UNITED MOHUN BAGAN FOOTBALL TEAM P. LTD.,KOLKATA vs. I.T.O.,WARD-6(4), KOLKATA

The assessee is a private limited company mainly engaged in the activity of running a football team. It filed its return of income for the Assessment Year 2012-13 on 28/09/2012 declaring Nil Income. The Assessing Officer passed a best judgment assessment order u/s 144 of the Act, determining the total income at Rs.1,41,26,905/- interalia making an addition on account of difference in gross receipt of Rs.82,25,555/- and disallowance of expenditure on adhoc basis @ 5% of that which was claimed of Rs.54,15,232/-. Aggrieved the assessee carried the matter in appeal. The ld. First Appellate Authority, deleted the addition made on account of difference in gross receipts. On the issue of disallowance of 5% of expenditure claimed on adhoc basis, the ld. CIT(A) reduced the same to Rs.10,00,000/- lumpsum by observing as follows:- “4.2. I have carefully considered the arguments of the AIR of the appellant and perused the relevant issue in the assessment order as well as the materials placed before me. The short point for my consideration is whether the ad hoc disallowance is justified in the circumstances. It is observed that the appellant has disputed the addition mainly on the footing that the AO did not consider the details of Other Expenses which was filed in his office on the 9th March, 2015. Under cover of such Assessment Year: 2012-13 United Mohan Bagan Football Team Pvt. Ltd United Mohan Bagan Football Team Pvt. Ltd. letter, the appellant had given details of all the payments made to the professional letter, the appellant had given details of all the payments made to the professional letter, the appellant had given details of all the payments made to the professional football players after deduction of TOS. In fact, their name, addresses as well as PAN football players after deduction of TOS. In fact, their name, addresses as well as PAN football players after deduction of TOS. In fact, their name, addresses as well as PAN were also provided by the appellant. were also provided by the appellant. It was also contended that the payments on this It was also contended that the payments on this account were made through banking channel. I have myself verified the assessment account were made through banking channel. I have myself verified the assessment account were made through banking channel. I have myself verified the assessment records. I find that the observations made in the assessment order that no supporting records. I find that the observations made in the assessment order that no supporting records. I find that the observations made in the assessment order that no supporting documents were not furnished by the appe documents were not furnished by the appellant is not correct. However, I find that llant is not correct. However, I find that there were certain players whose PAN was not provided. It is also observed that the there were certain players whose PAN was not provided. It is also observed that the there were certain players whose PAN was not provided. It is also observed that the payments to certain professional players are humongous whereas it is not the same payments to certain professional players are humongous whereas it is not the same payments to certain professional players are humongous whereas it is not the same in respect of other players. There is huge disp in respect of other players. There is huge disparity in such payments. Thus, I am of the arity in such payments. Thus, I am of the considered opinion that the finding reached by the AO in resorting to the estimated considered opinion that the finding reached by the AO in resorting to the estimated considered opinion that the finding reached by the AO in resorting to the estimated disallowance by applying an ad hoc rate of @5% does not disallowance by applying an ad hoc rate of @5% does not commensurate with the commensurate with the facts and figures, which in my considered opinion, s facts and figures, which in my considered opinion, should be restricted to a lump sum hould be restricted to a lump sum amount of Rs.10,00,000/ amount of Rs.10,00,000/- which appears to be justified considering the which appears to be justified considering the circumstances of the case. Accordingly, ground no. 4 raised in this respect is partly circumstances of the case. Accordingly, ground no. 4 raised in this respect is partly circumstances of the case. Accordingly, ground no. 4 raised in this respect is partly allowed.”

The ld. Counsel for the assessee, Shri Somnath Gh The ld. Counsel for the assessee, Shri Somnath Ghosh, vehemently contended osh, vehemently contended that there is no justification in disallowing an amount of Rs.10,00,000/ that there is no justification in disallowing an amount of Rs.10,00,000/ that there is no justification in disallowing an amount of Rs.10,00,000/- on lumpsum basis for the reason that he pointed out that the books of account of the assessee are basis for the reason that he pointed out that the books of account of the assessee are basis for the reason that he pointed out that the books of account of the assessee are audited u/s 44AB of the Act and that these were not doubte audited u/s 44AB of the Act and that these were not doubted nor were disputed by the d nor were disputed by the revenue authorities. He submitted that all the expenditure were duly supported by revenue authorities. He submitted that all the expenditure were duly supported by revenue authorities. He submitted that all the expenditure were duly supported by vouchers and all details and supporting documents were furnished before the Assessing vouchers and all details and supporting documents were furnished before the Assessing vouchers and all details and supporting documents were furnished before the Assessing Officer as well as the ld. CIT(A). He pointed out that the ld Officer as well as the ld. CIT(A). He pointed out that the ld. CIT(A) has given a finding of . CIT(A) has given a finding of fact that the Assessing Officer was not correct in stating that supporting documents fact that the Assessing Officer was not correct in stating that supporting documents fact that the Assessing Officer was not correct in stating that supporting documents were not furnished and that he failed to consider the details in question. He pointed out were not furnished and that he failed to consider the details in question. He pointed out were not furnished and that he failed to consider the details in question. He pointed out that the only reason for the ld. CIT(A) to disall that the only reason for the ld. CIT(A) to disallow, on a lumpsum basis on a lumpsum basis, Rs.10,00,000/- was that PAN Nos. of certain was that PAN Nos. of certain players were not provided and professional payments to were not provided and professional payments to certain players was higher than others. He relied on a number of case law for the was higher than others. He relied on a number of case law for the was higher than others. He relied on a number of case law for the proposition that such disallowance is bad in law. W proposition that such disallowance is bad in law. We would discuss these case e would discuss these case-law if and when necessary.

The ld. D/R, Shri Dhrubajyoti Ray, relied on the order of the ld. CIT(A) and The ld. D/R, Shri Dhrubajyoti Ray, relied on the order of the ld. CIT(A) and The ld. D/R, Shri Dhrubajyoti Ray, relied on the order of the ld. CIT(A) and submitted that the assessee has not furnished PAN No. of certain players submitted that the assessee has not furnished PAN No. of certain players submitted that the assessee has not furnished PAN No. of certain players and hence the payments are not verifiable. He sub payments are not verifiable. He submitted that the payments to certain professional mitted that the payments to certain professional players are humungous and hence the ld. CIT(A) has reasonably, on an adhoc basis players are humungous and hence the ld. CIT(A) has reasonably, on an adhoc basis players are humungous and hence the ld. CIT(A) has reasonably, on an adhoc basis disallowed a lumpsum amount of Rs.10,00,000/ disallowed a lumpsum amount of Rs.10,00,000/-. He prayed that the same be upheld. . He prayed that the same be upheld. 5. The ld. CIT(A) has acknowledged that the assessee has filed all details of the A) has acknowledged that the assessee has filed all details of the A) has acknowledged that the assessee has filed all details of the payments made to the professional football players after deducting TDS. Copy of these payments made to the professional football players after deducting TDS. Copy of these payments made to the professional football players after deducting TDS. Copy of these details are filed before us in the form of a paper book. From the details it can be seen details are filed before us in the form of a paper book. From the details it can be seen details are filed before us in the form of a paper book. From the details it can be seen

Assessment Year: 2012-13 United Mohan Bagan Football Team Pvt. Ltd United Mohan Bagan Football Team Pvt. Ltd. that PAN Nos. were provided in the case of every player except “Goutam Th were provided in the case of every player except “Goutam Th were provided in the case of every player except “Goutam Thakur” and “Daniell Carl Zeleny”, though TDS has been hough TDS has been made from payments made to both these from payments made to both these players and remitted to the Government and remitted to the Government. All payments are through banking channels All payments are through banking channels and are evidenced by vouchers. chers. It is common knowledge that payments to professional It is common knowledge that payments to professional footballer players would differ from person to person depending upon their talent and footballer players would differ from person to person depending upon their talent and footballer players would differ from person to person depending upon their talent and capacity. The assessee in this case, has discharged the burden of proof that lay on it. capacity. The assessee in this case, has discharged the burden of proof that lay on it. capacity. The assessee in this case, has discharged the burden of proof that lay on it. In our view, the disallowance is without basis. lowance is without basis. Under the facts and circumstances, in our Under the facts and circumstances, in our view, the adhoc disallowance of lumpsum amount of Rs.10,00,000/ view, the adhoc disallowance of lumpsum amount of Rs.10,00,000/ view, the adhoc disallowance of lumpsum amount of Rs.10,00,000/- is uncalled for. Hence, we delete the disallowance. Hence, we delete the disallowance.

In the result, appeal of the assessee is allowed. appeal of the assessee is allowed.