO THE FAIR MAR KET VALUE OF THE GOODS, SERVICES OR FACILITIES FOR WHICH THE PAYM ENT IS MADE; OR (B) THE LEGITIMATE NEEDS OF THE BUSINESS OR PROF ESSIONOF THE ASSESSEE; OR (C) THE BENEFIT DERIVED BY OR ACCRUING TO THE ASSESSEE. HENCE, THE DISALLOWANCE CAN BE MADE IF E ITHER OF THE ABOVE-REFERRED THREE CONDITIONS IS SATISFIED. IN T HE INSTANT CASE, THERE IS NO MATERIAL TO SAY THAT EXPENDITURE I NCURRED WAS REASONABLE TO THE LEGITIMATE NEEDS OF THE BUSINESS OR PROFESSION OR WAS REASONABLE TO THE BENEFIT DERIVED BY THE ASSESSEE. CONSIDERING THE ABOVE DISCUSSION AND FOL LOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE HOLD THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN DISALLOWING THE EXPENDITURE OF RS.5 LAKHS. PAGE 12 OF 12 ITA NO.400/BANG/2009 12 14. CHARGING OF INTEREST IS MANDATORY AND IT IS MENTIONED IN THE ORDER. HENCE WE HOLD THAT THE AO WAS JUSTIFIED IN CHARGING THE INTEREST. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21ST AUGUST, 2009. SD/- SD/- (K P T THANGAL) (N L KALRA) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE, DTD.21/8/2009 COPY TO : 1. THE ASSESSEE 2.THE REVENUE 3. THE CIT( A) CONCERNED.4. THE CIT CONCERNED. 5. THE DR 6. GUAR D FILE. 7. GF, ITAT, NEW DELHI. MSP/5.8. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.