Loading judgment…
Facts
The assessee appealed against the CIT(A)'s order for AY 2013-14, challenging additions made by the AO and confirmed by the CIT(A). The disputed additions related to donations/subscriptions, repairs and maintenance expenses, preliminary expenses, and interest income.
Held
The Tribunal allowed the appeal in part. It held that expenses for festivals/pujo for business relations are allowable under Section 37(1). It also found that TDS provisions under Section 194C and 40a(ia) were not applicable to repairs and maintenance expenses as individual bill amounts were below the threshold. However, the addition for interest income was upheld as it was not offered to tax.
Key Issues
The primary issues were the allowability of expenses claimed as business expenditure, the applicability of TDS provisions for repairs and maintenance, and the taxability of interest income.
Sections Cited
37(1), 80G, 194C, 40a(ia)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRIPRADIP KUMAR CHOUBEY, JM
This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Gurugram, (hereinafter referred to as the “Ld. CIT(A)”] dated 16.12.2024 for the AY 2013-14.
The issue raised in ground no.1 is in respect all the issues as raised individually in ground no.2 to 5, therefore, the issues are being decided individually in ground nos.2 to 5.
3.1. The facts in brief are that during the course of assessment proceedings, the ld. AO disallowed the expenses on the ground that these payments made for the purpose of Durga Puja and building of temple etc. The ld. AO disallowed these payments on the ground that the assessee has failed to show that recipients were registered u/s 80G of the Income-tax Act, 1961 (the Act).
3.2. In the appellate proceedings, the ld. CIT (A) confirmed the order of the ld. AO on the ground that the assessee has failed to prove that whether the recipients are registered under section 80G of the Act and the assessee would be entitled for any deduction u/s 80G on payment of these amounts.
3.3. After hearing the rival contentions and perusing the materials available on record, we find that in Kolkata these types of expenses are very common and have to be incurred by the business entities if they are to carry on business in the local territory. We are of the considered view that payments for festivals/sports/pujo, if made to maintain good relations for business, can be allowed as a business expenditure under Section 37(1). Consequently, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the addition. The ground no. 2 is allowed.
The issue raised in ground no.3 is against the order of ld. CIT (A) confirming the addition of ₹91,000/- as made by the ld. AO u/s 4.1. The facts in brief are that the assessee has incurred repairs and maintenance expenses during the year on account of repairs to machinery. The assessee has furnished before the ld. AO the bills of M/s Tech India but the ld. AO disallowed the same on the ground that the assessee has not deducted any TDS u/s 194C of the Income- tax Act, 1961. The ld. AO noted that if this is a consolidated bills according to the ld. AO the assessee has failed to furnish any details qua the said amount which were incurred on various dates as per the details below:
Date Amount 13.08.2012 18,500 15.08.2012 17,500 18.08.2012 13,500 26.08.2012 14,000 02.09.2012 17,500 17.09.2012 10,000 4.2. The ld. AO finally disallowed the said amount for non-deduction of TDS u/s 194C of the Income-tax Act, 1961 (the Act), which was confirmed by the ld. CIT (A).
4.3. After hearing the rival contentions and perusing the materials available on record, we find that the individual details of these bills are below the limit which are liable to tax at source. Moreover, the provisions of Section 40a(ia) of the Act are not applicable as these expenses were incurred on different dates as stated hereinabove. Therefore, we set aside the order of the ld. CIT (A) and direct the ld. AO to delete the addition.The ground no. 3 is allowed.
5.1. In the appellate proceedings, the ld. CIT (A) also confirmed the order of the ld. AO on the ground that the assessee has not filed any details before the ld. AO.
5.2. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has incurred these expenses in the earlier assessment year which was being claimed at 1/5th of the said expenses every year. Accordingly, the assessee has claimed at 1/5th of the said expenses. Since then, we note that the assessee has claiming similar expenses in the earlier assessment years also and which were duly allowed. Therefore, considering the facts on record and the plea of the assessee, we set aside the order of the ld. CIT (A) and direct the ld. AO to delete the addition. The ground no. 4 is allowed.
The last ground raised in ground no. 5 by the assessee is against the confirmation of addition of ₹63,952/- by the ld. CIT (A) as made by the ld. AO in respect of interest income.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 17.02.2026.
Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 17.02.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: