TaxTMI 
TaxTMI 
TaxTMI 
2014 (5) TMI 1080
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....excessive. 2. That Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 10.00,000/- on account of expenditure debited by the assessee towards membership fee paid to M/s United Smokeless Tobacco Association, disregarding the A.O's finding that the expenditure was of the nature of capital expenditure and not related to the business of the assessed and was not deductible u/s 37 of the IT Act 1961 as expenditure incurred wholly and exclusively for the purpose of business. 3. That Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 75,000/- made on disallowance of depreciation claimed on the vehicle without appreciating the fact that the assessee did not own the assets and it did not furnish the certificate of transfer of vehicle on which it had claimed depreciation at any point of time during the relevant part of the year. 4. That the order of the Ld. CIT (A) being erroneous in law and on facts be vacated and the order of the A.O. be restored. 5. That the appellant craves leave to amend any one or more of the grounds of the appeal as stated above as and when need for doing so may arise." 3. Learned D.R. of the Revenue supported the as....
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....alification and performing similar duties. Now at this stage, we examine the applicability of the judgment cited by learned D.R. of the Revenue having been rendered in the case of Bengal Enamel Works Ltd. Vs Commissioner of Income-tax (supra). In that case, it was found that part of the remuneration was paid on extra commercial consideration and that part of the remuneration, paid to the director was disallowed. In the present case, it is not the case of the Assessing Officer that any part of the remuneration paid by the assessee company to the directors was on account of extra commercial consideration and hence, this judgment of Hon'ble Apex Court cited by learned D.R. of the Revenue is not applicable in the facts of the present case. We also find that it is noted by CIT(A) that his predecessor has also adjudicated upon the same issue in favour of the assessee in assessee's own case in the immediately preceding year and nothing has been brought on record before us by learned D.R. of the Revenue that the order of CIT(A) in the earlier year was reversed or modified by the Tribunal. We also find that although the Assessing Officer has invoked the provisions of section 40A(2)(b) o....
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....copy of confirmation of United Smokeless Tobacco Association is also submitted before the Assessing Officer. Such copy of confirmation is also available on page No. 34 of the paper book. In the said confirmation, the party has confirmed the receipt of Rs. 10 lac by stating that the said receipt is towards membership fees but in the assessee's own submission before the Assessing Officer dated 30/06/2010, which is after the date of this confirmation, it was submitted by the assessee before the Assessing Officer that this amount has been paid to United Smokeless Tobacco Association as special contribution. On page No. 3 & 4 of paper book being part of written submissions filed by the assessee before the CIT(A), it is submitted by the assessee before the CIT(A) that the basis of disallowance of the Assessing Officer is that it is either capital expenditure or an expenditure not related to the business of the assessee and therefore, it cannot be allowed as business expenditure. It is also stated on page No. 4 that since no certificate for the claim of deduction u/s 80-G has been filed by the assessee, such deduction was also not allowed. Before us, apart from submitting a confirmation d....
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....age for the enduring benefit of a trade, there is a very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital. In the present case also, even if it is a membership subscription to the association, it will result into creation of enduring benefit and since no such circumstances were shown for leading to an opposite conclusion, the same has to be treated as capital expenditure. 8.1.3 Now we examine the applicability of various judgments cited by Learned A.R. of the assessee. The first judgment cited by Learned A.R. of the assessee is the judgment of Hon'ble Delhi High Court rendered in the case of Commissioner of Income-tax Vs Engineers India Ltd. (supra). In that case, it was noted by Hon'ble Delhi High Court that the amount in dispute was paid by the assessee for acquiring membership of the organization but mere membership do not entitle the assessee to get the desired information till the subscription is paid from year to year. It was also found that if the annual subscription is not paid, the assessee will not receive any technical information. Under....
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....ssee company and it was also not shown that without paying any annual membership fees, no information is available to the assessee from such association. We have also found that the true nature of this payment is not ascertainable because as per the confirmation it is membership fees and as per assessee's own submission after the date of such confirmation, it was special contribution. After considering all these facts, we are of the considered opinion that the order of CIT(A) is not sustainable. Hence, we reverse the order of CIT(A) on this issue and restore that of the Assessing Officer. Accordingly, ground No. 2 is allowed. 9. Regarding ground No. 3, it was submitted by learned D.R. of the Revenue that it was a sale consideration repaid by the seller and, therefore, depreciation is not allowable because the assessee was not owner. He supported the assessment order. 10. As against this, Learned A.R. of the assessee supported the order of learned CIT(A). He also submitted that on page No. 47 and 48 of the paper book is the confirmation issued by the seller and sale receipt and delivery letter. Inspite of specific query, Learned A.R. of the assessee could not bring on record any d....