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Income Tax Appellate Tribunal, DELHI BENCH ‘C’ : NEW DELHI
Before: SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER : The appellant, India Yamaha Motor Pvt. Ltd. New Delhi (hereinafter referred to as 'the assessee’) by filing the aforesaid appeal, sought to set aside the impugned order dated 03/10/2016 passed by Ld. Commissioner of Income Tax(Appeals)-22, New Delhi qua the Assessment Year 2011-12 on the grounds inter alia that:
“On the facts and circumstances of the case, the learned CIT (Appeals) has erred both on facts and in law in confirming the disallowance of part amount of payments made to Hotel Rutugandh, Diwali & celebration expenses, and short - deduction of tax at source. 2.On the facts and circumstances of the case, the learned CIT (Appeals) has erred both on facts and in law in confirming the disallowance of an amount of Rs. 9,90,135/- on account of payments to Hotel Rutugandh towards conference of dealers held by the Appellant, on the alleged ground that these expenses are not genuine, without appreciating the evidence on record. 3.On the facts and circumstances of the case, the learned CIT (Appeals) has erred both on facts and in law in confirming the disallowance of an amount Rs. 10,09,085/- i.e. 20% of the total amount of Rs. 50,45,424/- incurred towards Diwali and celebration expenses, without appreciating that these expenses were to be incurred as part of business expenditure of the Appellant, and also the material on record. 4.On the facts and circumstances of the case,the learned CIT (Appeals) has erred both on facts and in law in confirming the disallowance of an amount Rs. 1,80,495/- under Section 40(a)(ia) of the Income Tax Act, 1961, without appreciating the evidence on record. 5.The Appellant reserves its right to add, delete, amend and/or substitute any of the grounds of appeal before or at the time of hearing of the appeal.”
Briefly stated the facts necessary for adjudication of the 2. controversy at hand are: the assessee is into the business of manufacturing, assembling, installing, producing, alteration, fabrication, remodeling, purchase, sale designing, development, repair, procurement, import, export of motorcycles and parts thereof during the year under assessment. AO made disallowance of Rs. 9,90,135/- on account of payment to Hotel Rutugandh towards conference of dealers held by the assessee company on the ground that the bills furnished by assessee company do not carry the service tax chargeable on such services under the Service Tax Act nor the bill carries Service Tax Registration no., nor the bill has been confirmed by Hotel Rutugandh concerned by filing reply to the letter no. 713 dated 11.02.2015 issued by the AO.
AO also disallowed an amount of Rs. 2,16,682/- and 48,28,742/- claimed by the assessee on account of celebration expenses and Diwali expenses respectively and thereby framed the assessment u/s 143(3) of the Act.
Assessee carried the matter before ld. CIT(A) who has partly allowed the appeal. Feeling aggrieved the assessee company has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representative of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Ground no. 1 6. Ground no 1 is general in nature, hence, needs no specific findings.
Ground no. 2 7. AO as well as Ld. CIT(A) has made disallowance of amount of Rs. 9,90,135/- claimed by the assessee company on account of payment to Hotel Rutugandh towards conference of dealers held by the assessee company on the ground that the bills furnished by the assessee does not carry Service Tax chargeable, Service Tax Registration no. and the same have not been verified by the Hotel concerned.
7.1 Ld. AR for the assessee contended that the Service Tax was not applicable to the Hotel Industry during the year under assessment and brought on record Finance Act, 2011 whereby Service Tax was applied to the Hotel Business. Since, Finance Act, 2011 has been made effective for the Financial Year 2011-12, the same is not applicable to the year under assessment, so there was no requirement on the part of the Hotel concerned to put Service Tax Registration no. on the bill. 7.2 Furthermore, when Assessing Officer has not disputed the convening of the conference and the detail of expenses has been duly brought on record, now available at page 3 of the paper book, and hotel bills are available at page 5 to 12, the same cannot be disallowed on the basis of conjecture and surmises as well as on the basis of wrong notion that the bills do not contain the detail as to the payment of service tax, which was not applicable on that date. Moreover, assessee’s audited accounts have never been disputed by the AO. In these circumstances, AO was not required to get the verification of the bills from the hotel concerned. So, we are of the considered view that AO as well as Ld. CIT(A) have erred in disallowing the hotel expenses bill and as such the addition of Rs.9,90,135/- made on this account is ordered to be deleted, hence, ground no. 2 is determined in favour of the assessee.
Ground no. 3 8. Ld. CIT(A) restricted disallowance made by the AO to 20% of Rs. 50,45,424/-. When we examine the facts and circumstances of the case in the light of the contention raised by the assessee company that these expenses have been incurred for the benefit of employees and has a direct connection with the business of the assessee company, the same are not allowable because assessee has already claimed expenses towards employees welfare which is a separate head and has been allowed as such by the revenue.
However, in the totality of facts and circumstances, we are of the considered view that Ld. CIT(A) has fairly and reasonably made the disallowance to the tune of Rs. 10,09,085/- i.e. @ 20% of the total amount of Rs. 50,45,424/-. Even otherwise no detail of such expenses incurred on staff on the occasion of the Diwali has been filed. So, we are of the considered view that there is no scope to interfere into findings returned by Ld. CIT(A). Hence, ground no. 3 is determined against the assessee.
Ground no. 4
Ground no. 4 has not been pressed by the Ld. AR for the Assessee.
In view of what has been discussed above present appeal filed by the Assessee is partly allowed.
Order pronounced in open court on this 31st January