TMI Blog2018 (12) TMI 749X X X X Extracts X X X X X X X X Extracts X X X X ..... ORATION LIMITED [1996 (12) TMI 6 - SUPREME COURT] and BROOKE BOND INDIA LIMITED [1997 (2) TMI 11 - SUPREME COURT] we upheld the same. So far the claim of deduction under section 35D is concerned, the same is not allowable as the expenditure is not related to plants and machinery as it was related to increase of share capital. - Decided against assessee. Disallowance of foreign traveling expenses u/s 37(1) - Held that:- AO has pointed out that expenditure was incurred for pleasure trip to Four Season Multitrade Pvt. Ltd. Resorts, Bali. Further, vouchers prepared and passed are self-prepared without any check. The expenses were incurred on gift articles and DVD as well as CDs. Therefore, in such circumstances and in absence of anything brought on record to show that thing are different for this year as in A.Y.2006-07. In view of this matter, respectfully following the findings of tribunal in assessee own case in preceding assessment year. Therefore, the finding arrived at by the lower authorities are confirmed. Accordingly, this grounds of appeal is therefore, dismissed. Disallowing of gift expenses and Diwali Gift expenses u/s 37 (1) - Held that:- We find that the expense were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of business promotion expenses - Held that:- We find that expenditure has been incurred for the purchase of movie tickets, T20 Match tickets, Kashmiri Shawls, silver boxes and other gift articles. Though the assessee has given the copies of the bills / vouchers but the names of beneficiaries of the impugned expenditure has not been supplied, therefore, it cannot be said that the expenditure was incurred wholly and exclusively for the purpose of business and the same was incurred in relation to expenditure on dealer, suppliers etc. In view of these circumstances, we do not find any infirmity in the order of the CIT (A). Accordingly, same is upheld. Disallowance of club expenses - Held that:- We find that expenditure has been incurred for corporate membership of club for the officials and clients of the assessee company. The assessee is being company, there cannot be any personal element involved. Hence, we concur with the findings of the CIT (A). Therefore, This ground of appeal is dismissed. Disallowance of deduction claimed from book profit under clause (vii) of explanation to section 115JB available to sick company - Held that:- the benefit of exclusion of the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses pertaining to year in which it has been incurred, all though the bill or the payment has been made in subsequent year. 6. Per contra, learned CIT (D.R.) submitted that issue is covered in favour of Revenue by the order of Tribunal for the assessment year 2006-07. Hence, CIT (A) has rightly confirmed the disallowance so made. 7. We have heard the rival submissions and perused the relevant material on record. We find that the assessee has credited amount of expenses as provisions in the account hence, the liability has been credited in books of accounts therefore, the assessee was liable to deduct TDS thereon. Hence, the finding of CIT (A) are upheld. Further, the issue is covered by the decision of Co-ordinate Bench in assessee`s own case vide order dated 13.09.2013 dtd. In I.T.A.No.341/RJT/2012 for the assessment year 2006-07. Hence, following the same this ground of appeal is dismissed. 8. Ground No. 2 3 relates to disallowance of ₹ 1,14,30,400/- incurred towards increase in authorized share capital confirming the same to the extent of ₹ 1,13,94,000/-. Ground No. 3 states that CIT (A) erred in not allowing alternate deduction claim under section 35D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. $10,000 from The Palace Art Co., as per bill dtd.06.06.2006. Another expenditure of Rs. $ 480 have been incurred on duty free shop for purchases of CDs and DVDs. Further, expenses of ₹ 5,20,336/- spent on pleaser trip at Four Season Multitrade Pvt. Ltd. Resort, Bali. The voucher of expenses are self-made and only certified by the directors. Considering these facts and some business connection with Gulf Countries where the assessee company has exported cement and tinker, the AO has allowed 20% expenses as fair, reasonable, and disallowed remaining 80% of foreign expenses, which work outs to ₹ 97,33,000/- which were disallowed by treating the same as personal in nature. 15. Being aggrieved, the assessee filed an appeal before the ld. CIT(A). The ld. CIT (A) confirmed the disallowance by observing that identical disallowance made in A.Y. 2006-07 were confirmed by the tribunal in the appellant`s case. The appellant has not proved that situation is different in the year under appeal. The AO has reasonably allowed 20% of expenses to take care of the expenditure attributable to business activities. 16. Being, aggrieved the assessee filed this appeal before the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Gifts. The AO further, noticed that FBT expenses were meant for the benefits derived by the employees from the employer and the expenses not related to employees are cannot be considered as perquisite. In view of these facts and circumstances, the AO made disallowance of ₹ 58,52,176/- and ₹ 8,47,352/- aggregating to ₹ 66,99,528/-. 20. Being aggrieved, the assessee filed an appeal before the ld. CIT (A). The CIT (A) observed that similar disallowance were also made in A.Y. 2006-07 and CIT (A) has restricted such disallowance to 35%. This decision of CIT (A) was also confirmed by the ITAT. Therefore, following the same the CIT (A) has restricted the disallowance to 35% of expenses of ₹ 66,99,528/- and hence, disallowance was restricted to ₹ 23,44,835/-. 21. Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee submitted that CIT(A) has simply followed the ITAT order whereas chart-showing details of gift expenses was filed. Therefore, disallowance sustained should be deleted. 22. Au contraire, the Ld. CIT (DR) relied on the order of CIT (A) and submitted that the nature of gift expenses a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of T. R. F. Ltd. vs. CIT [2010] 323 ITR 397(SC)/[2010] 190 Taxman 391(SC). As the assessee was not required to establish the debt become bad if it has been written off in books of accounts as irrecoverable. Therefore, we do not find any infirmity in the order of CIT (A), accordingly, same is upheld. This grounds of appeal of the Revenue is dismissed. 29. In the result, the appeal of the Revenue is dismissed. 30. In the result, the appeal of the Assessee as well as Revenue for the assessment year 2007-08 is dismissed. I.T.A.No.607/RJT/2014/A.Y. 2010-11/ by Assessee: 31. Ground No.1 relates to disallowance of ₹ 47,89,996/- out of gift expenses on account of alleged non business purpose and CIT(A) erred in confirming the same to the extent of ₹ 16,76,488/- being 35% of total disallowance of ₹ 47,89,996. 32. Facts apropos of this ground are that the assessee has debited expenses of ₹ 47,89,966/- being gifts. On verification, the AO found that the assessee has not submitted the list of persons to whom gift was made. Since the assessee has not been able to establish that the expenditure has been incurred wholly and exclusively for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The voucher of expenses are selfmade and only certified by the director only. Accordingly, the assessee is disallowed the expenses of ₹ 25,37,807/- by treating the same as no business expenditure. 39. Being aggrieved, the assessee filed an appeal before the ld. CIT (A). The ld. CIT (A) confirmed the disallowance by observing that identical disallowance made in A.Y. 2006-07 were confirmed by the tribunal in the appellant`s case. The appellant has not proved that situation is different in the year under appeal. Therefore, the disallowance so made were confirmed. 40. Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee submitted that justification for expenses was submitted during assessment proceeding and also furnished sample of supporting documents were filed. The CIT (A) simply relied on the order of tribunal dtd. 13.09.2013 in appellant`s own case, hence, disallowance sustained may please be deleted. 41. We have heard the rival submissions and perused the relevant material on record. We find that the assessee has not been able to controvert the finding of the CIT (A) that facts are identical as in A.Y. 2006-07. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficiaries of impugned expenses are not furnished. Therefore, the contention of the appellant that items purchased were given to the dealer s, suppliers etc. cannot be accepted at face value. It is the duty of the appellant to come out with the specific evidences to demonstrate that the expenditure claimed is related to the business. In the absence of such evidence, the claim cannot be allowed merely on the basis of averments. Since the appellant has failed to adduce necessary evidences in support of the claim of deduction of the business promotion expenses, the CIT (A) has held that the AO was justified in disallowing the same. 45. Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee submitted that the copies of bills and vouchers were produced before the AO. Therefore, the expenditure related to business promotion purpose should have been allowed as deduction. 46. Per contra, the Ld. CIT (DR) submitted that since the assessee has failed to produce necessary evidence to justify the claim and names of beneficiaries of impugned expenses, therefore, the lower authorities were justified in disallowing the same as non-busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee for A.Y.2010-11 as discussed above by our order. It is seen that the expense were incurred on account of gift for the person who are not connected with the business of the assessee. Therefore, the expenses are not wholly and exclusively incurred for the purpose of business carried on by the Revenue. Further, the facts are identical and same has not been controverted by the assessee. Therefore, respectfully following decision of tribunal in assessee`s own case for the A.Y. 2006-07 dtd. 13.09.2013, we are of the view that Ld. CIT (A) was justified in restricting the disallowance to 35% of total claim. Therefore, we do not find any infirmity in the order of CIT (A), accordingly, same is upheld. This ground is therefore, dismissed. 54. Ground no. 2 relates to deleting the disallowance of ₹ 88,357/-being club expenses. 55. The assessee has claimed club expenses of ₹ 88,357/- on the ground that the assessee is having corporate membership of various clubs and expenditure has been incurred towards entrance fees, subscription for company officials and business associates. Hence, it is being business expenditure, no personal element is involved. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sic company. Therefore, contention of the appellant that it was still sic company was not found acceptable. The CIT (A) quoted the provision of sub-clause (vii) of section 115JB and observed that commencing point and the ending point for such exclusion of profit is clearly provided. The commencing point is that year in which the company becomes a sick company and the ending point in the year in which the net worth of the company becomes equal to or exceeds the accumulated losses. In the appellant s case, the commencing point is not under dispute. What is under dispute is the ending point. On the basis of BIFR`s order as per which the net worth has become positive as on 31.03.2010, the appellant would be eligible for the benefit of above sub-clause for the year under appeal or is it to be decided. From the plain reading of the above sub-clause, it is clearly appears that the benefit of exclusion of the entire profit under the above subclause shall be available for the year in which net worth becomes positive and the company shall be liable to pay tax under section 115JB from the next year. The AO has failed to properly interpret the plain provisions of the above sub-clause. The i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment year commencing on and from the assessment year relevant to the previous year in which the said company has become a sick industrial company under sub-section (1) of section 1727 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and ending with the assessment year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses. 65. Thus, plain reading of above clause provides that the amount of profits of sick industrial company would be eligible with ending with the assessment year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses. The commencing point and the ending point for such exclusion of profit is clearly provided. The commencing point is that year in which the company becomes a sick company and the ending point in the year in which the net worth of the company becomes equal to or exceeds the accumulated losses. In the assessee`s case, the commencing point is not under dispute. What is under dispute is the ending point. On the basis of BIFR`s order as per which the net worth has become positive as on 31.03. 2010, the appellant would be eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X
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