INTERPOLE TECHNOLOGIES PVT LTD., MUMBAI V. ITO 14 (2)(1), MUMBAI

ITA 7514/MUM/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9376 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2021
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 05-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Rule of consistency
• Section: 143(3); 143(1)

Judgement Text

आयकर अपीलीय अिधकरण मुंबई पीठ “एस एम सी” , मुंबई Įी ǒवकास अवèथी, Ûयाियक सदèय के सम¢ IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER आअसं. 7514/मुं/2019 (िन.व.2013-14) ITA NO.7514/MUM/2019 (A.Y.2013-14) M/s Interpole Technologies Pvt. Ltd., 7, “Gauri Shankar”, 50/A, Piston Sagar, Chembur, Mumbai-400089. PAN: AABCI1991A ...... अपीलाथȸ /Appellant बनाम Vs. ITO 14(2)(1) Room No. 457, Aayakar Bhavan, M.K. Road, Mumbai-400020. ..... Ĥितवादȣ/Respondent अपीलाथȸ Ʈारा/ Appellant by : Ms. Neelam Jadhav Ĥितवादȣ Ʈारा/Respondent by : Sh. Sanjay J. Sethi सुनवाई कȧ ितिथ/ Date of hearing : 22/07/2021 घोषणा कȧ ितिथ/ Date of pronouncement : 04/10/2021 आदेश/ ORDER PER VIKAS AWASTHY, J.M: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-22, Mumbai [hereinafter referred to as ‘the CIT(A)’] dated 21/08/2019 for the assessment year 2013-14. 2 आअसं. 7514/मुं/2019 (िन.व.2013-14) ITA NO.7514/MUM/2010 (A.Y.2013-14) 2. Ms. Neelam Jadhav appearing on behalf of the assessee submitted that the assessee in appeal has assailed: 1. Disallowance of Card Renewal Fee Rs. 56,180/- 2. Disallowance of Business Promotion Expenses Rs. 2,25,102/- The ld. Authorized Representative (AR) of the assessee submitted that the assessee is engaged in Information Technology business. In the books, the assessee interalia claimed Club Membership Fee and Card Renewal Fee. In assessment proceedings, the Assessing Officer (AO) disallowed both the aforesaid expenditure holding it to be unrelated to the business. The assessee carried the issue in appeal before the CIT(A). The CIT(A) allowed Club Membership Fee as Business Expenditure and disallowed Card Renewal Fee. The ld. AR submitted that the Card was exclusively used for business purposes. In the preceding AYs and succeeding AYs, the Card Renewal fee was allowed as business expenditure in assessments completed under section 143(1) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’]. 2.1 With regard to business promotion expenses, the ld. AR submitted that the details of expenditure incurred were submitted during assessment proceedings. Substantial payments on this account were made through Credit Card. The Credit Card statement was furnished to substantiate that payments were made for business purpose. The expenditure has been disallowed merely for the reason that the names of the clients and the place of meeting were not furnished. The assessee has been claiming business promotion expenses of similar nature in the past. In AY 2007-08, the expenditure was allowed in assessment completed under section 143(3) of the Act. 3 आअसं. 7514/मुं/2019 (िन.व.2013-14) ITA NO.7514/MUM/2010 (A.Y.2013-14) 3. Per contra, Sh. Sanjay J. Sethi representing the Department vehemently supported the impugned order and prayed for dismissing appeal of the assessee. The ld. DR submitted that the assessee has failed to establish nexus between renewal of Card Membership and the business activities. With regard to disallowance of Business Promotion Expenditure, the ld. AR submitted that in absence of corroborative evidence, the AO and the CIT(A) disallowed assessee’s claim. 4. Both sides heard, orders of the authorities below examined. The assessee is in appeal against disallowance of card renewal fee. A perusal of the impugned order shows that the assessee has paid annual card fee of Rs. 56,180/-. The assessee purportedly upgraded the card which provides higher reward points and better foreign exchange rate. The sole contention of the assessee is that in the preceeding and succeeding AYs, similar expenditure has been allowed. However, no documentary evidence whatsoever was furnished by the assessee to show that the card is being used for business purpose. The ld. AR of the assessee has admitted that in preceding AY and succeeding AYs similar expenditure has been allowed in assessments completed under section 143(1) of the Act. Thus, there was no occasion for the AO to examine the nature of expenditure and its allowability. Therefore, the rule of consistency will not apply. Hence, the ground no.1 raised in appeal is dismissed. 5. In ground No.2 of appeal, the assessee has assailed disallowance of business promotion expenditure. The contention raised by ld. AR is that the payment for expenditure was made through Credit Card. The statements of the Credit Card were furnished to substantiate nature and expenditure, however, the authorities below failed to examine the same. Once, the assessee has 4 आअसं. 7514/मुं/2019 (िन.व.2013-14) ITA NO.7514/MUM/2010 (A.Y.2013-14) furnished the details of the expenditure, the duty was cast upon the AO to examine the varsity of the statements furnished and thereafter accept or reject the same. In the present case, it is observed that the AO and the CIT(A) has failed to examine the statements furnished by the assessee. Keeping in view the smallness of the amount involved, it would not be worthwhile to restore this issue back to the file of AO for examination. Taking into consideration entirety of facts and the details furnished, the assessee succeeds on ground no.2. 6. In the result, appeal by assessee is partly allowed. Order pronounced in the open court on Monday, the 04 th day of October, 2021. Sd/- (VIKAS AWASTHY) Ûयाियक सदèय / JUDICIAL MEMBER मुंबई/Mumbai, Ǒदनांक/Dated: 04/10/2021 SK, PS Ĥितिलǒप अĒेǒषत/Copy of the Order forwarded to : 1. अपीलाथȸ/The Appellant , 2. Ĥितवादȣ/ The Respondent. 3. आयकर आयुƠ(अ)/ The CIT(A)- 4. आयकर आयुƠ CIT 5. ǒवभागीय Ĥितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 6. गाड[ फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai