TaxTMI 
TaxTMI 
2017 (9) TMI 1870
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....mmissioner of Income-Tax 00-35, Mumbai (hereinafter referred to as AG) in disallowing of an amount of Rs. 62,935/- being travelling expenses incurred on behalf of family members of players, by holding that these persons have not rendered any service to the appellant and the expenses are private expenses of individuals unrelated to the business. The appellant submits that the travelling expenses incurred on behalf of family members of players are incurred for the purpose of business and the same should be allowed as claimed. 2. The CIT(A) erred in confirming the action of the AO in disallowing an amount of Rs. 60,87,867/- being 10% of hospitality expenses of Rs. 6,08,78,672/- on adhoc basis by holding that the same is not r....
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....ndered any service to the appellant and the expenses are private expenses of individuals unrelated to the business. 4. We have heard the counsels for both the parties and we have also perused the material placed on record as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above grounds raised by the revenue in para no. 7 of its order. The operative portion of the order of Ld. CIT(A) is contained in para no. 7.4 of its order and the same is reproduced below:- 7.4 Decision- 7.4.1 I have considered the submissions of the appellant and perused the materials available on record. The app....
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.... following expenses of the Player in connection with his duties under this agreement: (a)Travel to and from India or, if appropriate, any other relevant location (which shall be business class subject only to availability); (b)travel to and from any match; (c)a daily allowance of INR 3,800; (d) accommodation (which shaft normally be 5 star subject only to availability)." From the above, it is evident that as per the said model agreement also the appellant is not contractually obliged to incur any expenditure for the spouses or family members of the players. In absence of such contractual liability the impugned expenses under consideration incurred for the spouses/family members of the players cannot be he....
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....ed by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, this ground raised by the assessee stands dismissed. Ground No. 2 6. This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in confirming the action of the AO in disallowing an amount of Rs. 60,87,867/- being 10% of hospitality expenses of Rs. 6,08,78,672/- on adhoc basis by holding that the same is not related to assessee's business. We have heard the counsels for both the parties and we have also perused the material placed on record as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above grou....
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....he AO noted discrepancies in the quantity of meals/snacks etc. served on various dates. The appellant has not been able to clarify the discrepancies either at the time of assessment or even at the appellate stage. Admittedly, meals/snacks were provided to the players and supporting staff during matches and the number of such players and supporting staff cannot vary between 40 and 160. Thus, it is evident that the hospitality expenses do involve an element of personal expenses and, accordingly, it was fair and reasonable on part of the AO to estimate the personal element at mere 10% of the said expenses. Therefore, / do not find any error or infirmity in the action of the AO in disallowing Rs, 9,74,2501- being 10% of the hospitality expenses....
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.... inadvertently even though argued that at length on 22/07/2016, which amounts to mistake apparent from record. Accordingly, we have again heard the learned AR and DR on the issue of disallowance in the hands of the assessee being a Corporate entity /artificial person. 6. Following decisions lay down the ratio that a company being an artificial person, there cannot be any personal element in expenses incurred by a company and subsequently, no disallowance in the hands of a company can be made u/s 37 of the Act. The addition, if any, can be made in the hands of a person (e.g. employee, directors etc.) receiving such benefits. 1 Sayaji Iron & Engg. Co. (A leading judgment-IT has subsequently been followed by the Mumbai tribunal ....