Turbo Energy Limited, CHENNAI V. ACIT, CHENNAI

ITA 847/CHNY/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4708 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 06-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: K SRINIVASAN
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH D : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NO. 847/MDS/2011 ASSESSMENT YEAR : 2005-06 M/S TURBO ENERGY LTD 67, CHAMIERS ROAD CHENNAI 600 028 VS THE ACIT COMPANY CIRCLE III(2) CHENNAI [PAN - AAACT2916R] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.SRINIVASAN, CA RESPONDENT BY : SHRI ANIRUDH RAI, CIT/DR O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE, FOR ASSESSMENT YE AR 2005-06, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), DATED 24.2.2011. 2. THE ASSESSEE HAS RAISED TWO EFFECTIVE ISSUES IN THIS APPEAL. THE FIRST ISSUE IS REGARDING SUSTENANCE OF DISALLOW ANCE U/S 14A CONTAINED IN GROUND NOS.1.1 TO 1.3. THESE GROUNDS WERE WITHDRAWN AT THE TIME OF HEARING. THUS, ONLY ONE ISSUE WHICH IS RAISED VIDE GROUND NOS.2.1 AND 2.2, SURVIVES FOR ADJUDICATION. THIS ISSUE RELATES ITA 847/11 :- 2 -: TO DISALLOWANCE OF A SUM OF ` 5 LAKHS CONTRIBUTED AS DONATION TO A LOCAL TEMPLE. THE FACTS APROPOS THIS ISSUE ARE THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING OF TURBOCHARGERS AND AUTO PRECISIO N COMPONENTS. THE ASSESSEE MADE A CONTRIBUTION OF ` 5 LAKHS TO A TEMPLE. THE ASSESSING OFFICER HAS DISALLOWED THE SAME ON THE GR OUND THAT IT WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINES S PURPOSES SINCE THE TEMPLE WAS NOT SITUATED INSIDE THE PREMISES OF THE ASSESSEES FACTORY/PLANT. THE CASE OF THE ASSESSEE AS PUT FOR TH BY SHRI K.SRINIVASAN, CA, IS THAT THE TEMPLE IS A PLACE OF WORSHIP WHICH AUGURS WELL THE MENTAL AND SOCIAL WELL BEING OF THE LOCAL POPULATE HABITATING ADJACENT TO THE FACTORY WHERE THE EMPLOYEES OF THE FACTORY WERE ALSO STAYING. BY IMPLICATION, AS PER THE LD.AR, THIS EX PENDITURE IS FOR THE WELL BEING OF THE EMPLOYEES IN A WAY WHO WOULD PRAY BEFORE THE LORD AND FEEL MENTALLY BRAVE ENOUGH TO DO THE WORK AND M OREOVER, A SOCIAL HARMONY AMONGST THE WORKERS AND LOCAL RESIDENTS WOU LD ENSURE PEACEFUL ATMOSPHERE AND STABILITY OF BUSINESS WHICH WOULD BE IN THE BENEFIT OF THE EMPLOYEES AND ULTIMATELY IN THE INTE REST OF THE BUSINESS OF THE ASSESSEE. THUS, IT WAS CLAIMED THAT THIS EX PENDITURE IS DEFINITELY AN ALLOWABLE EXPENDITURE WHICH HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE BENEFIT OF ASSESSEES BUSINESS. IN THIS REGARD, DECISIONS OF ATLAS CYCLE INDUSTRIES LTD VS CIT, 1 34 ITR 458(P&H) AND ITA 847/11 :- 3 -: OF COMMERCIAL AHMEDABAD MILLS CO. LTD VS CIT, 204 I TR 505 (GUJ) WERE RELIED UPON. ON THE OTHER HAND, THE LD. CIT/DR , SHRI ANIRUDH RAI, HAS SUPPORTED THE ORDER OF THE LD. CIT(A) BY VEHEME NTLY SUBMITTING THAT THIS EXPENDITURE CAN NOT BE TREATED HAVING INC URRED FOR THE BUSINESS OF THE ASSESSEE AND THUS, NEEDS TO BE DIS ALLOWED. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE CONSIDERED OPINION THAT EVEN IF THE TEMPLE IS SITUA TED OUTSIDE THE PREMISES OF THE FACTORY BUILDING, THE CONTRIBUTION MADE TOWARDS A LOCAL TEMPLE WAS OBVIOUSLY FOR THE BENEFIT OF THE EMPLOYE ES OF THE COMPANY AND IN THE END FOR THE BENEFIT OF ASSESSEES BUSINE SS. IT WOULD DEFINITELY ENHANCE SOCIAL RELATIONSHIP BETWEEN THE EMPLOYEES AND THE LOCAL PEOPLE. USUALLY, THE EMPLOYEES OF THE FACTOR Y TAKE RENTED ACCOMMODATION IN THE NEARBY LOCALITY WHEREFROM THEY DAILY COME TO THE FACTORY BOTH IN DAY AND NIGHT TIME. THIS IS A COMMON PLACE EXPERIENCE THAT IF GOOD RELATIONS ARE KEPT BY THE M ANAGEMENT OF THE COMPANY WITH THE LOCALS, IT ENHANCES THE CONFIDENCE AND WORKING ABILITY OF THE EMPLOYEES, WHICH, IN TURN, HELPS THE BUSINESS OF THE ASSESSEE. THEREFORE, BY TREATING THIS EXPENSE TO H AVE BEEN INCURRED TOWARDS BUSINESS NECESSITY, WE ALLOW THIS EXPENDITU RE AND ORDER TO DELETE THE SAME FROM THE HANDS OF THE ASSESSEE. ITA 847/11 :- 4 -: 4. IN THE RESULT, THE APPEAL STANDS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 13.7.201.. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 13 TH JULY, 2011 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR