TMI Blog2012 (7) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... with the prospective clients - Held that:- No details of the prospective clients have been filed. Also, assessee was not having any business connection in those countries. Dis-allowance upheld. Expenditure incurred on training of employees - revenue or capital expenditure - Held that:- Same is revenue in nature - addition made is deleted. - ITA No.138/Del./2010 - - - Dated:- 31-5-2012 - SHRI U.B.S. BEDI, SHRI B.C. MEENA, JJ. ASSESSEE BY : Shri Vidur Puri, CA REVENUE BY : Smt. Srujani Mohanty, DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : This appeal filed by the assessee emanates from the order of CIT (Appeals)-XII, New Delhi dated 17.08.2009 for Assessment Year 2006-07. 2. As per the record, the assessee was engaged in the business of marketing, consultancy management services and car leasing and car hire services. 3. The grounds of appeal read as under :- 1. The Learned Commissioner of Income Tax (Appeal) erred in law and on facts in upholding the disallowance of Rs.3,53,206 paid in respect of sponsorship other expenses of Polo tournament which was for the advertising, corporate image building and brand of SONA. 2 The Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or photography of the Polo event. These expenses were incurred for sponsoring Polo team which played in the tournament in name, Samaira Polo Cup. The name of this tournament was adopted as the son of Rani Kapoor, Shri Sanjay Kapoor got married to Krishma Kapoor (ex-film actress) and their daughter s name is Samaria. Smt. Rani Kapoor holds 75% of the assessee company. The CIT (A) sustained the addition by holding as under :- Perusal of evidence and documents on record reveals that the return was filed on 13.10.06 and notice u/s 143(2) was served on the assessee on 18.10.07. Thereafter the proceedings carried on with opportunities being given for one year and the assessment order was passed on 31.10.08 i.e assessment proceedings were carried out for full one year during which assessee company was given several opportunities to produce the evidence to substantiate its claim. In view of these facts, the AR has no substantial or logical explanation for not producing the photographs/evidence, bills vouchers specifically sought by the AO during the assessment. Hence the said evidence is not being admitted under Rule 46 A. It is pertinent that this provision has been inserted to av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or is having 75% shareholding in the assessee company and her son, Shri Sanjay Kapoor got married with Krishma Kapoor (ex film actress) and their daughter (Samaria Kapoor) was around one half year old at the relevant time. The event was named as Samaria Polo Cup out of love and affection for her grand-daughter. The assessee company was not having any Polo team and no business purpose was served. Shri Sanjay Kapoor, son of Smt. Rani Kapoor who is holding 75% of the company was having a hobby for the Polo game but it is not relevant as he was not even an employee of the assessee company. It is a personal expense and has no commercial angle. This expense was to fulfill personal wishes for son and grand-daughter. The assessee was asked specifically to furnish details for the sponsorship event. The assessee failed to file any details in this regard. It is also pertinent to note that assessee was not engaged in the business which needs advertisement. Assessee had only 2 3 clients, and they are from the group companies under same family management. The assessee has the consultancy work which is coming from the companies of which management control are with the same persons. Only a small ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal ; or (d) where the [Assessing Officer] has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] records in writing the reasons for its admission. (3) The [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the [Assessing Officer] has been allowed a reasonable opportunity (a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. (4) Nothing contained in this rule shall affect the power of the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee s contention that Shri Maneshinde had been paid a retainership fee for looking after legal issues involving car leasing business is also unreliable as not supported by any evidence. The assessee has disclosed business income for car leasing of Rs.7 lacs approx only. There is no business connection of the assessee in Bombay at the relevant time. The assessee has also not filed any evidence for the services provided by the Advocate at Bombay for which this amount was paid. During the relevant period, son of Smt. Rani Kapoor, who is having 75% shares of the assessee company, was in litigation with his wife, Karishma Kapoor. These amounts were paid towards the personal litigation of the son of the assessee with his wife. There was no business requirement of the assessee company. Therefore, the CIT (A) has rightly upheld the addition. 12. We have heard both the sides on the issue. After hearing, we find that except producing a memorandum of fee of Shri S.L. Maneshinde, Advocate for Rs.3 lacs, no other evidence has been filed which could show or establish that the assessee company had received any services from the said Advocate for its business purposes. The assessee has comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s but the assessee has failed to file evidences to establish the purpose of these meetings. No details of the prospective clients have been filed. Even the identification of these clients was not done on the record. The countries visited by Smt. Rani Kapoor also show that the assessee was not having any business connection in those countries. There is no evidence on the record in respect of the claim that the travel was for meeting with prospective clients or for exploring the business possibilities. Since assessee failed to establish any business purpose for these travel, we are of the view that these travel were pleasure trips of Smt. Rani Kapoor. Therefore, this expenditure of Rs.8,94,512/- was nothing but a personal expenditure of Smt. Rani Kapoor which has been met out of coffers of the assessee company. Keeping these facts in view, we sustain this disallowance. 14.1 As far as the remaining disallowance of Rs.3,72,738/-, we find that the Assessing Officer has treated the expenditure as capital in nature by holding that the assessee company is receiving enduring benefits. The ld. AR has relied on the decision of ACIT vs. SRF Limited 21 SOT 122 (Delhi) and Alembic Chemical ..... 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