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TMI Blog2019 (4) TMI 1577X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,40,488/- u/s 35ABB of the Act on expenses incurred towards liquidated damages and interest thereon paid to the Department of Telecommunications. 2. On the facts and in the circumstances of the case, the ld. CIT(A) has erred in law and on facts in deleting the disallowance of membership fee paid to various clubs amounting to Rs. 96,265/-. 3. On the facts and in the circumstances of the case, the Id. CIT(A) has erred in directing the AO to adopt the loss at figure of Rs. 94,10,62,358/- for the A.Y.210-11 without appreciating the fact that the assessee did not claim the business loss of Rs. 44,26,99,485/- for the A.Y. 2010-11 and thus the assessee is not entitled to claim the above business loss in view of the judgement of Hon'ble Apex C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services or part thereof within the stipulated period. As the assessee company could not meet with time frame for delivery of service, liquidated damages and interest amounting to Rs. 8,61,07,328/- were paid to Dot, for which the assessee had claimed 1/15th deduction u/s 35- ABB. It was also submitted that the payment on account of liquidated damages and interest are incurred and paid in the course of obtaining the rights to operate telecommunication services and not for any breach/violation of any law. The liquidated damages and interest has been paid in business interest and commercial exigency. The Assessing Officer was not satisfied with the submissions of assessee and referring to the provisions of section 35ABB, disallowed the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saged under that section, as enumerated by the Assessing Officer. It was submitted that the payments made towards membership fee of various clubs was not wholly and exclusively for the purpose of business and the Assessing Officer had rightly taken the business loss as claimed by assessee as per acknowledgement of return and therefore, the claim which was not reflected in the return was not permissible in view of decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT 284 ITR 323. 8. The ld. AR of the assessee, on the other hand, supported the impugned order and submitted that the first two issues are squarely covered in favour of the assessee by the decision of coordinate Bench of Tribunal in the cases of assessee its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the decision in the case of CIT Vs. Indo Asian Switch Gears P. Ltd. (supra) the payment of damages is for breach of contract and not on account of infraction of law and, therefore, the same is admissible as expenses having been expended wholly and exclusively for the purposes of business. When we examine the facts of the present case in view of the ratio laid down in the above cited decision, we find that the assessee in the present case has paid liquidated damages and interest thereon due to breach of the agreement and not as a breach of law. Thus, the expenditure claimed does not fall within Explanation to section 37(1) of the Act. And since it was incidental to business, it cannot be disallowed. The Id. CIT (A) was thus justified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plotfOrm are based for the officials of the assessee company to develop contract for promoting interest of the company and promote business. He cited following decisions in support (i) Hero Hondo Motors Ltd. Vs. JCIT 103 ITD 157 (Del.); (ii) JCIT Vs. Mukand 291 ITR 249 (Mum.) (SB); (iii) Gujarat Petro Synthesis Ltd. Vs. DCIT 76 ITD 257 (Ahd.); (iv) CIT Vs. Samtel Colour Ltd. 2009 - TMI - 32263 (Delhi High Court); 4.3 Considering the above submissions and the decisions cited in support we do not find any infirmity in the first appellate order on the issue as considering the expenditure incurred and nature of industry, the amount incurred by the assessee for corporate club membership fees is held for business promotion, The first ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by the assessee. In Schedule "CYLA" - losses to be adjusted is reflected of Rs. 94,10,62,358/- and Schedule "CFL" is also reflecting the losses of current year as at Sl. No. (xi) of Rs. 94,10,62,358/-. Same figure of (-94,10,62,398) in schedule "BP" at Column (C) under computation of Income from business or profession. However, on perusal of this schedule "BP" of ITR-6, we find that there are distorted figures at various serial nos. of this schedule. For example, the figure shown at Sl. No. 24 of this schedule is Rs. 42,79,17,101/-, which is the total of Sl. Nos. 14 to 23, whereas no figure is mention in inner columns of these serial numbers. These figures and columns of ITR-6 filed by the assessee need to be thoroughly examined an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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