M/S. JAMSHEDPUR TRANSPORT CO.LTD.,KOLKATA V. I.T.O., WARD - 6(2), KOLKATA

ITA 2618/KOL/2024

AI Insights

The case involves M/s Jamshedpur Transport Co. Ltd., the appellant, contesting an order from the Commissioner of Income Tax (Appeals) which partially upheld an addition to their declared income and dismissed their claim for deduction of club entrance fees. The appellant had initially declared a total income of Rs.3,56,95,240, which was adjusted to Rs.3,57,50,240 by the Assessing Officer, adding Rs.55,000 without specific discussion in the assessment order. The appellant's claim for a deduction of Rs.11,80,000 for club entrance fees, argued to be a business expense, was ignored by the Assessing Officer and subsequently dismissed by the CIT(A). The Tribunal found that the Assessing Officer and CIT(A) had not adequately considered the appellant's submissions and the supporting documents, leading to a decision in favor of the appellant.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312749 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Other Referred Cases: CIT vs. United Glass Mfg. Co. Ltd, Goetze (India) Ltd. vs. CIT, Mahalaxmi Sugar Mills Ltd. vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return; Principle of natural justice
• Section: 143(3)

Judgement Text

" आयकर अपीलȣय अͬधकरण, कोलकाता पीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH KOLKATA Before Shri Sonjoy Sarma, Judicial Member and Shri Rakesh Mishra, Accountant Member I.T.A. No.2618/Kol/2024 Assessment Year: 2018-19 M/s Jamshedpur Transport Co. Ltd.……………………………..….……….Appellant Eastern Building, 2nd Floor, Suit No.201, Kolkata -1. [PAN: AACCJ1431D] vs. ITO, Ward-6(2), Kolkata...……..............................……........……...…..…..Respondent Appearances by: Shri Manoj Kataruka, Advocate, appeared on behalf of the assessee. Shri Lovish Shelly, Sr. DR, appeared on behalf of the Revenue. Date of concluding the hearing : April 28, 2025 Date of pronouncing the order : April 29, 2025 ORDER Per Sonjoy Sarma, Judicial Member: The present appeal has been preferred by the assessee against an order dated 16.12.2024 of the Commissioner of Income Tax (Appeal) ADDL/JCIT-12, Mumbai [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. Brief facts of the case are that the assessee filed its return of income declaring a total income of Rs.3,56,95,240/-. However, in the assessment framed u/s 143(3) of the Act, the income of the assessee assessed at Rs.3,57,50,240/- resulting in an addition of Rs.55,000/- to the declared income. While framing the assessment order, no specific issue was discussed by the Assessing Officer regarding the addition of Rs.55,000/- added to the total income of the assessee. In fact, the assessment order is silent on disallowance relating to Rs.55,000/- as made by the Assessing Officer. During the course of assessment proceedings, the assessee stated by a letter dated 22.12.2019 that I.T.A. No.2618/Kol/2024 Assessment Year: 2018-19 M/s Jamshedpur Transport Co. Ltd 2 expenditure on account of club entrance fees of Rs.11,80,000/- had been added back to the computation to the income at the time of filing of the return whereas such expenditure was to be allowed and thereby, the assessee made a fresh claim and pleaded before the Assessing Officer to allow the expenditure to the extent of Rs.11,80,000/- by reducing the total income to that extent. However, the Assessing Officer ignored this submission of the assessee and no fact has been mentioned in the assessment order and the assessment was completed without considering the claim of the assessee. 3. Aggrieved by the above order, the assessee filed appeal before the ld. CIT(A) and the ld. CIT(A) granted partial relief by deleting the addition of Rs.55,000/- observing that the Assessing Officer made the said addition without application of mind. However, regarding the claim of deduction of club entrance fees of Rs.11,80,000/-, the ld. CIT(A) granted no relief by simply dismissing the ground taken by the assessee. 4. Dissatisfied with the above order, the assessee is in appeal before this Tribunal contending that the said club entrance fees amounting to Rs.11,80,000/- was duly debited in the books of accounts and genuinely incurred by the assessee, therefore, this ought to have been allowed by the Assessing Officer. The ld. AR further stated that the said club entrance fees was incurred purely for the purpose of improving its business and he therefore, relied on the various judicial pronouncement including the decision of Hon’ble Apex Court in the case of CIT vs. United Glass Mfg. Co. Ltd. reported in (2012) 28 taxmann.com 429 (SC). The ld. AR also argued that the duty of the Assessing Officer is not only to assess but also to determine the correct income of the assessee on the basis of books of account of the assessee, hence, the disallowance was unjustified. I.T.A. No.2618/Kol/2024 Assessment Year: 2018-19 M/s Jamshedpur Transport Co. Ltd 3 5. On the other hand, the ld. DR supported the decisions of the Assessing Officer as well as ld. CIT(A). The ld. DR relied on the decision of Goetze (India) Ltd. vs. CIT (2006) 284 ITR 323 (SC) and stated that no new claim cannot be entertained by Assessing Officer without a revised return. However, the ld. AR objected to such submission made by the ld. DR stating that appellate authority can entertain such claim. 6. We, after hearing the rival submissions and perusing the materials available on record, find that during the course of assessment proceedings, the assessee claimed deduction of Rs.11,80,000/- towards club entrance fees by filing an application dated 22.12.2019, however, the Assessing Officer neither considered nor discussed the same which is against the principles of natural justice. Similarly, the ld. CIT(A) also did not record any findings on the issue but simply dismissed the appeal of the assessee. We also note that the said club entrance fees were incurred for the promotion of the business interest and hence the same is an allowable expenditure. The Hon’ble Supreme Court in the case of Mahalaxmi Sugar Mills Ltd. reported in (1986) 160 ITR 920 (SC) has clearly held that the income tax authorities must grant relief to the assessee if the facts and materials available on record justify such relief, even if the assessee has not made a specific claim before the Assessing Officer. In the present case, the facts relating to club entrance fees was very much available on record. The assessee had submitted its claim before the Assessing Officer along with supporting documents and the expenditure was duly reflected in books of accounts. We further note that the duty of the Assessing Officer is to assess correct income and the legitimate tax must be assessed and collected. Considering the submissions made by the assessee and in the light of the discussion above, we find it just and proper to allow the claim of the assessee and we direct the Assessing Officer to allow the claim of club entrance fees I.T.A. No.2618/Kol/2024 Assessment Year: 2018-19 M/s Jamshedpur Transport Co. Ltd 4 amounting to Rs.11,80,000/- as debited by the assessee in books of accounts and recompute the total income of the assessee. 7. In terms of the above, the appeal of the assessee is allowed. Kolkata, the 29th April, 2025. Sd/- Sd/- [Rakesh Mishra] [Sonjoy Sarma] लेखा सदèय/Accountant Member ÛयाǓयक सदèय/Judicial Member Dated: 29.04.2025. RS Copy of the order forwarded to: 1. M/s Jamshedpur Transport Co. Ltd 2. ITO, Ward-6(2), Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches "