TaxTMI 
TaxTMI 
2013 (8) TMI 837
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....ount of M/s. Jindal Saw Ltd. due to dispute in respect of quantity and rate difference pending for settlement. 3. On the facts and in the circumstances of the case and in law, the id. AO erred in confirming the addition to the extent of Rs. 71,750/- to the income of the Appellant by way of disallowing certain advertisement expenses in souvenirs on the plea that there said is in the nature of donation. 4. The ld. CIT(A) erred in holding that of interest u/s. 234B and 234C are consequential. The Appellant denies its liability for such penalty. 5. The ld. CIT(A) erred in holding that the ground raised disputing initiation of penalty proceedings u/s.271(1)(c) is pre-mature. The Appellant denies its liability for such penalty. 3. Ground No. 1 is regarding disallowance of entrance fees and subscription for club membership. The assessee has incurred expenditure being club entrance fees of Rs. 22,60,504/-. The AO asked the assessee to submit the details of expenditure and also to show cause as to why entrance fees should not be treated as capital expenses. The assessee explained that the assessee company had made payment of entrance fee fo....
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....ssessee is in the name of the directors and not in the name of the assessee company. 6. We have considered the rival submission as well as relevant material on record. The assessee has made out a case that the club membership has been taken for the purpose of the business of the assessee as the directors of the assessee company conduct meeting/conference with the clients, suppliers and business associates. The authorities below have disallowed the expenditure only on the ground that the same is capital in nature and it has not been disputed that the expenditure has been incurred for the purpose of the business of the assessee. Therefore the question before us is whether the expenditure is revenue in nature or capital. In the case of Otis Elevator Co. (India) Ltd. Vs CIT (supra). The Hon'ble Jurisdiction High Court has held as under: "Mr. Mistry, learned counsel for the assessee, contended that the question of law raised by the second question was concluded by the decision of this court in CIT v. Indokem Private Ltd. [1981] 132 ITR 125. Dr. Balasubramanian, learned counsel for the Revenue, however, contested this submission and maintained that the memberships of c....
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....nder section 37 of the Act is that expenditure incurred should not be on capital account. The Assessing Officer came to the conclusion that the expenditure was of a capital nature based on a fallacious reasoning that the expenditure was of an enduring nature and hence on a capital account. It is well-settled that an expenditure which gives enduring benefit is by itself not conclusive as regards the nature of the expenditure. We may add that even lump sum payment, which was the case in the instant matter, is not decisive as regards the nature of the payment. See observations in Empire Jute Co. Ltd. v. CIT [1980) 124 1TR 1 (SC) as also the judgment of the Division Bench of this court in CIT v. J. K. Synthetics Ltd. [2008) 309 ITR 371; I.T.R. Nos. 139 of 1988 and 202 of 1989. The true test for qualification of expenditure under section 37 of the Act is that it should be incurred wholly and exclusively for the purposes of business and the expenditure should not be towards capital account. In the instant case, as discussed above, the admission fee paid towards corporate membership is an expenditure incurred wholly and exclusively for the purposes of business and not towards capital acco....
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....d before it to show that this amount was not accounted for. 10. Before us the Ld. AR has submitted that the assessee had filed a statement of reconciliation of balances with Jindal Saw Ltd. along with letter dated 16.11.2011 at page No. 74-77 of the paper book. He has further submitted that no excess deduction of expenses has been claimed by the assessee on account of the difference in balances. Thus, the Ld. AR has submitted that the assessee has not claimed any expenses on this account therefore the addition is not justified. On the other hand, the Ld. DR has relied upon the orders of the authorities below. 11. We have considered the rival submission as well as relevant material on record. The AO made the addition on the basis of the information received from Jindal Saw Ltd. which shows a difference in closing balance. The CIT(A) has confirmed the addition on the ground that the assessee has not filed any supporting evidence. We find that the assessee has filed the reconciliation of balance with Jindal Saw Ltd. Further when the assessee has explained that no excess deduction of expenses has been claimed then the disallowance cannot be made without verify this fact that the ....
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.... 08 Bengal Engineering College, Alimony Association 5,000 Donation 4th Sep 08 Durga Puja 10,000 Religious donations 11th Sep 08 Ganesh Puja 5,000 Religious donations 11th Sep 08 Mahila Mandal 1,000 Donation 17th Sep 08 Durga Puja 20,000 Religious donations 20th Sep 08 Vashi Cultural Association 3,500 Donation 20th Sep 08 Durga Puja 1,250 Religious donations 3rd Oct 08 Durga Puja 5,000 Religious donations 7th Oct 08 Durga Puja 5,000 Religious donations 7th Oct 08 Durga Puja 5,000 Religious donations 9th Dec 08 Ayappa Bhakt Sewa Sangam 1,000 Religious donations 6th Jan 09 Navratra Mahotsava 5,000 Religious donations 31st Mar 09 Sindhi Culture Society 4,000 Social donation Total 81,750 16. Out of the total amount of Rs. 81,750/- the payment of Rs. 10,000/- to Maharashtra Navnirman Sena was found to be suo-motto disallowed by the assessee and accordingly the CIT(A) restricted the disallowance to Rs. 71,750/-. There is no quarrel on the point that no distinction can be made between the expenditure on adverti....