DCIT, New Delhi V. M/s. Fortune Park Hotels Ltd., Gurgaon

ITA 5999/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97582 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 06-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Business expenditure; Commercial expediency; Revenue expenditure
• Section: 143(3); 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. A.T.VARKEY, JM AND SH. PRASHAN T MAHARISHI, AM ITA NO. 5999/DEL/2013 A Y 2010-11 DCIT CIRCLE 11(1) NEW DELHI VS FORTUNE PARK HOTELS LTD. CORPORATE OFFICE, ITC LTD. GREEN CENTRE-10 INSTITUTIONAL AREA, SECTOR-32 GURGAON (APPELLANT) (RESPONDENT) PAN NO. AAACF6741Q APPELLANT BY : SH. HEMANT GUPTA, SR. DR RESPONDENT BY : SH. ROH IT JAIN, ADV. SH. DEEPESH JAIN, CA DATE OF HEARING : 12.10.2015 DATE OF PRONOUNCEME NT : 21.10.2015 ORDER PER PRASHANT MAHARISHI, AM: 01. THIS APPEAL IS PREFERRED BY REVENUE AGAINST ORDER O F CIT(A) XIII DATED 12 AUGUST, 2013 RAISING FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE O F RS. 17,99,870/- MADE OUT OF ADVERTISEMENT EXPENSES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS . 19,854/- OUT OF CLUB MEMBERSHIP EXPENSES. 02. THE BRIEF FACTS OF THE CASE THAT ASSESSEE COMPANY I S ENGAGED IN THE BUSINESS OF PROVIDING TECHNICAL SERVICES OF HOTEL S UNDER ITS BRAND NAME FORTUNE. IT PROVIDES OPERATING AND MARKETING SERV ICES ALSO. FOR THE RELEVANT ASSESSMENT YEAR IT FILED ITS RETURN OF INC OME ON 27.09.2010 DECLARING IN TOTAL INCOME OF RS. 5,16,67,703/- ASSE SSMENT U/S 143(3) WAS MADE ON 28 TH SEPTEMBER, 2012 ON TOTAL INCOME OF RS. 5,35,54,780 /-. THE ASSESSING OFFICER DISALLOWED A SUM OF RS. 17,99,870 /- BEING 20% OF TOTAL ADVERTISEMENT EXPENDITURE INCURRED BY THE ASSESSEE OF RS. 1,19,99,128/-. ITA NO. 59 99/DEL/2013 FORTUNE PARK HOTELS LTD. 2 FURTHER DISALLOWANCE OF RS. 19,854/- WAS ALSO MADE ON ACCOUNT OF CLAIM MEMBERSHIP FEES AND RS. 67,353/- ON ACCOUNT OF DISA LLOWANCE U/S 14A. AGAINST THIS ASSESSEE PREFERRED APPEAL BEFORE CIT ( A) WHO IN TURN ALLOWED THE APPEAL ON SUBSTANTIVE GROUNDS AND DELETED THE A DDITION OF ADVERTISEMENT EXPENDITURE AS WELL AS THE CLUB FEES EXPENDITURE. A GAINST THE ORDER OF CIT (A), REVENUE IS IN APPEAL BEFORE US. GROUND NO.1 :- 03. GROUND NO. 1 IS AGAINST DELETION OF DISALLOWANCE OF RS. 17,99,870/- OUT OF ADVERTISEMENT EXPENDITURE. DURING THE YEAR ASSESSEE HAS INCURRED EXPENDITURE OF RS. 1,53,44,166/- UNDER THE HEAD AD VERTISEMENT AND SALES PROMOTION AND OUT OF THE ABOVE SUM AN AMOUNT OF RS. 1,19,99,128/- WAS INCURRED ON ACCOUNT OF ADVERTISEMENT IN PRINT MEDIA FOR STRENGTHENING THE FORTUNE BRAND. LD. ASSESSING OFFICER DISALLOWED 2 0% OF THE ADVERTISEMENT EXPENSES ON ACCOUNT OF BRAND BUILDING EXPENDITURE AND ACCORDING TO AO, SAME WAS CAPITAL IN NATURE. THEREF ORE HE DISALLOWED AN AMOUNT OF RS. 23,99,826/-. HE FURTHER HELD THAT AS BRAND IS AN INTANGIBLE ASSET ALLOWED DEPRECIATION @ 25% ON 23,99,826/- AMO UNTING TO RS. 5,99,956/- THEREBY MAKING NET ADDITION / DISALLOWAN CE OF RS. 17,99,870/-. ON APPEAL BEFORE THE CIT(A) THE ADDITION OF RS. 17,99,000/- WAS DELE TED ON THE GROUND THAT EXPENDITURE HAS NOT BEEN INCURR ED TO ACQUIRE ANY BRAND AND SUCH EXPENDITURE HAS NOT RESULTED IN CREATION O F ANY ASSET FOR THE ASSESSEE. HE FURTHER HELD THAT OBJECT OF THE EXPEND ITURE WAS BETTER PERFORMANCE AND IMPROVEMENT ON EXISTING BUSINESS. H E FURTHER HELD THAT AS THERE IS NO BENEFIT OF ENDURING NATURE ACQUIRED BY THE ASSESSEE THE EXPENDITURE INCURRED ON BRAND BUILDING IS NOT CAPIT AL EXPENDITURE. HE RELIED ON VARIOUS DECISIONS OF JURISDICTIONAL HIGH COURT W HEREIN SUCH DISALLOWANCE IS DELETED. 04. LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND STATED THAT THE BRAND IS DEFINITELY AN INTANGIBLE ASSET FOR THE ASS ESSEE FROM WHICH ECONOMIC BENEFIT IS DERIVED FOR A LONG TIME. THE ASSESSEE IS GETTING BENEFIT NOT FOR ITA NO. 59 99/DEL/2013 FORTUNE PARK HOTELS LTD. 3 ONE YEAR BUT FOR SEVERAL YEARS OUT OF EXPENDITURES ON BRAND BUILDING INCURRED BY THE ASSESSEE. 05. LD. AR SUBMITTED THAT THIS ISSUE IS COVERED IN FAVO UR OF THE ASSESSEE IN ITS OWN CASE FOR AY 2009-10 IN ITA NO 522/DEL/2013 DATE D 27/09/2013. HE SUBMITTED THAT HONBLE ITAT HAS CONSIDERED ALL THE GROUNDS AND HAS DELETED THE ADDITION. HE DREW ATTENTION TO PARA 8 OF THE OR DER WHEREIN HONBLE ITAT HAS HELD THAT EXPENDITURE INCURRED BY THE ASSE SSEE ARE OF REVENUE NATURE. HE SUBMITTED THAT THIS GROUND OF APPEAL IS THEREFORE COVERED IN FAVOUR OF THE ASSESSEE. 06. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. WE HAVE PERUSED THE ORDER OF CO-ORDINATE BENCH IN CASE OF ITA NO. 522/D EL./2013 FOR ASSESSMENT YEAR 2009-10 IN CASE OF THE ASSESSEE. ACCORDING TO THAT ORDER, ITAT HAS CONSIDERED THE IDENTICAL ISSUE FOR AY : 2009-10. TH E PARTIES HAVE ALSO AGREED D THAT THERE IS NO CHANGE IN THE FACTS AS WE LL AS LAW WITH RESPECT TO THIS ADDITION PERTAINING TO THE CURRENT ASSESSMENT YEAR. HONBLE ITAT HAS DEALT WITH THIS ISSUE AS UNDER :- 8. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE ISSUE IS AS TO WHETHER THE INCURRENC E OF THE EXPENDITURE IN QUESTION HAS BROUGHT ANY ENDURING BE NEFIT TO THE ASSESSEE COMPANY. THE ASSESSEE COMPANY IS IN THE BU SINESS OF PROVIDING OPERATING, MARKETING AND TECHNICAL SERVIC ES TO HOTELS, THROUGH ITS EXPERTISE, UNDER THE BRAND NAME 'FORTUN E'. THE SERVICES PROVIDED BY THE ASSESSEE PERTAINED-TO TECH NICAL, CONSULTANCY, OPERATING AND MARKETING SERVICES FOR O PERATION OF HOTELS IN INDIA. FOR PROVISION OF SUCH SERVICES, AN AGREEMENT IS ENTERED INTO, WHEREBY, THE HOTEL SEEKING TO AVAIL T HE SERVICES OF THE ASSESSEE, AGREES TO ENGAGE THE ASSESSEE COMPANY TO RENDER SERVICES INCLUDING MARKETING, ADVERTISEMENT AND RES ERVATION SERVICES AND TECHNICAL CONSULTANCY AND PRE-OPENING SERVICES. FOR THIS, SERVICE FEE IS PAID TO THE ASSESSEE COMPA NY BY THE HOTEL. APROPOS THE EXPENDITURE IN QUESTION, UNDER T HE RELEVANT AGREEMENT, UNDISPUTEDLY, THE ASSESSEE WAS REQUIRED TO PROVIDE SERVICES IN CONNECTION WITH MARKETING, ADVERTISEMEN T AND PUBLICITY OF ITS CLIENT HOTEL IN THE LOCAL AND NATI ONAL MARKETS. THE ASSESSING OFFICER HELD THE EXPENDITURE INCURRED TO HAVE BEEN INCURRED TOWARDS BRAND BUILDING AND CAPITAL IN NATURE. HOWEVER, IT IS SEEN THAT THE ASSESSEE HAD INCURRED THE EXPENDITURE IN QUESTION SO AS TO PROMOTE AND MAINTA IN HOTELS ITA NO. 59 99/DEL/2013 FORTUNE PARK HOTELS LTD. 4 RUN BY IT UNDER THE 'FORTUNE' BRAND OWNED BY THE AS SESSEE. THIS WAS HAVING A DIRECT BEARING ON THE SALES/TURNOVER O F THE HOTELS BEING OPERATED BY THE ASSESSEE COMPANY, RESULTING I N MORE PROFITS TO IT. UNDISPUTEDLY, THE EXPENDITURE WAS IN CURRED BY THE ASSESSEE COMPANY IN THE REGULAR COURSE OF ITS BUSIN ESS. IT WAS INCURRED TO ENHANCE THE BRAND VALUE OF THE HOTELS A ND TO THEREBY EARN HIGHER PROFITS. THE EXPENDITURE WAS HA VING A DIRECT NEXUS WITH THE ASSESSEE'S BUSINESS AND PROFITABILIT Y. THIS EXPENDITURE WAS, IN FACT, NECESSARY FOR PROMOTING T HE ASSESSEE'S BUSINESS INTERESTS. IT HAS NOT BEEN SHOWN THAT THE EXPENDITURE WAS INCURRED TO ACQUIRE ANY BRAND FROM ANY OUTSIDE PARTY, NOR DID IT RESULT IN THE CREATION OF ANY CAPITAL ASSET FOR THE ASSESSEE COMPANY. THE BRAND HAS BEEN IN EXISTENCE FOR A NUMB ER OF YEARS AND THE EXPENDITURE CLAIMED IN THE EARLIER YEARS HA S CONSISTENTLY BEEN ALLOWED AS AN ALLOWABLE REVENUE E XPENDITURE U/S 37(1) OF THE ACT. 9. ALL THESE FACTS AND CIRCUMSTANCES, IT IS SEEN, WERE DULY TAKEN INTO CONSIDERATION BY THE LD. CIT (A) WHILE H OLDING THE EXPENDITURE INCURRED BY THE ASSESSEE TO BE OF A REV ENUE NATURE RATHER THAN A CAPITAL ONE, AS ERRONEOUSLY HELD BY T HE ASSESSING OFFICER. IT WOULD BE APPROPRIATE TO HERE REPRODUCE THE RELEVANT PORTION OF THE CIT (A)'S ORDER:- IT IS SEEN THAT MOST OF THE EXPENDITURE HAS BEEN I NCURRED ON PRINT/DIGITAL MEDIA, TO CREATE 'ARCHIVE DESIGNS' AN D PRINTING CLOTH CAPS ETC. THE EXPENDITURE INCURRED IN THE PRINT AND DIGITAL MEDIA FOR PUBLICITY OF BRAND 'FORTUNE' ALONG WITH T HE NAME OF PARTICULAR HOTEL IS NOT ENDURING IN NATURE AND SAME HAS TO BE KEPT ON REPEATING EVERY MONTH TO ATTRACT THE PUBLIC ATTENTION. IT MAY BE MENTIONED HERE THAT THE APPELLANT IS FACING STIFF COMPETITION FROM ITS RIVAL BRANDS AND IN ORDER TO M ARK ITS PRESENCE IN THE MARKET, THE APPELLANT HAS TO INCUR EXPENDITURE ON ADVERTISEMENT AND SALES PROMOTION. THEREFORE, TH E EXPENDITURE INCURRED ON ADVERTISEMENT AND PUBLICITY IS NOT OF THE CAPITAL NATURE BUT THE SAME IS OF REVENUE NATUR E. IT IS CONTENDED BY THE APPELLANT THAT IT HAS SUBMIT TED ALL THE BILLS AND VOUCHERS OF ADVERTISEMENT EXPENSES ALONG WITH THE COPY OF LEDGER ACCOUNT. THESE DETAILS HAVE ALSO BEE N FILED BEFORE ME. IT IS SEEN THAT ALL THE EXPENSES ARE SUP PORTED BY THE BILLS AND VOUCHERS AND THE SAME HAVE BEEN INCURRED ON ADVERTISEMENT AND PUBLICITY OF THE BRAND 'FORTUNE.' THEREFORE, EXPENSES INCURRED ON ADVERTISEMENT CANNOT BE CALLED OF ENDURING NATURE. THE EXPENDITURE WAS NOT IN A CAPIT AL NATURE AS NO PERMANENT ASSET HAS BEEN CREATED BY THIS EXPENDI TURE. THE APPELLANT HAS TO INCUR EXPENDITURE ON ADVERTISEMENT AND ITA NO. 59 99/DEL/2013 FORTUNE PARK HOTELS LTD. 5 PUBLICITY TO REMAIN IN THE LIME LIGHT AND TO SHOW I TS PRESENCE IN THE MARKET. THE PUBLIC MEMORY IS VERY SHORT, IF THE APPELLANT DOES NOT SPENT MONEY ON ADVERTISEMENT AND PUBLICITY , THE COMPETITOR WILL TAKE THE STAGE AND MARKET SHARES OF THE APPELLANT.' 10. ON THE CIT(A)S OBSERVATION THAT ALL THE EXPENSES I NCURRED BY THE ASSESSEE ARE SUPPORTED BY THE BILLS AND VOUC HERS AS HAVING BEEN INCURRED ON ADVERTISEMENT AND PUBLICITY OF TH E BRAND NAME, THE LD. DR HAS OBJECTED THAT THE EXPENDITURE HAS NO T BEEN DOUBTED BUT, UNDISPUTEDLY, CERTAIN AMOUNT HAS CERTA INLY BEEN SPENT FOR CREATING A BRAND NAME, WHICH ITSELF FETCH ES A DEFINITE ENDURING BENEFIT TO THE ASSESSEE. WE DO NOT FIND OU RSELVES AD IDEM WITH THE LD. DR IN THIS REGARD. THE OBSERVATION OF THE LD. CIT (A) IS MERELY BUTTRESSING THE FINDING THAT THE EXPENDIT URE INCURRED DID NOT FETCH ANY ENDURING BENEFIT TO THE ASSESSEE, THAT SUCH EXPENDITURE HAD TO BE REPEATED EVERY MONTH TO ATTRA CT PUBLIC ATTENTION IN THE FACE OF STIFF COMPETITION FROM RIV AL BRANDS OF THE ASSESSEE AND TO KEEP AFLOAT IN THE PREVAILING CUT-T HROAT COMPETITION. 11. THE DEPARTMENT HAS NOT BEEN ABLE TO ESTABLISH EITH ER THAT THE EXPENDITURE WAS INCURRED TO ACQUIRE ANY BRAND F ROM ANY OUTSIDE PARTY, OR THAT IT WAS NOT INCURRED IN THE N ORMAL COURSE OF THE ASSESSEE'S BUSINESS, OR THAT IT HAD RESULTED IN THE CREATION OF ANY CAPITAL ASSET FOR THE ASSESSEE COMPANY, OR EVEN THAT IT HAD FETCHED ANY ENDURING BENEFIT TO THE ASSESSEE COMPAN Y IN THE CAPITAL FIELD. 12. ALSO, THE CASE IS GOVERNED BY THE RULE OF CONSISTE NCY, THE DEPARTMENT HAVING REGULARLY ALLOWED SIMILAR EXPENDI TURE INCURRED IN EARLIER YEARS AND THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES IN THE YEAR UNDER CONSIDERATION. SO, THERE IS NO REASON TO MAKE DISALLOWANCE THIS YEAR. 13. IN VIEW OF THE ABOVE, THE LD. CIT (A) IS FOUND TO HAVE CORRECTLY APPRECIATED THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE COMPANY TO BE OF A REVENUE NATURE. ALL THE CASE LAW S CITED BY THE ASSESSEE BEFORE THE LD. CIT (A) HAVE CORRECTLY BEEN TAKEN INTO CONSIDERATION BY HIM. 14. IN 'CIT VS. AGRA BEVERAGES CORPN. (P) LTD.', 11 TA XMAN.COM 350 (DEL), THE ASSESSEE HAD INCURRED EXPENDITURE ON ADVERTISEMENT AND PUBLICITY OF PRODUCTS OF A PARTY IN ITS TERRITORY. THE ASSESSING OFFICER TOOK A VIEW THAT S INCE THE PARTY ITA NO. 59 99/DEL/2013 FORTUNE PARK HOTELS LTD. 6 HAD ALSO GAINED FROM THE SAID EXPENDITURE, THE ASSE SSEE'S CLAIM COULD NOT BE ALLOWED IN FULL AND DISALLOWED 10% OF THE AMOUNT CLAIMED. THE TRIBUNAL ALLOWED THE ENTIRE CLAIM AND THE HON'BLE JURISDICTIONAL HIGH COURT UPHELD THE ORDER OF THE T RIBUNAL, HOLDING THAT THE EXPENDITURE WAS EXCLUSIVELY INCURR ED FOR THE PURPOSES OF THE ASSESSEE'S BUSINESS AND TO PROMOTE THE SALES OF THE ASSESSEE AND IF IN THE SAID PROCESS, THE PARTY, OR ITS TRADE MARK ALSO BENEFITED, THAT WOULD NOT MILITATE AGAINS T THE ASSESSEE SO FAR AS REGARDS DEDUCTION U/S 37 OF THE ACT. 15. IN 'ADIDAS INDIA MARKETING (P) LTD. VS. ASSE SSING OFFICER, WARD 1(2), NEW DELHI' 10 TAXMAN.COM 18 (DEL), THE A SSESSEE COMPANY WAS A SUBSIDIARY OF ADIDAS. IT INCURRED EXP ENDITURE ON ADVERTISEMENT AND PROMOTION OF THE BRAND 'ADIDAS' I N INDIA AND DEBITED IT TO THE ACCOUNT OF THE HOLDING COMPANY. B EFORE THE ASSESSING OFFICER, THE ASSESSEE EXPLAINED THAT IT H AD INCURRED EXPENDITURE ON BRAND PROMOTION AND HAD DEBITED THE SAME TO THE HOLDING COMPANY AND THAT NO AMOUNT WAS ACTUALLY PAI D BY IT TO THE HOLDING COMPANY OUT OF BORROWED FUNDS FOR NON-B USINESS PURPOSES. THE ASSESSING OFFICER, HOWEVER, DISALLOWE D INTEREST PAYMENT MADE BY THE ASSESSEE. IT WAS HELD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS ADVERTISEMENT FOR AND ON BEHALF OF THE HOLDING COMPANY WAS UNDOUBTEDLY ON GROUNDS O F COMMERCIAL EXPEDIENCY, INASMUCH AS THE ASSESSEE UND OUBTEDLY WOULD BE BENEFITED BY MAKING ADVERTISEMENT OF THE BRAND NAME 'ADIDAS' TO AUGMENT AND PROMOTE SALE EFFECTED BY IT IN NOTIFIED TERRITORIES AND THAT THEREFORE, THE ASSESSING OFFIC ER WAS NOT JUSTIFIED IN DISALLOWING THE INTEREST PAYMENT MADE BY THE ASSESSEE. V 16. IN 'SALORA INTERNATIONAL VS. ACIT, RANGE -9, NE W DELHI', 166 TAXMAN 54 (DEL) (MAG), IT WAS INTER ALIA, HELD THAT IF THE ADVANTAGE CONSISTS MERELY IN FACILITATING THE ASSES SEE'S TRADING OPERATIONS OR ENABLING THE MANAGEMENT AND CONDUCT O F THE ASSESSEE'S BUSINESS TO BE CARRIED ON MORE EFFECTIVE LY OR MORE PROFITABLY, WHILE LEAVING THE FIXED CAPITAL UNTOUCH ED, THE EXPENDITURE WOULD BE ON REVENUE ACCOUNT, EVEN THOUG H THE ADVANTAGE MAY ENDURE FOR AN INDEFINITE FUTURE; THAT ADVERTISEMENT EXPENDITURE CANNOT BE OF ENDURING NAT URE IN THE PRESENT DAY SCENARIO, AS THERE IS A LOT OF COMPETIT ION IN THE MARKET; AND THAT SINCE UNDER THE SAME SET OF FACTS, THE DEPARTMENT, IN EARLIER YEARS, WAS CONSTANTLY ALLOWI NG THE PAYMENTS AS ROYALTY EXPENDITURE, THERE WAS NO JUSTI FICATION ON ITS PART TO CHANGE THE VIEW AT ITS SWEET WILL, WITHOUT ANY CHANGE OF FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSI DERATION. 17. IN 'CIT VS. SALORA INTERNATIONAL LTD.' 308 ITR 199 (DEL), IT WAS HELD THAT WHERE THERE WAS A DIRECT NE XUS BETWEEN ITA NO. 59 99/DEL/2013 FORTUNE PARK HOTELS LTD. 7 THE ADVERTISEMENT EXPENDITURE AND THE BUSINESS OF T HE ASSESSEE, THE EXPENDITURE WAS A REVENUE EXPENDITURE. 18. ALL THE ABOVE DECISIONS ARE SQUARELY APPLICABLE TO THE PRESENT CASE AND THEY HAVE BEEN CORRECTLY APPRE CIATED BY THE LD. CIT (A). NO DECISION TO THE CONTRARY HAS BEEN B ROUGHT TO OUR NOTICE. 19. IN VIEW OF THE ABOVE DISCUSSION, FINDING NO MERIT IN THE GROUND RAISED BY THE DEPARTMENT, THE SAME IS RE JECTED. 07. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF C O-ORDINATE BENCH IN THE CASE OF THE ASSESSEE FOR AY 2009-10, WE CONFIRM THE ORDER OF CIT(A) IN DELETING THE DISALLOWANCE OF RS. 17,99,870/- MADE O UT OF ADVERTISEMENT EXPENSES. THEREFORE, GROUND NO. 1 OF THE APPEAL OF THE REVENUE IS DISMISSED. GROUND NO. 2 :- 08. 2 ND GROUND OF APPEAL IS AGAINST THE DISALLOWANCE OF RS . 19,854/- INCURRED BY THE ASSESSEE OF CLUB EXPENSES. DURING THE COURSE O F ASSESSMENT PROCEEDINGS ASSESSEE SUBMITTED THAT THE SAID EXPENSES ARE COMPR ISING OF MEMBERSHIP EXPENSES OF THE EMPLOYEES OF THE COMPANY. HOWEVER, ASSESSING OFFICER DISALLOWED THESE EXPENSES AS PERSONAL EXPENDITURE. AGAINST THIS ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO IN TURN D ELETED THE DISALLOWANCE HOLDING THAT REVENUE CANNOT STEP INTO SHOES OF A BU SINESSMAN TO CONDUCT BUSINESS OR INCUR EXPENDITURE IN A PARTICULAR WAY A ND THEREFORE FOLLOWING THE DECISION IN CASE OF ASSESSEE FOR A.Y. : 2008-09 HE DELETED THE ADDITION AGAINST THIS REVENUE IS IN APPEAL. 09. BEFORE US LD. DR SUBMITTED THAT AO HAS DISALLOWED T HE EXPENDITURE HOLDING THAT IT IS A PERSONAL EXPENDITURE AND THEREFORE DIS ALLOWANCE MAY BE UPHELD. THE LD. AR OF THE APPELLANT SUBMITTED THAT THE HON BLE SUPREME COURT IN CIT VS. UNITED GLASS MANUFACTURING COMPANY LTD. HAS HELD THAT CLUB ITA NO. 59 99/DEL/2013 FORTUNE PARK HOTELS LTD. 8 MEMBERSHIP FEES FOR EMPLOYEES INCURRED BY THE ASSES SEE IS A BUSINESS EXPENDITURE AND IS ALLOWABLE U/S 37 OF THE INCOME TAX ACT. 10. WE HAVE HEARD THE RIVAL CONTENTIONS. IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN CASE OF CIT VS. UNITED GLASS MANUF ACTURING COMPANY LTD, CIVIL APPEAL NO 30146/2008 DATED 13.9.2012 THE MEMB ERSHIP EXPENSES OF THE CLUB INCURRED BY THE ASSESSEE ARE ALLOWABLE U/S 37(1) OF THE ACT. THEREFORE WE CONFIRM THE ORDER OF CIT(A) IN DELETIN G IN THE DISALLOWANCE OF RS. 19,854 ON THIS ACCOUNT. THEREFORE, GROUND NO. 2 OF THE APPEAL IS DISMISSED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 21/10/2015) SD/- SD/- (A.T.VARKEY) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTA NT MEMBER DATED: 21/10/2015 *B. RUKHAIYAR* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGISTRAR ITA NO. 59 99/DEL/2013 FORTUNE PARK HOTELS LTD. 9 DATE INITIAL 1. DRAFT DICTATED ON 13/10/2015 2. DRAFT PLACED BEFORE AUTHOR 13/10/2015 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.