B & A PACKAGING INDIA LIMITED,BALASORE vs. DCIT, CIRCLE-1(1), BHUBANESWAR

Shri Partha Mukherjee, represented on behalf of the assessee and Shri Vijay Singh, Sr. DR represented on behalf of the Revenue.

It was submitted by the ld. AR that when the return was filed an audit report dated 25.11.2022 had been filed along with the return of income. It was the submission that the said audit report contained an error in so far as the ICDS (Income Computation and Disclosure

It was also the submission that the club expenses which had been disallowed by the ld. AO may be deleted. It was the submission that the club expenses were required in so far as the assessee is in the business of packaging industry and it was required for the Directors and the Senior Management of the company to discuss business and the same was sometimes at the request of the clients done outside the office premises for maintaining secrecy. It was the submission that the club expenses were required for this purpose. It was the submission that the turnover of the assessee for the impugned assessment year was more than 13 crore and the club expenses were only to the extent of ₹5,98,587/-. It was the submission that this was not really club expenses but in the nature of business expenditure.

In reply, the ld. Sr DR submitted that the audit report dated 10th March, 2026, cannot be blindly accepted and the same has been examined by

We have considered the rival submissions. A perusal of the facts in the present case clearly shows that the club expenditure was for the business activities of the assessee. The club membership is also a corporate membership and in the name of the company. Admittedly, a company cannot have personal expenditure. The expenditures incurred are exclusively for the purpose of the business of the assessee. This being so, the addition has made by the ld. AO and as confirmed by the ld. CIT (A) in respect of club expenses stands deleted.

Coming to the addition representing the disallowances of the affect of ICDS, as it is noticed that the audit report dated 10th March, 2026 is in the nature of fresh evidence and the same was not before the ld. Assessing Office, the issue is restored to the file of the ld. AO for re- adjudication after graining assessee adequate opportunity of being heard. The ld. AO shall consider the revise audit report filed along with the original audit report filed and consider the reconciliation that has to be provide by the assessee and then re-adjudicate the issue.

In the result, the appeal of the assessee is partly allowed for statistical purposes.