TaxTMI 
TaxTMI 
2018 (12) TMI 1213
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.... 3. The Ld. CIT(A) has erred in law by upholding the disallowance of conference expenses (to the extent of Rs. 684,111/-) by placing reliance on irrelevant facts and considerations. 4. The Ld. CIT(A) has erred in law and in facts and circumstances of the case by enhancing the disallowance of travelling expenses from Rs. 19,91,803/- to Rs. 30,00,000/- on the ground that the said expenses were personal in nature. 5. The Ld. CIT(A) has erred in law in enhancing the disallowance of travelling expenses from Rs. 19,91,803/- to Rs. 30,00,000/- without giving the assessee an opportunity of being heard and by placing reliance on irrelevant facts and considerations. 6. The above grounds of appeals are independent and without prejudice to one another. 7. The appellant craves leave to add /withdraw or amend any ground of appeal at the time of hearing." 2. Briefly stated facts of the case are that the assessee is a Law Firm and earning income under the head profit and gains of business and profession, capital gain and income from other sources. The Ld. Counsel of the assessee submitted before us that the assessee followed cash method of accounting sys....
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....) as per bill attached 4,33,125.00 31.03.2010 Being Exp, Incurred On Vedio Coverage & Photography for Party on dt. 27.03.10 against bill no. 1759 dt. 29.03.10 approved by Mr. RKL as per bill attached. 8,500.00 29.07.2009 Paid to PEl Media Ltd. Being exp. Incurred by Mr. Mohit Saraf on Amex credit card for the period of May 28 to July 27, 2009 as 5,54,250.26 per Statement Attached. TOTAL 13,68,222 5. In view of the Assessing Officer personal element was involved in the expenses and thus, according to him same cannot be said as incurred exclusively for business purpose. Accordingly, he disallowed 50% of the amount of Rs. 13,68,222/-which was worked out to Rs. 6,84,111/-. Before the Ld. CIT(A) the assessee filed detailed submission in respect of the above expenses, which the Ld. CIT(A) has summarised in para 5.1 of the impugned order. 6. On the issue of expenses of Rs. 1,11,600/- for two watches, it was submitted before the Ld. CIT(A) that those watches were given as appreciation awards to two employees during the annual conference of the firm. One watch was given to advocate Mr Shishir Jose as appreciation for au....
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....ate achievements of the firm along with its client, when it won " National Law Firm of the Year 2010", "World's Number-One Law Firm", and "Best Overall Firm" awards. In the event clients and advocates of the firm along with other dignitaries were invited. According to the assessee, this was normal business practice followed for sharing the information about the firm's achievement with its clients. The Ld. CIT(A) however noted that a bill of "Oriental Kitchen" showing expenses of Rs. 4,52,912/-on dinner organised on 27/03/2010 at 09, Asoka Road, New Delhi was produced before him. He observed that how the national award for the year 2010 could be announced in the March, 2010 itself, when the year was yet not over. He observed that the dinner was personal in nature as was apparent from the Video Coverage of the Dinner. 11. Before us the Ld. Counsel submitted that national law firm of the year award was issued by IFLR in the month of March 2010 and other two awards of global project finance/PPP deals and Best overall firm was awarded in 09/10/2009 and 26/02/2010 respectively. According to him, the expenses incurred on the party hosted for celebrating the achievement of the firm, in ....
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....r the purpose of the business. On the issue of dinner expenses, also she submitted that Ld. CIT(A) on the basis of the video footage, observed that expenses were in the nature of personal rather than business expenditure. 15. We have heard the rival submission of the parties and perused the relevant material on record, including the paper book filed by the assessee. 17. In the instant case, there is no doubt that expenses on the conference have gone from Rs. 9.57 lakhs as compared to last year to Rs. 43.36 lakhs during the year under consideration, which is an increase of 353%, whereas the gross receipt in the year under consideration of Rs. 68.16 lakh has decreased as compared to gross receipt of Rs. 71.51 lakhs in last year. Out of the total expenses on conference of Rs. 43.36 , the Assessing Officer identified expenses of Rs. 13.68 lakhs on various items like watches, T-shirt's, Caps, jackets, dinner, media event etc and held that those expenses were partly related to personal use and accordingly he disallowed 50% of the expenses amounting to Rs. 6,84,111/-. 18. Regarding the expenses on two watches of Rs. 1,11,600/- the assessee has claimed that same were distributed a....
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.... not fall within the provisions of section 36( I)(ii) of the Act and that they were payments allowable as revenue expenditure having been incurred for the purpose of business expediency. These payments were not of the type contemplated by the Payment of Bonus Act. It was held that it was an ex gratia payment or some sort of reward given to an empIoyee for the good work done by him and would therefore, fall within the category of expenditure incurred for the purpose of business expediency and for, improving the working of the assessee. Therefore, It would not fall within the meaning of section 36(I)(ii) of the Act but would fall within the ambit of section 37 of the Act. Accordingly, the third question is answered in the affirmative, in favour of the assessee and against the revenue and it is held that the 'good work reward' is allowable as business expenditure under section 37(1) of the Act." 18. In our opinion, in absence of any evidence of distribution of watches to employees or evidence of rationale of watch distribution to two employees only and other inconsistencies observed above , the ratio of the above decision cannot be applied over the facts of the instant cas....
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....less steel cups to its members on the silver jubilee function and the expenditure was incurred to continue the services of the members, which the assessee received for past 25 years. But in the instant case, there was no such occasion and the Annual Day Celebration, was more a kind of pleasure trip by the members to Beijing, not intended to serve the business purpose and thus facts of the instant case being distinguishable , ratio of the above decision cannot be applied in the instant case. 21. Regarding expenditure of Rs. 4,33,125/- on "Promidity Dinner" and Rs. 8,500/- for "video coverage" of the event is concerned, the Ld. counsel has submitted that expenses are incurred for a party hosted to celebrate the achievements of the firm, in which all clients and counsel of the firm along with various dignitaries were invited. According to the Ld. Counsel the expenses were incurred for recognising exceptional work of the counsel and to celebrate the achievement with its distinguished clients and thus it was not in the nature of personal expenditure. We note that the Ld. counsel has not given any specific date (except as March 2010) on which the firm was awarded as national law firm ....
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....und No.5 of the revenue appeal." 23. The Ld. Counsel contested that in view of the above decision, the sponsoring expenses should be allowed to the assessee. However, we note that in the above cited case, the assessee is a corporate entity engaged in the business activity, as against the assessee which is a firm of advocates, who must be member of the Bar Councils. The Rule 36 of the Bar Council of India Rules states that Indian Law firms and lawyers are not allowed to advertise their practice in the market, both offline or online. Rule 36 of Bar Council of India Rules states that an advocate in India cannot solicit work or advertise, either directly or indirectly by circulars, advertisements, personal communications or interviews, or by furnishing or inspiring newspaper comments or producing photographs to be published in connection with their cases. The signboard or name-plate of a lawyer must be of a reasonable size and must not indicate that he is or has been President or Member of a Bar Council or of any Association or that he has been associated with any person or organisation or that he has been a Judge or an Advocate General. 24. In view of the above, the action of th....
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....served that the assessee claimed Rs. 30 lakhs for advance made to M/s Tomas Cook for travelling by the Counsels of the firm and their family members to Beijing in the month of April 2010. The Ld. CIT(A) made following observation in respect of the expenses of Rs. 30 lakh claimed: • The amount was paid in advance to M/s. Thomas Cook • The passports and other documents produced by the appellant showed that the bill included payment for number of family members including children • The bill produced later of M/s. Thomas Cook showed that the trip was from 1st to 3rd April • Number of persons had extended their trips for which additional charges had been paid • There was no evidence that the expense had been incurred for any conference at Beijing 28. According to the Ld. CIT(A) the trip to Beijing was not for official purposes but for personal purposes, and thus not allowable. 29. Before us the Ld. Counsel of the assessee submitted that the firm hosts such annual event to announce the promotions and reward for the exceptional work of the specified individuals and during the year the firm decided to host its annual da....