DAKSHIN DAMODAR COLD STORAGE PRIVATE LIMITED,BANKURA MORE vs. ACIT CIR-1 BURDWAN, COURT COMPOUND

PDF · subscribers
ITA 436/KOL/2025Status: DisposedITAT Kolkata17 February 2026AY 2013-145 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal decided each issue as follows: Issue 1 (Donations and Subscriptions): The Tribunal held that expenses incurred for festivals, sports, or pujas, if made to maintain good relations for business purposes, can be allowed as business expenditure under Section 37(1). The Tribunal found these types of expenses to be common in Kolkata for business entities. Therefore, the order of the CIT(A) was set aside, and the AO was directed to delete the addition. This issue was allowed. Issue 2 (Repairs and Maintenance Expenses): The Tribunal found that the individual bill amounts for repairs and maintenance were below the threshold requiring TDS deduction. Furthermore, as these expenses were incurred on different dates, the provisions of Section 40(a)(ia) were not applicable. Consequently, the order of the CIT(A) was set aside, and the AO was directed to delete the addition. This issue was allowed. Issue 3 (Preliminary Expenses): The Tribunal noted that the assessee had incurred these expenses in an earlier assessment year and was claiming 1/5th of the said expenses annually, which had been allowed in previous years. Considering the facts and the assessee's plea, the order of the CIT(A) was set aside, and the AO was directed to delete the addition. This issue was allowed. Issue 4 (Interest Income): The Tribunal found that the interest income represented interest accrued on a security deposit which the assessee had not shown in the return of income. Therefore, the Tribunal found no infirmity in the order of the authorities below and dismissed the ground raised by the assessee, upholding the order of the CIT(A). This issue was dismissed. The Tribunal expressly left undecided no issues.

What were the facts?

The assessee, Dakshin Damodar Cold Storage Private Limited, filed an appeal against the order of the Commissioner of Income-tax (Appeals) dated 16.12.2024 for Assessment Year 2013-14. The appeal challenged additions made by the Assessing Officer (AO) and confirmed by the CIT(A). The issues involved additions related to donations and subscriptions, disallowance for non-deduction of TDS on repairs and maintenance, preliminary expenses, and interest income. The AO had disallowed expenses on donations and subscriptions for failing to show recipient registration under Section 80G. The AO disallowed repairs and maintenance expenses for non-deduction of TDS under Section 194C. Preliminary expenses were added due to lack of details. Interest income was added as it was not shown in the return of income.

What were the issues?

1. Whether the disallowance of ₹9,000/- and ₹6,000/- for donations and subscriptions is justified, considering the assessee's claim that these were incurred to maintain business relations, and whether Section 80G is relevant for allowing these as business expenditure? (Question of mixed law and fact, concerning Section 37(1) and Section 80G of the Income-tax Act, 1961). 2. Whether the disallowance of ₹91,000/- for repairs and maintenance expenses under Section 40(a)(ia) is valid due to alleged non-deduction of TDS under Section 194C, considering the individual bill amounts were below the threshold and incurred on different dates? (Question of mixed law and fact, concerning Section 40(a)(ia) and Section 194C of the Income-tax Act, 1961). 3. Whether the addition of ₹7,06,335/- in respect of preliminary expenses is justified when the assessee claimed it as 1/5th of expenses incurred in an earlier year, which were allowed in previous assessments? (Question of mixed law and fact). 4. Whether the addition of ₹63,952/- as interest income is justified when it represents interest accrued on security deposit not shown in the return of income? (Question of fact). Assessee's contentions: For issue 1, the assessee argued that such expenses are common in Kolkata for maintaining business relations and should be allowed under Section 37(1). For issue 2, the assessee contended that individual bill amounts were below the TDS threshold and incurred on different dates, making Section 40(a)(ia) inapplicable. For issue 3, the assessee claimed the preliminary expenses were a continuation of claims from earlier years which were allowed. For issue 4, no specific argument is recorded for the assessee regarding the interest income. Revenue's contentions: The revenue, through the AO and CIT(A), argued that for issue 1, the assessee failed to prove recipient registration under Section 80G. For issue 2, the AO disallowed the expense for non-deduction of TDS under Section 194C. For issue 3, the AO disallowed preliminary expenses due to lack of details. For issue 4, the revenue upheld the addition as the interest income was not declared.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 80G,Section 40(a)(ia),Section 194C

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

For Appellant: Shri Soumitra Choudhury, AR
For Respondent: Shri Santanu Ghosh, DR
Hearing: 22.01.2026Pronounced: 17.02.2026

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.

2.

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.

4.

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.

6.

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.

7.

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

Order pronounced in the open court on 17.02.2026.

More judgments on Section 37(1)

All 6,995 judgments and leading authorities on Section 37(1) →

Recent GST High Court judgments

Search GST case law →