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Facts
The assessee, Samsung C & T Corporation India Pvt. Ltd., appealed against an order for AY 2019-20 that made an adjustment of Rs. 7,91,398/- under section 143(1) for club membership/entrance fees and charged interest under sections 234B and 234C. The assessee contended that the disallowance was contrary to law, a debatable issue, not noted in the tax audit report, and that they had succeeded on this issue in the prior year.
Held
The Tribunal noted that the Revenue did not rebut the assessee's argument regarding success on the same issue in the preceding assessment year. Consequently, the Tribunal deleted the entire disallowance of Rs. 7,91,398/- related to club membership/entrance fees, implicitly setting aside the associated interest charges.
Key Issues
Whether the disallowance of club membership/entrance fee under section 143(1) and related interest charges under sections 234B and 234C were justified, especially when not reported in the tax audit and previously allowed.
Sections Cited
143(1), 143(1)(a)(iv), 234B, 234C
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Income Tax Appellate Tribunal, DELHI (SMC
Date of hearing 18.12.2024 Date of pronouncement 18.12.2024 ORDER This assessee’s appeal for assessment year 2019-20, arises against the Addl./JCIT(A)-3, Chennai’s DIN and order no. ITBA/APL/S/250/2023-24/1058644491(1) dated 07.05.2024 involving proceedings under section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. The assessee raises following the substantive ground in the instant appeal :
That the order of Ld. CIT (A) is against the law, facts, principles of natural justice and all other principles and rules of law and therefore liable to be set aside.
That Ld CIT(A) is not justified in confirming the order of Ld DCIT, CPC Bangalore by making adjustment U/s 143(1) of Rs. 7,91,398 out of Rs.9,71,926/- on account of Club Membership/Entrance Fee paid for services availed for business purpose only which is not fall under any of the clause of Sec 143(1) and hence contrary to provisions of law. As such adjustment made U/s 143(1) needs to be undone and the adjustment to the extent of Rs. 7,91,398/-confirmed by Ld CIT(A) needs to be deleted.
That Ld CIT(A) is not justified in confirming the adjustment made by Ld. CPC, Bangalore U/s 143(1) by disallowing and taxing to the tune of Rs. 7,91,398 on account of Club Membership/Entrance Fee paid for services availed for business purpose only though admitted the same as a debatable issue and allowed part amount of same which is based on surmises and conjectures and contrary to provisions of law. As such, the adjustment so made needs to be deleted. 4. That Ld. CPC, Bangalore is not justified in charging interest U/s 234B and 234C of the Inco me Tax Act which is contrary to facts borne on record and provisions of law. As such interest levied by Ld. CPC, Bangalore U/s 234B and 234C needs to be deleted.