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Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI
Before: SHRI H.S.SIDHU & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the Revenue against the order of the ld CIT(A)- 9, New Delhi dated 08.10.2015 for the Assessment Year 2011-12. 2. The Revenue has raised the following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law the order passed by Ld.CIT(A) is erroneous and the learned CIT(A) has erred in reducing the addition of Rs. 3,49,94,000/- to Rs. 5,93,000/- made by AO u/s 14A.
2. On the facts and in the circumstances of the case and in law the order passed by Ld.CIT(A) is erroneous and the learned CIT(A) has erred in deleting the addition of Rs. 5,60,082/- made by AO on account of Club expenses.
3. On the facts and in the circumstances of the case and in law the order passed by Ld.CIT(A) is erroneous and the learned CIT(A) has erred in deleting the disallowance on account of PF of Rs. 1,56,178/- and ESI of Rs. 2,95,294/- totaling Rs. 4,51,472/-.
4. On the facts and in the circumstances of the case and in law the order passed by Ld.CIT(A) is erroneous and the learned CIT(A) has erred in allowing deduction of Rs. 1,50,000/- u/s 80G of the I.T. Act.”
3. Brief facts of the case is that the assessee is engaged in manufacturing and trading of electric fans, water coolers and fuel injection equipments. Further, it is also marketing other consumer durables. It filed its return of income on 27.09.2011 for Rs. 498171009/-. The assessment u/s 143(3) was made on 28.03.2014 for Rs. 534774601/- making addition/ disallowance of Rs. 36603592/-. The assessee carried the matter before the ld CIT(A), who DCIT Vs. Usha International Ltd, (Assessment Year: 2011-12) allowed the appeal of the assessee partly. Therefore, on the relief given by the ld CIT(A), the revenue is contesting the present appeal. 4. The first ground of appeal is with respect to disallowance u/s 14A of the Income Tax Act made by the ld Assessing Officer of Rs. 34994000/- which was restricted to Rs. 593000/- by the ld CIT(A). During the year assessee has received dividend of Rs. 5.93 lacs which is exempt. The assessee has stated that it has not incurred any expenditure, however, the ld Assessing Officer applied Rule 8D and made a disallowance of Rs. 34996000/-. On appeal before the ld CIT(A), he restricted the same to Rs. 593000/-.
5. The ld DR relied upon the orders of the ld Assessing Officer, whereas, the ld AR relied upon the order of the ld CIT(A) and decision of the Hon'ble Delhi High Court in Joint Investment Pvt. Ltd. Vs. CIT 372 ITR 694.
6. We have carefully considered the rival contentions and also perused the orders the orders of the lower authorities. As the assessee has earned exempt income only Rs. 5.93 lacs disallowance u/s 14A cannot exceed the exempt income as held by Hon'ble Delhi High Court in Joint Investment Pvt. Ltd. (supra). Therefore, respectfully following the decision of the Hon'ble Delhi High Court we confirm the finding of the ld CIT(A) and hence, ground No. 1 of the appeal of Revenue is dismissed.
7. Ground No. 2 of the appeal is with respect to the addition of Rs. 560082/- on account of club expenses deleted by the ld CIT(A). The assessee has claimed these expenses as it is paid to Panchsheel Club for renewal of corporate membership for 10 years. The ld AO disallowed the same. The ld CIT(A) allowed the claim of the assessee following the decision of the Hon'ble Supreme Court in case of United Glass Manufacturing Co. Ltd in Civil Appeal No. 6447/2012.
8. The ld DR relied upon the order of the ld Assessing Officer, whereas the ld AR relied on the decision cited above as well as submission before the ld CIT(A).
9. We have carefully considered the rival contentions. The above disallowance has been deleted by the ld CIT(A) relying upon the decision of the Hon'ble Supreme Court wherein, it is held that club membership fees incurred by the assessee is a business expenditure. We find no infirmity in the order of the ld CIT(A), hence, ground No. 2 of the appeal is dismissed.
10. Ground No. 3 of the appeal is with respect to disallowance deleted by the ld CIT(A) on account of provident fund of Rs. 156178/- and ESI of Rs. 295294/- which were paid before the due date of filing of return of income but disallowed by the ld Assessing Officer for the reason that it is employee’s contribution and deposited late. The ld CIT(A) deleted the