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2019 (4) TMI 200 - AT - Income TaxDisallowance of interest attributable to advance - amounts withdrawn through embezzlement and fraud conducted by Sh. Arun Kapoor - HELD THAT:- These funds were out of interest-bearing fund is not correct, as assessee in year when advances were made, had interest-free funds of its own, amounting to ₹ 105.94 crores being share capital, securities premium, free reserves, debenture redemption reserve and accumulated depreciation reserve. There has been nothing contrary to the afore stated observations by CIT(A) and by this Tribunal in preceding assessment years that has been brought on record by AO or DR for year under consideration. Addition under head ‘marriage gift’ Shagun on marriage ceremonies of close relatives of employees, dealers and suppliers of company - allowablity of expenses u/s 37 (1) - HELD THAT:- Marriage gifts to dependents of employees are given in accordance with scheme laid down by company. As observed that these expenses are incurred towards marriage gifts to family members/dependents of staff/dealers are normal business courtesy incurred in course of running business. It has also been observed therein that these expenses are incurred by way of staff welfare and allowable as revenue expenditure on ground of commercial expediency and to develop good relationship with employees/dealers so as to further business interest of assessee. Tribunal in assessee’s own case for assessment year 1978-79 allowed the expenses. Disallowance of Subscription fees - HELD THAT:- these payment made towards Gymkhana Club and other Associations which are being provided toto Sr.Executives of the company to entertain dealers/suppliers and other business associates. As further observed that out of total claim AO has only disallowed on the ground that they are personal in nature. There has been no basis that has been attributed by Ld.AO for an ad-hoc disallowance. It is observed that these expenses have been regularly incurred by assessee in preceding assessment years which has been allowed as business expenses. There are a series of judgements passed by Hon’ble Supreme Court and High Courts holding subscription fees paid to Clubs on behalf of employees are incurred for business purposes and are allowable expenses. Disallowance of consultancy expenses - HELD THAT:- It is observed that assessee before Ld. CIT(A) tabulated nature of services rendered by these personnel and has also submitted copy of appointment letters along with form 16 A, wherein TDS has been deducted. AO has made ad-hoc disallowance on mere surmises which cannot be allowed. Ld.CIT(A) has not recorded any infirmity in respect of the same. We do not therefore find any infirmity with the view taken by Ld.CIT(A) and the same is upheld. Expenses towards advertisement in Hindustan Times - HELD THAT:- as submitted that Sh. Janki Dass Kapur who was the founder of assessee, and, it was under his able leadership that company achieved tremendous growth and excellence in field of cycle manufacturing. It has been submitted that these expenses have been incurred in loving memory of Sh. Janki Dass Kapur’s death anniversary to pay tribute/homage on behalf of management, staff and workers of all 5 units of company. Looking into cause, we do not find any infirmity in view taken by Ld. CIT (A) and same is upheld. Disallowance of Glow Sign Board expenses - HELD THAT:- Glow sign boards were used for promotion of assessee’s business in various cities. It is observed that assessee has incurred these expenditure with an objective to facilitate business promotion and not with an object to acquire asset of enduring nature. Disallowance of staff welfare expenses - HELD THAT:- AO has made ad-hoc disallowance on a lump-sum basis without pointing any specific vouchers that is inadmissible. It has been submitted that assessee being a public limited company is subjected to statutory audit and tax audit under section 44 AB and no adverse comment has been made out by AO. Disallowance of foreign travel expenses - addition deleted by this Tribunal in earlier AYs on ground that FBT has been duly paid on such expenses - HELD THAT:- For year under consideration there is no such clarity arises out of assessment order neither has Ld. Counsel submitted anything in respect of the same. Further on perusal of order passed by Ld.AO, it is categorically clear that family members of Kapoor family have undertaken foreign travel.Since assessee has not provided any details of personnel travelled abroad, we do not find any infirmity in disallowance made by Ld.AO and same is upheld. Addition on account of entertainment wine and beer - HELD THAT:- as submitted that assessee has 4000 dealers nationwide and company executives need to visit these dealers from time to time since company products can only be sold through network of these dealers. These amounts are spent on entertainment of dealers, who are selling products of the company. Further it is observed that Ld.AO has not expressed reason for disallowance apart from saying that expenses were not justified. - A.O. made addition on mere surmises and therefore deserves to be deleted. We do not find any infirmity in the view taken by Ld.CIT(A) and same is upheld. Expenses incurred under the head ‘prize and rewards’ - HELD THAT:- Counsel submitted that these are clubbed with head ‘salary and wages’ and has been paid to their employees as a matter of company policy to reward extraordinary work done by its employees. It has also been observed that TDS has been deducted on these payments. Such payments are very much necessary for large magnitude business carried out by assessee. We therefore do not find any infirmity in view taken by Ld. CIT (A) and same is upheld. Addition under the head ‘sales promotion’ - HELD THAT:- Admittedly these expenses are un-vouched and assessee has not been able to provide any bills in respect of same. Under such circumstances we do not find any reason to uphold view of Ld.CIT (A) and same is reversed and addition made by Ld.AO stands upheld.
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