2018 (3) TMI 34

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....ff and directors included in "staff welfare". 2. Confirming addition to total income of Rs. 1,61,481/- out of conveyance and travelling expenses and Rs. 76,793/- out of car expenses. 3. Rival contentions have been heard and record perused. Facts in brief are that assessee is engaged in the profession / business of Producers and Exhibitors of TV Serials and Movies & Studio Renting. During the year under consideration, the assessee had declared income under the head profit and gains of business or profession. During the year under consideration, AO noticed that the assessee has debited Rs. 18,83,892/- under the head medical expenses. During the assessment proceedings, vide notice u/s. 142(1} dated 3-10-2013, the assessee 'inte....

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....alf of the assessee contended that assessee company has reiumbursed the medical expenses as per the policy of the company. He further mentioned that Shri Anand Sagar who was the Director and employee of the company hospitalized. The medical expenses of directors were for the hospitalization; and surgery of Director Shri Anand Sagar who had suffered a paralytic stroke and underwent DBS operation at Kokilaben Dhirubhai Ambani Hospital. 7. As per learned AR since the expenditure was incurred in the course of business and for the employee of the company who was also Director should be allowed as business expenditure. For this purpose reliance was placed on the decision of Co-ordinate Bench in case of Sharma International Ltd., 123 ITD 549 wh....

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....urpose of the business and also observed that the assessee company has not brought on record any evidence to show the above expenses was made for the purpose of facilitating the carrying on of the business of the company or has a matter of commercial expediency and accordingly disallowed the entire above expenses of Rs. 18,83,892/-. From the record I found that AO has never questioned about the commercial exigency of the aforesaid expenditure since Mr. Anand Sagar, the Director of the company is naturally an employee of the company and thus any expenditure incurred by an assessee on his staff is naturally staff welfare expenditure. Secondly, the payment to hospital is not a capital in nature and finally the assessee is a company and thus th....