ADDL CIT RG 21(1), MUMBAI V. BHAVESH DESAI, MUMBAI

ITA 4954/MUM/2010

• Counselvise Citation: 495419914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 15-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Keywords: Business expenditure
• Section: 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI B.R. MITTAL (JUDICIAL MEMBER) AND SHRI R.K. PANDA (ACCOUNTANT MEMBER) ITA NO. 4954/MUM/2010 ASSESSMENT YEAR- 2006-07 THE ACIT, CIRCLE-21 (1), PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI-400 051 VS. SHRI BHAVESH DESAI, 69, SWASTIK PLAZA V.L. MEHTA ROAD, JUHU SCHEME, VILE PARLE (W)< MUMBAI-400 056 PAN-AABPD 1951G (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI G.P. TRIVEDI RESPONDENT BY: SHRI VIJAY MEHTA DATE OF HEARING : 11.10.2011 DATE OF PRONOUNCEMENT: 14.10.2011 O R D E R PER B.R. MITTAL, JM : THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMEN T YEAR 2006-07 AGAINST ORDER OF LD. CIT(A) DT. 19 TH MARCH, 2010 DISPUTING DELETION OF RS. 10,00,000/- DISALLOWED BY AO OUT OF RS.11,28,425/- UNDER THE HEAD TRAVELLING EXPENSES. 2. THE ASSESSEE HAS DECLARED INCOME FROM BUSINESS A ND INTEREST INCOME. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, ASS ESSEE PAID TO M/S. GOLDEN TRAVELS PVT. LTD. AS HOLIDAY ADVANCE RS. 10 LAKHS AND CLAIMED UNDER THE HEAD TRAVELLING EXPENSES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ITA NO. 4954/M/10 2 ASSESSEE IN REPLY TO A QUERY OF AO FILED THE FOLLOW ING VIDE ITS LETTER DT. 8.12.2008 WHICH IS AS UNDER: DURING THE FINANCIAL YEAR 2005-06 RELEVANT TO THE A . Y 2006-0 7 THE ASSESSEE HAS DEBITED TRAVELING EXPENSES AMOUNTING T O RS. L],28,425-. THE SAID CXCFLSC5 COMPRISE OF/BREIGN TRAVELING AND BUSINESS PROMOTION EXPENSES. IT IS SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BROKERAGE AND DEALING IN THE REAL ESTATE. IN THE BU SINESS OF BROKERAGE OF REAL ESTATE COMPRISES OF SALE AND PURCHASE OF SH OP. RESIDENTIAL FLATS, PLOTS. LEASE TRANSACTIONS ETC. ON BEHALF OF THE CLI ENTS. THE BUSINESS IS OBTAINED AND EXPANDED BY THE WORD OF MOUTH THROUGH VARIOUS SOURCES AND ADVERTISEMENT. IN THE NATURE OF ASSESSEE S BUS INESS THE TRANSACTIONS ARE OF NONRECURRING NATURE WITH PERSO NS. ONCE THE PERSON HAS DONE TRANSACTION OF SALE PURCHASE OF REA L ESTATE THROUGH THE BROKER IT IS NOT NECESSARY THAT TILE SAME PERS ON WILL CORN OUT ANOTHER/REPETITIVE TRANSACTION SALE/PURCHASE OR IMM OVABLE ASSET. EVEN IF THE TRANSACTION OF SALES/PURCHASE IS REPEATED BY THE SAME PARTY IT IS AT LONGER PERIOD A/INTERVAL. NOT ONLY TO EXPAND THE BUSINESS BUT EVEN TO SUSTAIN THE VOLUME OF BUSINESS THE ASSESSEE HAS TO EXPLORE THE BUSINESS THRO UGH VARIOUS PERSONS ENGAGED IN VARIOU S STREAMS OF BUSINESS WHICH CAN BE DONE THROUGH ADVERTISEMENT AN D CONDUCTING BUSINESS PROMOTION CONFERENCES. FOR SUSTAINING THE VOLUME OF THE BUSINESS AND FURTH ER EXPANSION THE ASSESSEE VISITED THE REAL ESTATE PROPERTY EXHIB ITION FARE AT DUBAI. IN RESPECT OF THE SAME THE ASSESSEE HAS INCURRED SUM OF RS. 1,28,425/- ON ACCOUNT OF FOREIGN TRAVELING EXPENSES . IN THE NATURE OF THE ASSESSEES BUSINESS THE BUSINE SS PROMOTION CONFERENCE WAS CONDUCTED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. IN THE MODERN TIME BUSINESS STRATEGIE S ADVERTISEMENT TAKE VARIOUS FORMS AND MEANS. THE ASSESSEE WITH A V IEW TO DO SOMETHING UNIQUE AND TO HAVE SUBSTANTIAL IMPACT AND ADVANTAGE OUT OF THE EXPENSES ON BUSINESS PROMOTION TO BE INCURRED H AD UNDERTAKEN BUSINESS PROMOTION CONFERENCE ON THE BOAT CRUISE WH ERE THE INTERACTION WITH THE INVITEES WOULD BE EXCLUSIVE AN D FOR LONGER PERIOD OF TIME. THE SAME BEING SO THAT THE INVITEES WOULD BE BOARDED ON THE BOAT AND THEN TAKEN INTO DEEP SEA AND AFTER THE BUS INESS CONFERENCE IS OVER THE BOAT WOULD RETURN TO HARBOR AND THE INVITE ES WILL THEN LEAVE THE CONFERENCE, DUE TO WHICH THE CHANCES OF INVITEE S LEAVING THE CONFERENCE IN-BETWEEN IS RULED OUT. ITA NO. 4954/M/10 3 THE INVITEES FROM VARIOUS BUSINESS STREAMS LIKE RE AL ESTATE DEALERS, CORPORATE CIVIL CONTACTOR AND BUILDERS, BU SINESS TYCOONS FROM THE LARGE CORPORATE HOUSES, FILM INDUSTRY, PROFESSI ONALS ETC. WERE INVITED. IN SUPPORT OF THE ABOVE, WE ENCLOSE HEREWIT H THE COPY OF THE LEDGER ACCOUNT IN THE BOOKS OF GUIDELINES TRAVEL PV T. LTD. WHEREIN DETAILS OF THE CRUISE CONFERENCE CONDUCTED IS MENTI ONED ALONGWITH THE NAME OF THE INVITEES. ON PERUSAL OF THE NAMES YOUR GOODSELF WILL APPRECIATE THAT THE PERSONS INVITED ARE FROM CORPOR ATE. BROKER, REAL ESTATE DEVELOPERS, EMINENT PERSONALITIES FROM THE B OLLYWOOD, EMINENT PROFESSIONAL CHARTERED ACCOUNTANTS, FOREIGN DELEGAT ES ETC. FOR READY PERUSAL FEW NAMES AND IT IS ASSOCIATION IS CITED ON EXAMPLE BASIS SAY MR. ASHOK MEHTA-BUILDER AND DEVELOPER, MR. BRU OBER OI DIRECTOR TATA GROUP, MR. ROHIT MEHRA DIRECTOR GMR GROUP EN GAGED IN CONSTRUCTION AND DEVELOPMENT OF REAL ESTATE, MR. RA HUL (JUPTA AND MR. RAJIV AJMERA DIRECTORS AJMERA BUILDERS, MR. RAJAT PATEL DIRECTOR PATEL ENGINEERING CO. LTD. BUILDER AND DEVELOPER, M R. BOMAN IRANI PROMINENT FILM ACTOR AND FOREIGN DELEGATE MR. ALEXA NDRA ANDREESCU. FROM THE PERUSAL OF THE ABOVE DETAILS ILLS HUMBLY SUBMITTED THAT ILLS IN THE NORMAL OF BUSINESS THAT HEAVY EXPENSES IS INCURRED FOR BUSINESS PROMOTION EITHER BY WAY OF ADVERTISEMENT O R CONDUCTING OF BUSINESS PROMOTION CONFERENCES. THE ASSESSEE HAS AL SO CONDUCTED BUSINESS PROMOTION CONFERENCE FOR EXPANSION OF ITS BUSINESS. THE SAME IS EVIDENT FROM THE DETAILS SUBMITTED HEREIN ABOVE THE PERSON INVITED WERE FROM THE EMINENT BUSINESS AREA OF THE ASSESSEE , BUSINESS TYCOONS, FOREIGN DELEGATES, ETC. IT IS NOT A SOCIAL OR PERSONAL FUNCTION THAT HAS BEEN CARRIED OUT. IT WILL NOT ONLY SERVE TH E DIRECT ADVERTISEMENT HUT THE SAME WOULD HAVE, LARGER IMPAC T OF PERSONAL BUSINESS RELATIONSHIP A/SPREADING WORDS THROUGH THI S HUSINESS TYCOONS AND PROMINENT PERSONALITIES WHICH WOULD FETCH BUSIN ESS FOR THE FUTURE AND LONGER PERIOD. THE SAME IS EVIDENT FROM THE/OCT THAT BROKERAGE IN COME HAS INCREASED MANY FOLDS IN LAST 3 FINANCIAL YEARS WHER EIN THE BROKERAGE RECEIVED AMOUNTS TO RS. 780 LAKHS AS COMPARED TO R. S. 61 LAKHS DURING THE FINANCIAL YEAR ENDED 31.03.05 AS TABULATED HERE IN BELOW: S. NO. FINANCIAL YEAR ENDED AMOUNT RS. 1 31.3.2005 61,04,860 2. 31.3.2006 1,59,92,010 3. 31.3.2007 55,73,750 4. 31.3.2008 5,64,15,000 TOTAL (2 - 4) 7,79,80,760 ON PERUSAL OF THE GROWTH YOUR GOODSELF WILL OBSERV E THAT AS COMPARED TO BROKERAGE EARNED AMOUNTING TO RS. 61,03 ,860/- DURING THE YEAR ENDED 31 ST MARCH,05 THE SAME HAS INCREASED TO R$ ITA NO. 4954/M/10 4 1,59,92,010/ - WHICH IS HAVING GROWTH OF 2. 62 TIME S. FURTHER THE BUSINESS KEPT ON EXPANDING AND THE FRUIT REAPED DUR ING THE F Y 2007- 08 WHEREIN THE ASSESSEE HAS EARNED GROSS BROKERAGE OF RS. 5,64, 15,000/- WHICH AS COMPARED TO THE BROKERAGE EARNED DURING THE F Y 2005-06 IS 3.5 TIMES. COPY OF LEDGER ACCOUNT OF BRO KERAGE INCOME FOR THE LAST 3 FINANCIAL YEARS IS ENCLOSED HEREWITH. TH US, AGAINST MEAGER AMOUNT OF BUSINESS PROMOTION EXPENSES OF RS. /0,00, 000/- THE ASSESSEE HAS REAPED FRUITS IN THE BLOCK OF 3 FINANC IAL YEAR COMPRISING 3L.03.06.31.03.0 AND 3/0308 WHEREIN GROSS BROKERAGE OF RS, 7,79,80, 760I- HAS BEEN EARNED AND OFFERED FOR TAXATION WHIC H WHEN COMPARED WITH THE EXPENSES INCURRED AND INCOME EARNED AMOUNT S MERELY 1.28%. THE CONTENTION OF THE ASSESSEE IS FURTHER SUPPORTE D FROM THE FACT THAT THE MAJOR BROKERAGE HAS BEEN EARNED FROM CORPORATES INCLUDING BIG TIME BUILDERS AND DEVELOPERS. ON PERU SAL OF THE BROKERAGE INCOME LEDGER ACCOUNT YOUR GOODSELF WILL OBSERVE THAT THE BROKERAGE HAS BEEN RECEIVED FROM RITUVARSHA ESTATE PVT. LTD. ANAGRAM STOCK BROKING LTD., MUKUND LTD. EKTA KAPPOR (FILM IN DUSTRY) VICTORIA ENTERPRISE PVT. LTD.. PATTON INVESTMENT PVT. LTD., SHAILESH AJMERA & FAMILY, SKY HEIGHTS DEVELOPERS PVT. LTD. SHREE NAMA N DEVELOVERS LTD. VIJAY RAHEJA ETC. TAKING INTO CONSIDERATION THE ABOVE MENTIONED FACT S IT IS EMPHATICALLY SUBMITTED THAT THE EXPENSES INCURRED A MOUNTING TO RS. 10,00,000/- IS LEGITIMATELY BUSINESS EXPENSES INCU RRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND THE SAM E IS DEDUCTIBLE U/S 37 OF THE 1. T. ACT. 3. THE ASSESSING OFFICER HAS STATED THAT THE MAIN C ONTENTION OF THE ASSESSEE IN REGARD TO ABOVE CLAIM IS AS UNDER: 1. THE EXPENSE IS INCURRED FOR THE PURPOSE OF BUSINESS PROMOTION AND ADVERTISEMENT. 2. THE EXPENSE HAS BEEN INCURRED FOR THE PURPOSE OF BU SINESS PROMOTION CONFERENCE AS THE CRUISE WOULD FACILITATE LONGER INTERACTION WITH THE INVITEES. IN FACT THE ASSESSE E HAS CONTENTED THAT THE CRUISE SO UNDERTAKEN WILL STOP AT THE INVI TEES FROM LEAVING THE CONFERENCE MIDWAY. 3. THE BROKERAGE INCOME HAS GONE UP. 4. THE ASSESSEE HAS RECEIVED BROKERAGE FROM BUILDERS, DEVELOPERS AND FILM PERSONALITY. ITA NO. 4954/M/10 5 4. THE AO STATED THAT THE SUBMISSION OF ASSESSEE IS TOTALLY SUBJECTIVE AND IS NOT BACKED BY ANY CONCRETE EVIDENCE. THE AO DID NOT ACCEPT THE ABOVE CONTENTION OF ASSESSEE AND DISALLOWED THE TRAVELLIN G EXPENSES CLAIMED AGGREGATING RS. 11,28,425/- BY OBSERVING AS UNDER: THE SUBMISSION OF THE ASSESSEE IS TOTALLY SUBJECTI VE AND IS NOT BACKED BY ANY CONCRETE EVIDENCE. THERE HAS BEEN NO LINKING OF THE BROKERAGE INCOME RECEIVED AND THE PERSONS ON WHOM T HE PAYMENTS HAVE BEEN MADE. IN FACT THE ASSESSEE HAS CONTENDED T HAT HE HAS RECEIVED INCOME FROM MISS. EKTA KAPOOR WHEREAS THE PERSONS WHO TRAVELED WERE OF THE FILM WORLD VIZ. MR. ANU MALIK AND MR. BOMAN IRANI. THEREFORE, THE AGREEMENT PUT FORTH ON THE FRO NT TOTALLY COLLAPSES. THE ASSESSEE HAS NOT EVEN CIVEN ANY EVIDENCE THAT T HE BUSINESS OF THE ASSESSEE HAS BENEFITED FROM THE PERSONS ON W HOM THE MONEY HAS BEEN SPENT ON TODAY OR IN FUTURE. THE ONL Y CONTENTION IS THAT THE BROKERAGE INCOME HAS INCREASED. THAT IS NO T THE CRITERIA FOR ALLOWING THE EXPENSE AND EXPENSE USED FOR BUSINESS PURPOSE. THE BUSINESS CONFERENCE AS CLAIMED BY THE ASSESSEE ACCORDING TO ME IS A FAR-FETCHED REASONING GIVEN BY HIM. THE ASSESSEE IS CONTENDING THAT THE CRUISE TRIP ARRANGED BY HIM ALL OWED HIM TO HAVE MORE TIME WITH THE PROSPECTIVE CLIENT IS ACCO RDING TO ME NOT REASONABLE EXPENDITURE FOR THE PURPOSE OF BUSINESS. ACCORDING TO ME THE EXPENSES ARE CLEARLY INDICATIVE OF BEING PERSONAL IN NATURE. THE EXPENSES HAVE NOT BEEN INCU RRED FOR THE TRIP PURPOSE IS NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. THERE WAS NO COMMERCIAL E XPEDIENCY TO INCUR THE AMOUNT. NEITHER THE EXPENSE HAS BEEN MADE FOR BUSINESS CONCESSION OR PROTECTION OF BUSINESS. PENALTY PROCE EDINGS FOR SUBMITTING INACCURATE PARTICULARS OF INCOME ARE BEI NG INITIATED SEPARATELY. 5. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE LD . CIT(A). ON BEHALF OF ASSESSEE, IT WAS CONTENDED THAT BUSINESS IS THAT O F NON-REPETITIVE NATURE. THE ASSESSEE HAS TO EXPLORE VARIOUS SOURCES BY WAY OF INTERACTING WITH THE PERSONS ENGAGED IN VARIOUS STREAMS OF BUSINESS WHIC H CAN BE DONE THROUGH ADVERTISEMENT AND CONDUCTING BUSINESS PROMOTION CON FERENCE ACCORDINGLY NOT ONLY TO EXPAND THE BUSINESS BUT EVEN TO SUSTAIN THE VOLUME OF BUSINESS. IT ITA NO. 4954/M/10 6 WAS CONTENDED THAT ASSESSEE FILED COPY OF LEDGER AC COUNT ALONGWITH SAMPLE BILLS IN RESPECT OF EXPENSES INCURRED OF RS. 10 LAK HS WHICH WAS PAID THROUGH ACCOUNT PAYEE CHEQUE TO M/S. GUIDELINE TRAVEL PVT. LTD. IT WAS CONTENDED THAT AO HAS ONLY DRAWN TRANSMISSION. ONCE EXPENSES ARE PROVED TO BE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, THE REASONABLENESS OR ITS BENEFIT IS THE PRUDENCE OF A BUSINESSMAN WHO INCURS THE SAID EXPENSES. IT WAS FURTHER CONTENDED THAT IN MOD ERN TIMES, THERE ARE VARIOUS NEW MEANS EVOLVED FOR MARKETING AND ADVERTI SING FOR SALE OF PRODUCTS AND EXPANSION OF ONES BUSINESS. THE CONDUCTING OF THE BOAT CRUISE AND HOLDING BUSINESS CONFERENCE IN THE BOAT WAS ONE OF SUCH UNIQUE MEANS. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSE SSEE VIDE PARA 3.3. OF ITS ORDER DELETED THE DISALLOWANCE OF RS. 10 LAKHS WHIC H READS AS UNDER: 1 HAVE CAREFULLY CONSIDERED THE ISSUE. THE FACT OF THE MATTER IS THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF ES TATE BROKER. IN THIS LINE OF BUSINESS, BUSINESS IS NOT REPEATED WITH THE SAME CLIENTS. IN OTHER WORDS, THE APPELLANTS BUSINESS IS THAT OF NO N-REPETITIVE NATURE. THIS REQUIRES CLOSER INTERACTION WITH PERSONS ENGAG ED IN VARIOUS STREAMS OF BUSINESS WHICH CAN BE DONE THROUGH ADVER TISEMENT AND CONDUCTING BUSINESS PROMOTION CONFERENCES. TO THAT EXTENT, THE LD. AO CANNOT CALL INTO QUESTION THE EXPEDIENCY OF ORGANIZ ING CONFERENCE BY THE APPELLANT. THE SOLE ISSUE TO BE CONSIDERED IS T HAT IF SUCH CONFERENCE WAS ORGANIZED ON A CRUISE, WHETHER IT QU ALIFIES WITHIN THE AMBIT OF BUSINESS EXPEDIENCY OR NOT. THE ISSUE OF B USINESS EXPEDIENCY HAS BEEN CONSIDERED BY VARIOUS COURTS AND IT HAS BE EN ESSENTIALLY HELD THAT SAID EXPENSE IS NOT TO BE CONSIDERED FROM THE ASSESSING OFFICERS POINT OF VIEW. IN OTHER WORDS, THE LD. AO CANNOT STE P INTO THE SHOES OF AN ASSESSEE TO EXAMINE WHETHER ANY EXPENDITURE WAS ABSOLUTELY ESSENTIAL OR NOT FOR THE PURPOSE OF BUSINESS. MUST BE THE CASE IS THAT THE EXPENDITURE SHOULD BE WHOLLY AND FOR THE PURPOS E OF BUSINESS. IT IS NOT A CASE WHERE THE EXPENSES IN RESPECT OF FR IENDS AND RELATIVES OF THE APPELLANT HAVE BEEN BOOKED IN THE APPELLANTS BOOKS OF ACCOUNT. IT IS NOT ALSO THE CASE WHERE IT HAS BEEN P ROVED THAT THE INVITEES BENEFITED FROM THE APPELLANT IN ANY OTHER MANNER IN OTHER WORDS, THOUGH THE NATURE OF EXPENSES MADE A FACTOR OF NOVELTY, IT IS NOT PROVED WITH ANY DEGREE OF CERTAINTY THAT THE EX PENSES WERE INCURRED FOR THE PURPOSE OTHER THAN THE BUSINESS. E VEN IF THE LD. AO HAD ANY DOUBT REGARDING PRUDENCE OF THE APPELLANT I N MAKING SUCH EXPENDITURE, HE IS NOT AUTHORIZED TO MAKE A DISALLO WANCE MERELY ON THIS BASIS. UNDER THE GIVEN FACTS AND CIRCUMSTANCES , IT HELD THAT THE ITA NO. 4954/M/10 7 EXPENSES OF RS.LO LAKHS INCURRED IN RESPECT OF BUSI NESS PROMOTION EXPENSES ARE ALLOWABLE. IN RESPECT OF FURTHER EXPENS ES OF RS.1,28,425/-, THE APPELLANT HAS MERELY STATED THAT THE EXPENSES HAS BEEN INCURRED FOR VISITING REAL ESTATE FARE AT DUBA I. THE APPELLANT PROBABLY HAS NO BUSINESS CONNECTION WITH DUBAI. IF H E HAD ANY, HE HAS NOT PROVED THE SAME DURING THE ASSESSMENT PROCEEDIN GS. THEREFORE, THE ADDITION OF RS.1,28,425/- IS SUSTAINED. AS A RE SULT, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 6. HENCE, DEPARTMENT IS IN APPEAL BEFORE TRIBUNAL. ON BEHALF OF DEPARTMENT, THE LD. DEPARTMENTAL REPRESENTATIVE SUP PORTED THE ACTION OF AO AND SUBMITTED THAT RECEIPT OF BROKERAGE HAS NO RELA TION WITH THE EXPENDITURE INCURRED BY ASSESSEE IN THE ASSESSMENT YEAR UNDER C ONSIDERATION. LD. DR REFERRED TO PAGE 3 OF THE ASSESSMENT ORDER AND SUBM ITTED THAT IN THE NEXT ASSESSMENT YEAR THE BROKERAGE RECEIPT CAME DOWN TO RS. 55,73,750/- FROM THE BROKERAGE OF RS. 1,59,92,010/- IN THE ASSESSMEN T YEAR UNDER CONSIDERATION. HE SUBMITTED THAT IF THE BROKERAGE IN THE ASSESSMENT YEAR 2008-09 HAD INCREASED TO 5.64 CRORES, IT COULD NOT BE SAID THAT THIS INCREASE HAS TAKEN PLACE DUE TO EXPENSES INCURRED BY ASSESSE E IN THE ASSESSMENT YEAR UNDER CONSIDERATION. HE SUBMITTED THAT THE PE RSONS WHO ARE INVITED ON BOAT CRUISE WERE FAMILY MEMBERS OF THE CELEBRITIES AND OTHER PERSONS AND THEY WERE NOT THE PERSON FROM WHOM THE ASSESSEE HAD RECEIVED BROKERAGE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. ON THE OT HER HAND, LD. AR SUPPORTED THE ORDER OF LD. CIT(A) AND MADE HIS SUBM ISSIONS ON THE LINES OF THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE SUBMITTED THAT THE EXPENDITURE HAS BEEN INCURRED BY ASSESSEE FOR THE P URPOSE OF ITS BUSINESS AND CONSIDERING THE NATURE OF BUSINESS OF ASSESSEE, THE ASSESSEE TARGETED CELEBRITIES AND BUSINESS TYCOONS WHERE THE WORD HAS SPREAD AND THE ASSESSEE COULD GET BENEFIT IN SUBSEQUENT YEARS BY WAY OF INC REASE INCOME OF BROKERAGE. THE LD. AR REFERRED TO PAGE 8 OF ORDER O F LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE EARNED BROKERAGE MUCH M ORE THAN THE EXPENDITURE INCURRED FROM TRANSACTIONS CARRIED OUT WITH VARIOUS EMINENT BUILDERS AND DEVELOPERS. HE SUBMITTED THAT ORDER O F LD. CIT(A) BE CONFIRMED. ITA NO. 4954/M/10 8 7. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF AUTHO RITIES BELOW AND THE SUBMISSIONS OF LD. REPRESENTATIVES OF THE PARTIES. WE OBSERVE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE BROKER. IN SUCH TYPE OF BUSINESS, ASSESSEE HAS TO HAVE WIDER LINKS AND CONTACTS WITH MEN OF MEANS. WE OBSERVE THAT ASSESSEE WITH THE PURPOSE OF MAKING CO NTACTS WITH CELEBRITIES AND BUSINESS TYCOONS ORGANIZED A BOAT CRUISE TO HAV E A CONFERENCE AND MEETING WITH THEM FOR THE PURPOSE OF PROMOTING HIS BUSINESS. IT IS A FACT THAT THE NATURE OF BUSINESS OF ASSESSEE IS SUCH THAT ASS ESSEE HAS TO EXPLORE NEW AVENUES BY MEETING VARIOUS PERSONS NOT ONLY TO EXPA ND HIS BUSINESS BUT EVEN TO SUSTAIN THE VOLUME OF HIS BUSINESS. THE DEPARTM ENT HAS NOT DISPUTED THE FACT THAT ASSESSEE ORGANIZED THIS BOAT CRUISE TRIP FOR THE PURPOSE OF MEETING VARIOUS PERSONS. WE OBSERVE THAT ASSESSEE HAS ALSO GIVEN A VALID REASON THAT TO TARGET CERTAIN GROUP OF PERSONS HE IS TO CO-ORDI NATE AND TO HAVE PERSONAL RAPERED WITH THEM. IT IS NOT NECESSARY THAT ASSESSE E WILL GET BUSINESS FROM ALL THE INVITEES. WE FIND SUBSTANCE IN THE SUBMISS ION OF ASSESSEE THAT IF CERTAIN GROUP IS TARGETED, WHO MATTERS IN THE SOCIE TY, THE WORDS ARE SPREAD AND REFERENCES ARE OBTAINED IN THE NATURE OF BUSINE SS IN WHICH ASSESSEE IS DEALING. CONSIDERING THE ABOVE FACTS, WE ARE OF TH E CONSIDERED VIEW THAT ASSESSEE WHEN ORGANIZED A BUSINESS PROMOTION MEETIN G ON CRUISE, IT HAS ORGANIZED THIS CRUISE MEETING IN HIS OWN WISDOM FOR THE PURPOSE OF HIS BUSINESS EXPEDIENCY. THEREFORE, EXPENDITURE INCURRE D BY ASSESSEE IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND IS ALLOWABLE U/S. 37(1) OF THE ACT. IN VIEW OF ABOVE, WE UPHOLD THE ORDER OF LD. CIT(A) AND REJECT GROUND OF APPEAL TAKEN BY DEPARTMENT. 8. IN THE RESULT, APPEAL FILED BY DEPARTMENT IS DISM ISSED. ORDER PRONOUNCED ON THIS 14 TH DAY OF OCTOBER, 2011 SD/- SD/- ( R.K. PANDA) (B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 14 TH OCTOBER, 2011 RJ ITA NO. 4954/M/10 9 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 4954/M/10 10 DATE INITIALS 1. DRAFT DICTATED ON: 12.10.2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 12.10.2011 SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. ORDER PRONOUNCED ON: SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: SR. PS/PS 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER: