TaxTMI 
TaxTMI 
2014 (7) TMI 426
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....rming the disallowance of Foreign Travel Expenses of Rs. 9,69,613/- by treating the same as expenditure incurred for non-business purpose. 2. Disallowance of expenditure of Guest Houses and residential flats of Rs. 1,17,49,450/- CIT (A) has erred in confirming the disallowance of expenses on guest houses and residential flats provided to own employees on the flimsy ground that details not provided and it cannot be confirmed that it is used only for business purpose. We have submitted guest house register during the appeal hearing, while CIT (A) has mentioned on page 12 para 10.2 that the same was not provided at all. In case of residential flats provided to employees, details of proof that they are only payroll of the company are not provided. 3. Over valuation of closing stock to the extent of Rs. 31,35,062/- CIT (A) has erred in partly confirming the over valuation of closing stock by stating that when in the closing stock unutilized Modvat credit is adjusted. Similar adjustment should be made to opening stock. However, since we have already increased the value of closing stock on the basis of actual payment of excise duty and CENVAT credit availed (section 145A of the I....
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....ction in this regard. 6. We have heard both the parties and perused the orders of the Revenue Authorities as well as the relevant material placed before us. On hearing both the parties and on perusal of the said relevant material, we find it reasonable to remand the issue to the file of the AO to examine the same and to take a fresh decision in the light of the information furnished before us. Accordingly, we remand the matter to the file of the AO for adjudicating the issue afresh after affording a reasonable opportunity of being heard to the assessee. Accordingly, ground no.1 is allowed for statistical purposes. 7. Second issue relates to the expenditure on guest house and residential flats. At the very outset, Ld Counsel for the assessee brought our attention to page 182 of the paper book-I, which is an affidavit filed by Shri Govind Sharma, Vice President (Taxation & Crop. Affairs), and mentioned that the confirmation given by Shri Sharma is supported by the „guest house register‟, which is placed in the paper book-I vide page 174 onwards. He also mentioned that this issue can also be remanded to the file of the AO to examine the expenditure incurred on guest ....
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....ccordingly, we remand the issue to the file of the AO for adjudicating the issue afresh after granting a reasonable opportunity of being heard to the assessee. Accordingly, ground no.3 raised by the assessee is allowed for statistical purposes. 11. In the result, appeal of the assessee is allowed for statistical purposes. ITA No.2538/M/2011 (AY 2007-2008) (By Revenue) 12. This appeal filed by the Revenue on 31.3.2011 is against the order of the CIT (A)-12, Mumbai dated 1.12.2010. In this appeal, Revenue raised the following grounds which read as under: "1.(a) On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in deleting the disallowance of 50% of license fees paid to M/s. RPG Enterprises Ltd without appreciating the fact that the assessee could not prove that the expenditure was incurred wholly and exclusively for the purpose of business. (b) On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in deleting the disallowance of 50% of license fee paid to RPG Enterprises Ltd without appreciating the fact that determination of the cost to be shares by the asssessee on the basis of turnover is grossly arbitrar....
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.... the assessee received by making payment. In the past 50% of such disallowance had been made and in the light of the same, the Assessing Officer made disallowance of 50% of the expenses. In AY 1997-98 in ITA No.5111/Mum/03; this issue had came up for consideration in assessee‟s own case before the Tribunal and the Tribunal following the decision of the Hon‟ble Calcutta Bench in JCIT vs. CFL Capital Finance Services Ltd vide ITA No.930/Kol/01, dated 31.5.2007 and orders of Cochin Bench and Chennai Bench of the ITAT on identical issue, was pleased to delete the disallowance made by the Assessing Officer. Respectfully following the decision of the Tribunal, we direct the addition confirmed by CIT (A) be deleted." 14. Further, Ld Counsel mentioned that the above order of the Tribunal was confirmed by the Hon‟ble Jurisdictional High Court vide Income Tax Appeal No.4148 of 2009 dated 6.12.2010 and the copy of the said judgment is placed at page 47 of the paper book-II. Considering the settled nature issue, we are of the opinion that order of the CIT (A) is fair and reasonable and it does not call for any interference. Accordingly, ground no.1 is dismissed. 15. ....
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....of ITAT „G‟ Bench, Mumbai and other orders of the Hon'ble ITAT have said that 1% to 5% of the dividend income should be treated as expenditure incurred on earning it. Using this as a base the Assessing Officer is therefore directed to calculate the disallowance u/s 14A of the IT Act accordingly at 5% of the dividend income received by the appellant." 19. From the above, we are of the opinion that the while adjudicating the issue, the CIT (A) has rightly considered the decisions of the ITAT as well as the judgments of the higher judiciary and the direction given by the CIT (A) to calculate the disallowance u/s 14A of the Act at 5% of the dividend income is fair and reasonable. Therefore, considering the same, we find no infirmity in the order of the CIT (A) and it does not call for any interference. Accordingly, ground no.2 raised by the Revenue is dismissed. 20. Ground no.3 relates to the disallowance of Rs. 6,16,455/- in respect of club expenses. Briefly stated, in the return assessee claimed Rs. 6,16,455/- as expenditure on account of payments made to clubs which includes annual subscription as well as cost of club services. During the assessment proceedings, AO....