M/s Kamla Kant & Co., New Delhi V. DCIT, New Delhi

ITA 5703/DEL/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8866 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-02-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 23-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Assessee Lawyers: APPLICATION REJECT
• Keywords: Business expenditure; Principle of natural justice
• Section: 142(1); 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SH. P.K.BANSAL, ACCOUNTANT MEMBER AND SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO. - 5703 /DEL/201 3 (ASSESSMENT YEAR - 2010 - 11 ) KAMLA KANT & CO., 575, DOUBLE STOREY, 1 ST FLOOR, NEW RAJENDRA NAGAR, NEW DELHI - 110060 PAN - AAFFK2884D (APPELLANT) VS DCIT, CENTRAL CIRCLE - 8, NEW D ELHI. (RESPONDENT) APPELLANT BY APPLICATION REJECT RESPONDENT BY SH.GAURAV DUDEJA, SR. DR DATE OF HEARING : - 2 7 . 02.2015 DATE OF PRONOUNCEMENT : - 27.02.2015 ORDER PER DIVA SINGH, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 29.07.2013 OF CIT (A) - XXXII , NEW DELHI PERTAINING TO 2010 - 11 ASSESSMENT YEAR. 2. HOWEVER, NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE AND AN ADJOURNMENT PETITION WAS MOVED ON THE LETTER HEAD OF MR. M.L.JAIN, ADV. SEEKING TIME ON THE GROUND THAT HE IS OUT OF STATION DUE TO PERSONAL WORK. HOWEVER ON CONSIDERATION OF THE MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. SR . DR IT WAS CONSIDERED APPROPRIATE TO REJECT THE ADJOURNMENT PETITION AND DECIDE THE APPEAL OF THE ASSESSEE EX - PARTE QUA THE APPE L L ANT ON MERIT S . 2.1. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THE LEARNED CIT(A) WAS WRONG IN LAW AND ON FACTS IN CONF IRMING THE DISALLOWANCE OF RS.283284/ - MADE BY ASSESSING OFFICER IN RESPECT OF A DVERTISEMENT EXPENSES. 2 I.T.A .NO. - 57 0 3/DEL/2013 2. THE LEARNED CIT(A) WHILE CONFIRMING THE DISALLOWANCE HAS F I LED TO APPRECIATE THAT THE AFORESAID EXPENSES WERE FOR BUSINESS PU RPOS ES AND WAS AN ALLOWA BLE EXPENSE. 3. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT SUCH EXPENSES WERE NOT OF PERSONAL NATURE AND THE DECISIONS CITED BY THE APPELLANT WERE APPLICABLE TO THE FACTS OF THE PRESENT CASE. 4. IN ANY CASE & WITHOUT PREJUDICE TO THE ABOVE GROUNDS T HE DISALLOWANCE OF ENTIRE EXPENSES IS MUCH TOO HIGH & EXPENSIVE. 5. THE ORDER OF THE LEARNED AO IS AGAINST LAW, FACTS & PRINCIPLES OF NATURAL JUSTICE. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE DECLARED AN INCOME OF RS.21,78,38,840/ - BY WAY OF FILING ITS RETURN ON 15.10.2010. THE SAID RETURN WAS PICKED UP FOR SCRUTINY BY ISSUANCE OF NOTICE U/S 143(2) & 142(1) ALONGWITH QUESTIONNAIRE ETC. THE AO IN THE COURSE OF HEARING REQUIRED THE ASSESSEE TO EXPLAIN HOW THE CLAIM OF ADVERTISEMENT BILLS AMOUNTING TO RS.2,83,284/ - CAN BE ALLOWED AS ADVERTISEMENT EXPENDITURE WHEN ADMITTEDLY THE EXPENDITURE WAS INCURRED ON SH R A DANJALI (REMEMBRANCE) EXPENDITURE ETC. THE SPECIFIC SHOW CAUSE NOTICE DATED 11.05.2012 IS REPRO DUCED HEREUNDER FOR READY - REFERENCE: - 'ON THE PERUSAL OF ADVERTISEMENT BILLS, IT IS NOTICED THAT ASSESSEE HAS CLAIMED AMOUNT OF RS.2,83,284/ - [RS.2,42,529 + RS. 40,755] AS BUSINESS EXPENSES WHEREAS THIS AMOUNT HAS BEEN SPENT ON ACCOUNT OF 'SHARDANJALI', WH ICH IS NOT A BUSINESS EXPENDITURE. THE COMPANY HAD PUBLISHED SHARDANJALI' FOR THEIR DECEASED MEMBERS AND CLAIMED THE EXPENDITURE ON PUBLICATION IN NEWSPAPER AS BUSINESS EXPENDITURE. THERE A SHOW CAUSE, WHY THE AMOUNT OF RS. 2,83,284/ - SHOULD NOT BE DISALL OWED AND ADDED BACK IN YOUR INCOME'. 4. THE LD. AR IN REPLY HAS STATED TH A T THE EXPENDITURE INCURRED TO ADVERTISE THE PRODUCTS IN THE NEWSPAPERS OF THE COMPANY WHICH HAD BEEN PROMOTED BY LATE RAM NATH CHAURASIA AS HE WAS THE PERSON WHO STARTED THE TRA DE NAME OF KAMLA PASAND AND IT WAS UNDER HIS GUIDANCE AND SUPERVISION THAT THE BUSINESS FLOURISHED. THE KAMLA PASAND BRAND IT WAS SUBMITTED BECAME POPULAR IN THE POUCH FORM IN THE NAME OF RAJSHREE THUS THE SHARDANJALI WAS A WAY OF ADVERTISING THE PRODUC T AND PAYING HOMAGE TO SH. RAM NATH CHAURASIA WHO HAD EXPIRED ON 1994. NOT CONVINCED WITH THE EXPLANATION OFFERED THE AO H E LD THAT THE EXPENDITURE IS A PERSONAL EXPENDITURE OF CHAURASIA FAMILY AS SUCH NOT 3 I.T.A .NO. - 57 0 3/DEL/2013 ALLOWABLE U/S 37 OF THE INCOME TAX ACT, 1961 AS S E C T I O N 3 7( 1 ) EXPRESSLY PROHIBITS THE DEDUCTION OF PERSONAL EXPENSES . D ISALLOWANCE OF THE SAID AMOUNT WAS ACCORDINGLY MADE. 5. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY THE ISSUE WAS AGITATED AGAIN BY THE ASSESSEE. RELIANCE WAS PLACED UPON THE FOLLOWING DECISIONS: - (I) WEIKFILED PRODUCTS CO.(I) (P.) LTD. VS DY. CIT (2001) 71 TTJ (PUNE) 519; (II) ANDHRA SUGARS LTD. VS. CIT (1988) 171 ITR 209 (ANDHRA); (III) CIT VS LAKE PALALCEHOTELS AND MOTELS P. LTD. (2007) 293 ITR 281 5.1. CONSIDERING THE SAME THE CIT(A) UPHELD THE ADDITION MADE HOLDING AS UNDER: - 6. I HAVE GONE THROUGH THE FACTS OF THE CASE, FINDINGS OF THE AO, WRITTEN SUBMISSIONS OF THE APPELLANT FILED IN THE COURSE OF THE APPEAL, AND ALSO THE CITATIONS OF THE CASE LAWS RELIED UPON BY THE AR AND CONSIDERED THEM. ON PERUSAL OF THE DETAILS, I FIND THAT THE APPELLANT FILED A COPY OF THE NEWS PAPER CUTTING THAT WAS PUBLISHED IN THE NEWS PAPER DATED 01.04.2009. IT WAS A 'SHRADHANJALI (REMEMBRANCE)' FOR SH. RAM NATH JI CHAURASIA PUBLISHED BY TILE MEMBERS OF HIS FAMILY, OFFICERS AND EMPLOYEES OF THE BRANDS OF PAN MASALA LIKE 'KAMALA PASAND' RAJSREE 'SAFFRONIC' ETC. WHICH WERE FOUNDED BY LATE SH. CHAURASIA ,A 'SHRADHANJALI (REMEMBRANCE)', IS A REMEMBRANCE WITH RESPECT AND DEDICATION AND IS A DECLARATION AND OTHER ACKNOWLEDGMENT OF GRATITUDE, RESPECT OR ADORATION. IT IS AN EVIDENCE OF ATTESTING TO SOMEONE OF THEIR PRAISE WORTHY QUALITY OR CHARACTERISTIC. 'IT IS AN OBEISANCE, TRIBUTE, RESPECT AND HONOR SHOWN OR EXPRESSED PUBLICLY'. THEREFORE, 'S HRADHANJALI', 'TRIBUTE' IN THE PRESENT CASE IS A REMEMBRANCE OF A FOUNDING FATHER OF THE GROUP. THE EXPENDITURE DOES NOT HAVE A CHARACTER THAT THEY ARE EXPENSES INCIDENTAL TO CARRYING OUT OF THEIR PAN MASALA BUSINESS NOR WERE INCURRED FOR MARKETING THE APP ELLANTS PRODUCTS. SECTION 37(1) CLEARLY STIPULATES THAT EXPENSES WHICH ARE REVENUE IN NATURE AND INCIDENTAL TO THE BUSINESS WOULD BE ALLOWED. IN THE PRESENT CASE, THE EXPENDITURE WAS INCURRED ON ACCOUNT OF EXPRESSION OF PERSONAL FEELINGS OF THE PERSONS MEN TIONED ABOVE AS A TRIBUTE, RESPECT, HONOR OF LATE SH. RAM NATH JI CHAURASIA FROM WHOM THE SONS INHERITED THE BUSINESS OF PAN MASALA. THE FACTS OF THE APPELLANT S CASE ARE EASILY DISTINGUISHABLE FROM THE CASE LAWS RELIED UPON BY THE APPELLANT. IN VIEW OF T HE ABOVE DISCUSSION, I HOLD THAT THE AO WAS JUSTIFIED IN MAKING THE IMPUGNED DISALLOWANCE AND IN MAKING AN ADDITION OF RS.2,83,264/ - TO THE INCOME OF THE APPELLANT. HENCE THE ADDITION MADE BY THE AO IS UPHELD AND I CONFIRM THE ADDITION OF RS.2,83,284/ - AC CORDINGLY. 6. THE LD. CIT DR PLACES RELIANCE O N THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. ON CONSIDERATION OF THE SAME 4 I.T.A .NO. - 57 0 3/DEL/2013 WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE HAS RIGHTLY BEEN REJECTED. THE C ASE LAW RELIED UPON ON FACTS IS DISTINGUISHABLE AND DOES NOT ADVANCE THE ASSESSEE S CASE IN ANY MANNER IN VIEW OF THE SPECIFIC PRO HIBITION PLACED BY THE LEGISLATURE ON THE CLAIM OF PERSONAL EXPENDITURE U/S 37 ( 1 ) . IN THE FACE OF THE STATUTORY PROVISION ON TH E FACTS WHERE ADMITTEDLY THE EXPENDITURE WAS INCURRED AS A SHRADHANJALI THE ASSESSEE S CLAIM HAS RIGHTLY BEEN REJECTED. ACCORDINGLY THE GROUNDS RAISED OF THE ASSESSEE IS REJECTED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMISSED. THE ORDER IS PRON OUNCED IN THE OPEN COURT ON 27 TH OF FEBRUARY 2015 . S D / - S D / - ( P.K.BANSAL ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 / 02 /201 5 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI