TMI Blog2016 (12) TMI 1545X X X X Extracts X X X X X X X X Extracts X X X X ..... o find out whether the business man, when he expends the money is acting reasonably in the interest of his own business. Every businessman knows his interest best and it is for assessee to decide how to promote his business interest. Therefore, the disallowance made by the AO on the ground that the hotel expenses was not incurred "exclusively" for the business purpose is not justified. In view of above discussion, we do not find any merit in the action of lower authorities disallowing the expenditure incurred by assessee for the purpose of its business. - Decided in favour of assessee - ITA No.2012/Mum/2014 - - - Dated:- 6-12-2016 - SHRI R.C.SHARMA, AM AND SHRI RAVISH SOOD, JM For The Assessee : Shri Vijay Mehta For The Revenue : Dr. Santosh Mankoskar ORDER PER R.C.SHARMA (A.M) : This is an appeal filed by the assessee against the order of CIT(A) for the assessment year 2009-2010 in the matter of order passed u/s.143(3) of the IT Act wherein the following grounds have been taken by the assessee. 1. On the facts and in the circumstances of the case, the learned CIT(A) erred in law and in facts in confirming the disallowance of hotel expenses of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, will not be treated as business expenses of the assessee. 6. Against the above order of CIT(A), assessee is in further appeal before us. 7. We have considered rival contentions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements relied on by learned AR in the case of CIT vs. Discovery Communication India (Delhi High Court) 370 ITR 57. Delhi High Court in case of Yum Restaurants India Pvt. Ltd., - 371 ITR139 in support of the proposition that expenditure laid out and expended wholly and exclusively for the purpose of the business is to be allowed. 8. In support of the above contentions, learned AR had also relied on the following judicial pronouncements: . 1. Sassocn J. David and Co. (P.) Ltd. Vs. CIT[118 ITR 0261] [SC] 2. CIT Vs. Dhanrajgirji Raja Narasingirji [91ITR 44][SC] 3. CIT V Malayalam Plantations Ltd. [053 ITR 0140] [SC] 4. Bralco Metal Industries Pvt. Ltd. Vs. CIT[206 ITR 477] 5. CIT Vs. GOPAL RAO EKBOTE and RAMACHANDRA RAJU P. JJ. [076 ITR 0664] [AP] 9. On the other hand, learned DR relied on the order of the lower authorities and contended that expenditure so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Mr. Samyak Veera was ₹ 53,10,54,078/- against which the assessee company has incurred hotel expenses of ₹ 54,72,091/-; which is only 1.03% of the total investment made by Mr. Veera. Had the assessee borrowed the same amount from some financial institution, it would have incurred an interest expenses at an average rate of 12% which is much higher than the expenses incurred by the assessee company by way of hotel expenses (i.e. only 1.03%). 12. From the record we also found that the investment made 'by Mr. Veera was very huge and keeping in view the potential investment in future, it was mutually agreed between the assessee and Mr. Veera that the later shall be in Mumbai for sometimes to observe the project. It is also matter of record that Mr. Veera was also appointed as an advisor to the company for advising on Corporate Development Properties matters vide board resolution dated 31st July, 2007 and it was also resolved that the assessee shall reimburse the lodging, boarding; travelling and conveyance expenses incurred by Mr.Veera during his stay in Mumbai. As mutually agreed between the assessee and Mr. Veera and decided by the assessee in board meeting, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by a statutory provision like section 40A(2), when the Revenue as per the statutory mandate may have jurisdiction to examine the issue of price/consideration. For incurring advertisement expenditure, in the relevant years, there were no statutory stipulations. When the expenditure is incurred for the assessee's own business, the mere fact that the expenditure would endure to the benefit of a third party or the third party incidentally obtains some advantage, would not affect or detract from the finding that the expenditure was wholly and exclusively was for the assessee's business. For example, a retail trader may advertise different products which may incidentally benefit the manufacturers but this does not mean that the advertisement expenditure fails to meet the requirement of wholly and exclusively . 16. Similarly in the case of YUM Restaurants India Pvt. Ltd., (Supra), Hon ble Delhi High Court observed as under:- In examining a claim for deduction under section 37(1) of the Income Tax Act, 1961, on the ground of commercial expediency, what is to be seen is not whether it was compulsory for the assessee to make the payment but whether it was of commercial ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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