9911796707
TMI Blog2012 (2) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... of club fee, ₹ 5,20,000/- on account of vehicle expenses, ₹ 3,20,000/- on account of travelling expenses, ₹ 2,70,000/- on account of telephone expenses, ₹ 2,40,000/- on account of miscellaneous expenses, ₹ 40,000/- ad hoc addition, ₹ 75,000/- on account of advertisement and presentation expenses and ₹ 64,000/- on account of ad hoc addition made on account of staff welfare expenses by placing reliance upon the order of the earlier year especially when the nature of expenses is factual and needs to be examined independently for each assessment year. The next ground pertains to addition of ₹ 13,05,652/- on account of belated payment of PF and ESIC and allowing ₹ 4,75,473/- as per section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses 320000 04 Addition out of telephone expenses 270000 05 Addition out of Misc. expenses 240000 06 Addition out of Entertainment expenses 40000 07 Addition out of Advertisement and presentation expenses 75000 08 Addition out of staff welfare expenses 64000 Total 1532900 We find that the Revenue is aggrieved by the impugned order wherein mainly the ad-hoc disallowances made by the Assessing Officer out of various expenses as mentioned in the aforesaid table were deleted on the ground that the assessee, being a private limited company, the accounts of which were duly audited both under the Companies Act as well as Income Tax Act and the Assessing Officer could not pin-point any specific item of disallowable nature, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No ground No ground Page 4 Para 3 07 Addition out of Advertisement and Presentation expenses No ground No ground Page 4 Para 3 08 Addition out of Staff Welfare Expenses No Ground No Ground No ground 3.2 In view of the above, we are reproducing hereunder the finding and the conclusion drawn in the impugned order :- "4. Considering the facts of the case, findings given by the A.O., appellate order passed by my predecessor and order of Hon'ble I.T.A.T. in the case of the appellant itself in the past assessment years and written and verbal submission put forward on behalf of the appellant, the grounds of appellant in the present appellant are decided as under :- 4.1 In first ground, appellant has challenged the disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding allowability of the employees contribution. Respectfully following the decisions of the Hon'ble Gauhati High Court, Hon'ble Delhi High Court and Hon'ble Apex Court as discussed (supra) the disallowance of ₹ 4,76,473/- made on account of Employer/employees contribution towards to ESIC is hereby deleted. The appellant accordingly get relief of ₹ 4,76,473. 4.2.3 The A.O. shall however ensure that both such claim have not been allowed in any later year and if so, he will take necessary steps in accordance with law. 4.3 In Ground No. 3, the appellant has challenged the disallowance of ₹ 5,20,000/- out of Vehicle running & maintenance expenses. The appellant in addition to its detailed submission also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isement & Presentation and Staff Welfare expenses respectively be deleted in full. The appellant accordingly get relief in respect of all these grounds. In the result, the appeal is allowed." 4. If the aforesaid conclusion drawn by the learned Commissioner of Income Tax (Appeals) and the assertion made by the learned respective counsels are kept in juxtaposition with the provisions of the Act, it can be said that to be an allowable expenditure u/s 37(1) of the Act, the money paid out or away must be (i) paid out wholly and exclusively for the purpose of business or profession, and further (ii) must not be (a) capital expenditure, (b) personal expenses, or (c) an allowance of the character described in sections 30 to 36 and section 80VV o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bombay High Court in CIT v. Sales Magnesite Private Limited; 214 ITR 81 clearly held that the commercial expediency must be decided from the point of view of a businessman but at the same time the expenditure must be directly and intimately connected with the trader. The factual finding mentioned in the impugned order was not controverted by the Revenue,therefore, by following the aforesaid judicial pronouncements and the decisions contained in the impugned order, we find no infirmity in the conclusion drawn by the learned Commissioner of Income Tax (Appeals). It is affirmed. Finally, the appeal of the Revenue is dismissed. This order was pronounced in the open in the presence of learned representatives from both the sides at the conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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