2018 (3) TMI 475 - AT - Income Tax

Urologist Surgeon's Appeal: Tax Tribunal Allows Business Expenses, Upholds Disallowances

Amit Ghose Versus DCIT, Circle-22, Kolkata

Amit Ghose Versus DCIT, Circle-22, Kolkata - TMI Issues Involved:1. Disallowance of advertisement and publicity expenses.2. Disallowance of purchase of gift items incurred through credit card.3. Disallowance of entertainment expenses.4. Disallowance of traveling expenses.5. Disallowance of meeting and seminar expenses.6. Disallowance of car repair expenses.7. Charging of interest under sections 234A, 234B, 234C, and 234D.Detailed Analysis:1. Disallowance of Advertisement and Publicity Expenses:The assessee, an Urologist Surgeon, incurred Rs. 202,014 on advertisement and publicity, which was disallowed by the AO under section 37(1) of the Income Tax Act, 1961, citing violation of the Indian Medical Council Regulation Act, 2002. The assessee argued that the expenses were for public awareness about urological diseases and were not intended for personal promotion. The Tribunal found that the expenses were for public welfare and not in violation of statutory law, thus allowable as business expenditure under section 37(1).2. Disallowance of Purchase of Gift Items Incurred Through Credit Card:The assessee incurred Rs. 90,850 on gift items for senior doctors and colleagues during seminars, which was disallowed by the AO as personal expenses. The Tribunal accepted the assessee's explanation that the gifts were a professional gesture in lieu of fees for knowledge sharing, allowing the expenditure under section 37(1).3. Disallowance of Entertainment Expenses:The assessee's entertainment expenses of Rs. 11,096 for hosting dinners during seminars were disallowed by the AO as personal expenses. The Tribunal found these expenses to be for professional purposes, allowing the deduction under section 37(1).4. Disallowance of Traveling Expenses:The assessee claimed Rs. 68,246 for foreign travel to attend a medical conference in London, which was disallowed by the AO due to lack of supporting evidence. The Tribunal upheld the disallowance, noting the absence of documentary proof for the travel expenses.5. Disallowance of Meeting and Seminar Expenses:The assessee incurred Rs. 15,478 on club subscriptions and meetings with senior doctors, which were disallowed by the AO as personal expenses. The Tribunal found these expenses to be for professional purposes, allowing the deduction under section 37(1).6. Disallowance of Car Repair Expenses:The assessee claimed Rs. 160,000 for car maintenance expenses but failed to provide supporting bills. The AO disallowed the entire amount, which was partly upheld by the Tribunal. The Tribunal allowed Rs. 80,000, considering the professional use of the cars.7. Charging of Interest under Sections 234A, 234B, 234C, and 234D:The issue of charging interest under sections 234A, 234B, 234C, and 234D was deemed consequential and did not require specific adjudication.Conclusion:The Tribunal allowed the appeal partly, permitting certain professional expenses while upholding some disallowances due to lack of evidence. The order emphasized the importance of substantiating claims with proper documentation for tax deductions.