TaxTMI 
TaxTMI 
2024 (7) TMI 1011
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.... foreign travel expenses, Other expenses, security service charges , Swimming pool rent, adhoc disallowance under 14A are against the principles of justice, weight of evidence and probabilities of the case of the appellant 2. The Learned Assessing Officer and the Appellate Commissioner have erred in justifying the disallowance of 50% of foreign travel expenses and ignoring the fact that the appellant as a professional in the field of film industry and thus has to enrich his knowledge and new trends in the industry and this foreign travel is expense incurred wholly and totally, necessary and absolutely required for the appellant in carrying his profession. 3. The Learned Assessing Officer and Commissioner of Income Tax, Appeals were wrong in disallowing/ upholding a sum of Rs. 43797/- (25% of physical fitness expenses) as physical fitness is a part and parcel of the appellant's profession as a film artiste and disallowance of same on adhoc basis is against the provisions of the Act 4. The Learned Assessing Officer and Commissioner of Income Tax, Appeals are not justified in disallowing/ upholding 20% of other expenses which are professional expenses an....
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..... The Learned assessing officer and Commissioner of Income Tax, Appeals erred in charging/ upholding interest under section 234D when the refund due was not been issued or granted to the assessee." 4. The brief facts of the case are that assessee is a film artist and doing business of film production and distribution. Assessee filed his return of income electronically on 28.09.2009 for the A.Y. 2009-10 admitting total income of Rs. 2,34,65,640/- and the same was processed u/s 143(1) of the Act. The case was selected for scrutiny under CASS and notice u/s 143(2) of the Act dt. 23.08.2010 was issued. During the course of assessment, Assessing Officer noticed that assessee has claimed Rs. 5,28,703/- as foreign travel expenditure stating that the same was incurred as legitimate professional expenses. However, the Assessing Officer disallowed the said expenditure stating that the same cannot be said to be incurred wholly and exclusively for the purpose of assessee's profession. Assessee has debited an amount of Rs. 1,75,188/- towards his physical fitness in the profit and loss account. As the difference in the said amount worked out to Rs. 53,695/- and 20% of the same amounting to Rs....
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....essential. It may be mentioned that for any professional weather a Doctor, Lawyer, Chartered Accountant, Company Secretary or a business person the necessity of maintaining the individual physique is of paramount importance but to claim that the individual can only be healthy by studying the latest trends in the industry in abroad is not acceptable, since such expenditure cannot be said to be incurred wholly and exclusively for the purpose of his profession. Hence, 50% of the travel expenditure of Rs. 528703/- is disallowed and added to the total income of the assessee." 6.1. Ld. AR has also drawn our attention to Para 6 of the order of ld.CIT(A) which is to the following effect : "6. The Decision : In the instant case, the assessment was completed u/s 143(3) by making, the following additions / disallowances: Sl.No Nature of addition/disallowance Amount. 1 50% of-foreign travel expenses 2,64,351/- 2 20% of Other expenses Considered as personal expenses . 41,2981/- 3 10% oh security charges 32,7831- 4 Rent for swimming pool 5 Diff. in physical fitness expenses at 20% 10,739/- 6 Loss in Ven....
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....tently made in the computation of income and that the physical, fitness expenses are incurred for the profession of the appellant. In this regard, it is to be noted that physical fitness is important for everyone as such and cannot be held. to be incurred wholly and exclusively for the profession of the appellant. However, considering the profession of the appellant, it has much more significance compared to other individuals and it is 'imperative for the appellant to maintain physical well-being for its profession. It is a matter of fact that certain professions like sports, films etc require more emphasis on physical well-being to ensure better performance and incentives, However, as stated above, physical well-being is essential for everyone and cannot wholly- and exclusively related to the profession of the appellant and. accordingly the Assessing Officer is directed to disallow 25% of the total physical fitness expenses of Rs. 1,75,1.88/-. Thus, the total disallowance with regard to Physical fitness expenses works out to Rs .43,17/- and the appellant in all is allowed a sum of Rs. 1,31,391/- 'on this account, the Assessing Officer -has made an addition of Rs. ....
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....en able to prove that the said expenses were wholly and exclusively incurred for its profession. In view of the above discussion, the action of the Assessing Officer in disallowing various proportions of expenses viz., 20% of other expenses, 10% of security charges and 50% of a-swimming pool charges is upheld and the ground no.6, 7 and 8 are dismissed accordingly. With regard to disallowance U/s 14A of Rs. 3,30,306/-, it is seen that the disallowance has been double of the actual disallowance. Thus, the actual disallowance would be only Rs. 1,65,253/-. The appellant gets necessary relief to that extent. Further, it is Seen that- the expenses have been in the nature of personal expenses have already been disallowed in the case of the appellant. The appellant has investment in Shares and partnership firm. The agriculture land purchase cannot form part of exempt asset within the meaning of 14A unless agriculture activity is carried out and explicit maintenance charges are brought out by the Assessing Officer ha- view of the same, it would be fair to disallow an adhoc sum of Rs. 50,000/- to cover up for any expenses as such with regard to exempt income. In view of the same, th....
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.... Being Ch issued to ICICI Lombard Insurance for USA Travel trip from 10.04.2008 to 11.06.2008 5,636.00 Chintakayala Ravi Shotting / Analysing new trends at USA 3 30.05.2008 Ch issued to AEBC credit card t/w Hilton Hotel at South LA and Comfort Suit at USA 32,220.00 Chintakayala Ravi Shotting / Analysing new trends at USA 4 05.06.2008 Ch issued to Travel Masters India Pvt. Ltd t/w Foreign Travel Tickets purpose. 1,25,790.00 Chintakayala Ravi Shotting / Analysing new trends at USA 5 20.06.2008 Ch issued to AEBC credit card t/w Circus Circus Hotel at USA 34,354.00 Chintakayala Ravi Shotting / Analysing new trends at USA 6 27.01.2009 Ch issued to Hyderabad Forex Ltd t/w purchase of foreign currency for USA travel trip purpose 1,49,578.00 Fitness program purpose Total Foreign Travel Expenses: 5,28,703.00 9.2. From the perusal of page 1 of the paper book, we are not able to draw an inference that the expenditure incurred by the assessee has co-relation with the professional activities of the assessee, for example, the assessee had claimed Rs. 1,81,125/- towards the foreign....
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....reby granted relief of Rs. 88,435/- to the assessee. 10.2. We have heard the rival submissions and perused the material on record. On perusal, we find that assessee has shown Rs. 1,75,188/- towards physical fitness expenses in the profit and loss account. Though the physical fitness was a part and parcel of assessee's profession but it cannot be held to be incurred wholly and exclusively for the profession of the assessee. Even the assessee has not filed any evidence to show that he underwent any weight loss program to fulfill his professional commitment. Hence, we do not find any reason to interfere with the finding of ld.CIT(A) on this issue. Thus, this ground of the assessee dismissed. 11. GROUND NO.4 - Other Expenses With respect to ground no.4 i.e., 20% of other expenses considered as personal expenses, ld. AR has submitted that the lower authorities are not justified in upholding 20% of other expenses which are exclusively come under profession expenses like costume expenses, telephone bills, water bills, club payment, credit card bills etc, totally amounting to Rs.41,298/-. In this regard, he has drawn our attention to Page 4 of the order of Assessing Officer, which....
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....ess expenditure. 14. Per contra, ld. DR submitted that the orders of lower authorities are in accordance with law. 15. We have heard the rival contentions and perused the material on record. The ld.CIT(A) at page 42 of his order reproduced hereinabove had mentioned that Assessing Officer had not totally disregarded the claim of assessee as he found that nature of these expenses were having element of personal and family expenses and were not wholly and exclusively spent for professional work. In our view, no fault can be found in the reasoning of Assessing Officer / ld.CIT(A) as nature of expenses claimed by assessee comes under mixed basket of profession and personal expenses and it is not possible to segregate preciously professional with personal expenses. Hence, we do not find any reason to interfere with the decision of learned lower authorities. Thus, this ground is dismissed. 16. GROUND NO.5 - Security Charges With respect to security charges, ld. AR has submitted that lower authorities have erred in disallowing / upholding of 10% of security charges stating that there is personal element without any basis. In this regard, he has drawn our attention to Page 5 of ....
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....w and order problem and hence, should have a private pool. The assessee's contentions are not fully acceptable since the assessee's family members would also be using the exclusive swimming pool and the payments being made to the assessee's sister. Considering the above facts and involvement of personal element 50% of the claim made on Rs. 60,000/- amounting to Rs. 30,000/- is disallowed." 19.1. In this regard, ld. AR further submitted that the assessee has provided all the details to the Assessing Officer as well as the ld.CIT(A). However, both the authorities have failed to take into consideration the expenditure incurred by the assessee. 19.2. Per contra, ld. DR submitted that the orders of lower authorities are in accordance with law. 19.3. We have heard the rival contentions and perused the material on record. On perusal, we find that ld.CIT(A) while passing his order has categorically mentioned that on perusal of nature of expenses, it is clear that there was a certain amount of personal expenditure involved with regard to the said expenses. Before us, Ld. AR reiterated the contentions made by the assessee before the lower authorities. The contentions of the....