Kamla Kant & Co., New Delhi V. DCIT, New Delhi

ITA 72/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5785 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 04-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NAINA SOIN KAPIL
• Keywords: Business expenditure; Principle of natural justice
• Section: 142(1); 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI D BEN CH, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER, ITA NO. 72/DEL/2016 ASSESSMENT YEAR 2011-12 KAMLA KANT & CO. 575, DOUBLE STOREY, 1 ST FLOOR, NEW RAJENDRA NAGAR, NEW DELHI-110060 DCIT, CC-8, NEW DELHI PAN - AAFFK2884D APPELLANT RESPONDENT ASSESSEE BY NONE REVENUE BY SMT. NAINA SOIN KAPIL DATE OF HEARING 08 /08 /2019 DATE OF PRONOUNCEMENT 09 /08 /2019 ORDER PER T. S. KAPOOR, ACCOUNTANT MEMBER, THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) DATED 29/10/2015. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE NOR WAS THERE ANY APPLICATION FOR ADJOURNMENT. HOWE VER, THERE IS A LETTER OF REQUEST DATED 26/07/2019 FOR GRANT OF ADJOURNMEN T WHICH IS PLACED ON RECORD AND BY WHICH REQUEST THE CASE WAS ADJOURNED TO THIS DATE. IN THAT ADJOURNMENT APPLICATION, THE ASSESSEE HAD STATED TH AT SIMILAR APPEAL WAS FILED FOR AY 2010-11 VIDE APPEAL IN ITA NO.5703 THE FATE OF THE ORDER OF THE TRIBUNAL WAS NOT KNOWN. THEREFORE , WE DECIDED TO 2 ITA NO.7 2/DEL/2016 DISPOSE OF THE APPEAL ON THE BASIS OF TRIBUNAL ORDE R IN ITA NO.5703 AND BENCH CLERK WAS DIRECTED TO TRACE THE ORDER. 2. THE BENCH CLERK PROVIDED THE BENCH A COPY OF THE TRIBUNAL ORDER IN ITA NO.5703/DEL/2013 AND FROM THE FINDINGS OF THE H ONBLE TRIBUNAL, WE FIND THAT SIMILAR ISSUE WAS INVOLVED IN AY 2010-11 AND HONBLE ITAT VIDE ORDER DATED 27/02/2015 HAD DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER:- 2.1. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THE LEARNED CIT(A) WAS WRONG IN LAW AND ON FACT S IN CONFIRMING THE DISALLOWANCE OF RS.283284/- MADE BY ASSESSING OFFIC ER IN RESPECT OF ADVERTISEMENT EXPENSES. 2. THE LEARNED CIT(A) WHILE CONFIRMING THE DISALLOW ANCE HAS FILED TO APPRECIATE THAT THE AFORESAID EXPENSES WERE FOR BUS INESS PURPOSES AND WAS AN ALLOWABLE EXPENSE. 3. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT SUCH EXPENSES WERE NOT OF PERSONAL NATURE AND THE DECISIONS CITED BY THE APPE LLANT WERE APPLICABLE TO THE FACTS OF THE PRESENT CASE. 4. IN ANY CASE & WITHOUT PREJUDICE TO THE ABOVE GRO UNDS THE DISALLOWANCE OF ENTIRE EXPENSES IS MUCH TOO HIGH & EXPENSIVE. 5. THE ORDER OF THE LEARNED AO IS AGAINST LAW, FACT S & PRINCIPLES OF NATURAL JUSTICE. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE DECLARE D 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 AMOUNT ING TO RS.2,83,284/- CAN BE ALLOWED AS ADVERTISEMENT EXPENDITURE WHEN ADMITT EDLY THE EXPENDITURE WAS INCURRED ON SHRADANJALI (REMEMBRANCE) EXPENDITU RE ETC. THE SPECIFIC SHOW CAUSE NOTICE DATED 11.05.2012 IS REPRODUCED HE REUNDER FOR READY- REFERENCE:- 'ON THE PERUSAL OF ADVERTISEMENT BILLS, IT IS NOTI CED 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 'S HARDANJALI', WHICH IS NOT A BUSINESS EXPENDITURE. THE COMPANY HAD PUBLISHED SHARDANJALI' FOR THEIR 3 ITA NO.7 2/DEL/2016 DECEASED MEMBERS AND CLAIMED THE EXPENDITURE ON PUB LICATION IN NEWSPAPER AS BUSINESS EXPENDITURE. THERE A SHOW CAUSE, WHY TH E AMOUNT OF RS. 2,83,284/- SHOULD NOT BE DISALLOWED AND ADDED BACK IN YOUR INCOME'. 4. THE LD. AR IN REPLY HAS STATED THAT THE EXPENDIT URE 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 ST ARTED THE TRADE NAME OF KAMLA PASAND AND IT WAS UNDER HIS GUIDANCE AND SUPE RVISION THAT THE BUSINESS FLOURISHED. THE KAMLA PASAND BRAND IT WAS SUBMITTED BECAME POPULAR IN THE POUCH FORM IN THE NAME OF RAJSHREE THUS THE SHARDAN JALI WAS A WAY OF ADVERTISING THE PRODUCT AND PAYING HOMAGE TO SH. RA M NATH CHAURASIA WHO HAD EXPIRED ON 1994. NOT CONVINCED WITH THE EXPLANA TION OFFERED THE AO HELD THAT THE EXPENDITURE IS A PERSONAL EXPENDITURE OF C HAURASIA FAMILY AS SUCH NOT ALLOWABLE U/S 37 OF THE INCOME TAX ACT, 1961 AS SEC TION 37(1) EXPRESSLY PROHIBITS THE DEDUCTION OF PERSONAL EXPENSES. DISAL LOWANCE OF THE SAID AMOUNT WAS ACCORDINGLY MADE. 5. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY T HE ISSUE WAS AGITATED AGAIN BY THE ASSESSEE. RELIANCE WAS PLACED UPON THE FOLLO WING 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 ADD ITION MADE HOLDING AS UNDER:- 6. I HAVE GONE THROUGH THE FACTS OF THE CASE, FIND INGS 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 AN D CONSIDERED THEM. ON PERUSAL OF THE DETAILS, I FIND THAT THE APPELLANT F ILED 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 CH AURASIA PUBLISHED BY TILE MEMBERS OF HIS FAMILY, OFFICERS AND EMPLOYEES OF TH E BRANDS OF PAN MASALA LIKE 'KAMALA PASAND' RAJSREE 'SAFFRONIC' ETC. WHICH WERE FOUNDED BY LATE SH. CHAURASIA ,A 'SHRADHANJALI (REMEMBRANCE)', IS A REM EMBRANCE WITH RESPECT AND DEDICATION AND IS A DECLARATION AND OTHER ACKNO WLEDGMENT OF GRATITUDE, RESPECT OR ADORATION. IT IS AN EVIDENCE OF ATTESTIN G TO SOMEONE OF THEIR PRAISE WORTHY QUALITY OR CHARACTERISTIC. 'IT IS AN OBEISAN CE, TRIBUTE, RESPECT AND HONOR SHOWN OR EXPRESSED PUBLICLY'. THEREFORE, 'SHR ADHANJALI', 'TRIBUTE' IN THE PRESENT CASE IS A REMEMBRANCE OF A FOUNDING FAT HER 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 APPELLANTS PRODUCTS. SECTION 37(1) CLEARLY STIPULAT ES THAT EXPENSES WHICH ARE REVENUE IN NATURE AND INCIDENTAL TO THE BUSINESS WO ULD BE ALLOWED. IN THE PRESENT CASE, THE EXPENDITURE WAS INCURRED ON ACCOU NT OF EXPRESSION OF PERSONAL FEELINGS OF THE PERSONS MENTIONED ABOVE AS A TRIBUTE, RESPECT, HONOR OF LATE SH. RAM NATH JI CHAURASIA FROM WHOM THE SON S INHERITED THE BUSINESS OF PAN MASALA. THE FACTS OF THE APPELLANTS CASE AR E EASILY DISTINGUISHABLE FROM THE CASE LAWS RELIED UPON BY THE APPELLANT. IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT THE AO WAS JUSTIFIED IN MAK ING THE IMPUGNED DISALLOWANCE AND IN MAKING AN ADDITION OF RS.2,83,2 64/- TO THE INCOME OF THE 4 ITA NO.7 2/DEL/2016 APPELLANT. HENCE THE ADDITION MADE BY THE AO IS UPH ELD AND I CONFIRM THE ADDITION OF RS.2,83,284/- ACCORDINGLY. 6. THE LD. CIT DR PLACES RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. ON CONSIDERATION OF THE SAME WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSES SEE HAS RIGHTLY BEEN REJECTED. THE CASE LAW RELIED UPON ON FACTS IS DIST INGUISHABLE AND DOES NOT ADVANCE THE ASSESSEES CASE IN ANY MANNER IN VIEW O F THE SPECIFIC PROHIBITION PLACED BY THE LEGISLATURE ON THE CLAIM OF PERSONAL EXPENDITURE U/S 37(1). IN THE FACE OF THE STATUTORY PROVISION ON THE FACTS WH ERE ADMITTEDLY THE EXPENDITURE WAS INCURRED AS A SHRADHANJALI THE ASSE SSEES CLAIM HAS RIGHTLY BEEN REJECTED. ACCORDINGLY THE GROUNDS RAISED OF TH E ASSESSEE IS REJECTED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISM ISSED. 3. FOLLOWING THE AFORESAID JUDICIAL PRECEDENCE AVAI LABLE IN THE CASE OF ASSESSEE ITSELF WE DISMISS THE APPEAL FILED BY THE ASSESSEE. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09/08/ 2019. SD/- SD/- [BHAVNESH SAINI] [T.S. KAPOOR] JUDICIAL MEMBER ACCOUNTANT MEMBER DELHI; DATED: 09/08/2019. F{X~{T? F{X~{T? F{X~{T? F{X~{T? FA FA FA FA P.S P.SP.S P.S COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI