DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), HYDERABAD vs. COUNTRY CLUB HOSPITALITY & HOLIDAYS LIMITED, HYDERABAD

We come to the Revenue’s appeal 1045/Hyd/2018. Its first and foremost ground seeks to revive the Assessing Officer’s action disallowing the expenditure incurred towards payment of RCI fee of Rs.6,47,419. Its sole argument before us is that the Assessing Officer had rightly disallowed the impugned sum on account of non-deduction of TDS under section 40(a)(ia) of the Act followed by the assessee's agreement. We fail to express our concurrence with the Revenue’s grievance in view of the fact that the Assessing Officer had not quoted any specific provision for invoking Chapter XVII of the Act as to under which head the assessee was liable to deduct TDS thereupon. And also that hon'ble apex court’s decision (2011) 5 SCR 897 Urviben Chiragbhai Sheth Vs. Vijaybhai Shambubhai Joranputra & Ors holds that such a concession is made, the same is sacrosanct if made before a Court of Record only. We therefore uphold the CIT(A)’s action in deleting the RCI

Next substantive ground comes disallowance of 14A r.w. Rule 8D of Rs. 2,08,04,086 made by the Assessing Officer and deleted by the CIT(A). Suffice to say, the assessee has not derived any exempt income in the relevant previous year. We therefore quote CIT Vs. Corrtech Energy Pvt. Ltd. 223 Taxman 130 (Guj); CIT Vs. Chettinad Logistics Pvt. Ltd. 80 taxmann.com 221 (Mad) and Cheminvest Ltd. Vs. CIT (2015) 378 ITR 33 (Del) that the impugned statutory provision applies only in relation to examine income than having any independent exigibility that the CIT(A) has rightly reversed the Assessing Officer’s action to this effect. The Revenue’s instant latter substantive ground as well as its main appeal ITA 1045/Hyd/2018 fail accordingly.

We now advert to the assessee's cross appeal ITA 1346/Hyd/2018. Its first and foremost substantive grievance challenges correctness of both the lower authorities' action disallowing employees’ contribution

Next comes the assessee's third grievance seeking to reverse both the lower authorities' action disallowing its section 80G claim as well as other deduction i.e. travelling, conveyance expenses and miscellaneous expenses of Rs.1,59,354; Rs.32,43,051 and Rs.3 lakhs respectively, totaling to Rs.37,02,405.

Learned counsel stated very clearly that the assessee is not pressing for the first and foremost head of 80G disallowance of Rs.1,59,354 keeping in mind smallness of the sum involved. Rejected accordingly.

We next notice that the learned lower authorities' have proceeded to disallow the assessee's travelling and conveyance as well as miscellaneous expenses of Rs.32,43,051 and Rs.3 lakhs respectively alleging its failure

Faced with this situation, we are of the opinion that an assessee incurs such expenses for running day to day business as well as necessary travels for the same which could not be altogether ruled out. The fact also remains that it has not been able to prove each and every expenditure by way of filing the necessary cogent evidence. We therefore deem it fit in these circumstances that a lump sum disallowance of Rs.10 lakhs and Rs.1 lakh, respectively, would meet the ends of justice with a rider the same cannot be treated as precedence. The assessee gets part relief of Rs.22,43,051 and Rs.2 lakhs; respectively. Necessary computation shall follow as per law. The assessee's instant cross appeal 1346/Hyd/2018 is partly allowed.

To sum up, the Revenue’s appeal 1045/Hyd/2018 is dismissed and assessee's cross appeal 1346/Hyd/2018 is