THE PR. COMMISSIONER OF INCOME TAX (CENTRAL), LUDHIANA vs. M/S BRIGHT ENTERPRISES PVT. LTD., MBD HOUSE, RAILWAY ROAD, JALANDHAR

According to the appellant, the following substantial question of law arises in the appeal:- “Whether on the facts and in the circumstances of the case, the Hon’ble Income Tax Appellate Tribunal, Amritsar Bench, Amritsar has erred in deleting the addition of Rs.92,92,170/- on account of excessive expenditure in purchase of magazines from sister concerns when no proper justification for same has been explained before the Assessing Officer.” Parkash Chand 2018.02.16 10:15 I attest to the accuracy and integrity of this document

The respondent-assessee claimed a business expense of about Rs.6 crores towards the purchase of newspapers and periodicals for the guest rooms and for the offices. The Assessing Officer disallowed 10 per cent. He considered the amount of Rs.6 crores towards newspapers and periodicals to be excessive especially in view of the fact that the same were purchased from a sister concern.

We find that neither the Assessing Officer nor the CIT nor the Tribunal have considered any relevant facts. Prima facie, the amount does seem excessive. A certain amount of excess has been accepted by the authorities themselves on the ground that the assessee, in the hotel industry, was bound to be aggressive in its campaign for promoting the 5-star hotel that it runs. The amount, however, is enormous considering that there are only a 120 rooms. That by itself, however, would not be a ground for the reduction. None of the authorities have considered the nature of the publications purchased and made available. Nor have they considered the manner in which the publications have been used. There are 120 guest rooms in the hotel. We will assume that there are another 30 offices. According to the assessee’s own case, therefore, each room/office was supplied the publications worth Rs.34,000/- per month. Such an expense must require consideration based on the facts.

In the circumstances, the impugned order is set aside. The matter is remanded to the Tribunal for a fresh decision after affording the parties an opportunity of furnishing evidence in support of the claim for deduction. Needless to clarify that the Tribunal is always at liberty to remand the matter, if it so Parkash Chand 2018.02.16 10:15 I attest to the accuracy and integrity of this document

The appeal and the cross-objections are accordingly disposed of. (S.J. VAZIFDAR) CHIEF JUSTICE (AVNEESH JHINGAN) JUDGE 15.02.2018 parkash NOTE: Whether speaking/non-speaking: Speaking Whether reportable: YES/NO Parkash Chand 2018.02.16 10:15 I attest to the accuracy and integrity of this document