COMMISSIONER OF INCOME TAX vs. MOHAN MEKAIN LTD.

PDF · subscribers
ITA - 1005 / 2009HC Delhi15 October 20094 pages
For Petitioner: PREM LATA BANSAL
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the expenses incurred on puja, hawan, and kirtan were for the welfare of employees and thus allowable as business expenditure. The court found no question of law arising from the ITAT's decision.

What were the facts?

The Revenue appealed against the ITAT's decision to allow expenses incurred by the assessee on puja, hawan, and kirtan as business expenditure. The Assessing Officer had disallowed these expenses, but the Commissioner (Appeals) and the ITAT had consistently allowed them as employee welfare measures.

What were the issues?

Whether expenses incurred on religious ceremonies like puja, hawan, and kirtan qualify as business expenditure for employee welfare. Whether the principle of consistency applies when such expenses were allowed in previous years and subsequently by the Revenue.

Which sections of the Income-tax Act were involved?

Section 37(1)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

IN THE HIGH COURT OF DELHI AT NEW DELHI

![](_page_0_Picture_2.jpeg)

+ <u>ITA Nos. 964, 967, 984, 985, 986, 987, 988, 989, 991, 992</u> 1001, 1002, 1003, 1005, 1006, 1007, 1008, 1009, 1010, 1013, 1014 1015 and 1028 of 2009

Dictated on: 15th October 2009

Commissioner of Income Tax

. . . Appellant

through:

Ms. Prem Lata Bansal with Ms. Anshul Sharma, Advocates

VERSUS

M/s. Mohan Meakin Ltd.

... Respondent

through:

Mr. C.S. Aggarwal, Sr. Adv. with Mr. Prakash Kumar, Advocate

CORAM:-

THE HON'BLE MR. JUSTICE A.K. SIKRI THE HON'BLE MR. JUSTICE SIDDHARTH MRIDUL

- 1. Whether Reporters of Local newspapers may be allowed to see the Judgment? - 2. To be referred to the Reporter or not? - 3. Whether the Judgment should be reported in the Digest?

A.K. SIKRI, J. (ORAL)

1.

Common issue which is raised in all these appeals preferred by the Revenue concerns allowing the assessee the expenses incurred in puja, hawan, kirtan etc. under Section 37(1) of the Income Tax Act, 1961. The assessee is the same in all these appeals and issue relates to different assessment orders. Therefore, these appeals were taken up together for hearing.

company has units located at Solan, Ghaziabad, Lucknow,

Gram and Kasauli. At these places there are sub units also. Expenditure was incurred and debited in the books of accounts under the aforesaid heads. No disallowance has been made till assessment year 1975-76. Thereafter attempts were made to disallow expenses but were deleted by the appellate authorities. From the assessment year 1984-85 till 1989-90, disallowances made were deleted by the Income Tax Appellate Tribunal, which has attained finality.

- From the assessment year 1990-91 till 2001-02, however, the Assessing Officer (AO) started disallowing this expenditure. As per the AO, the expenditure incurred on puja, hawan, kirtan, etc. cannot be said to have been incurred wholly and exclusively for the purposes of business of the assessee and there was nothing on record to prove that puja, hawan, kirtan etc. were performed inside the factory premises. On this basis, relying upon the judgment of the Bombay High Court in Kolapur Sugar Mills v. CIT, 119 ITR 87, the expenditure was disallowed. The Commissioner of Income Tax (A), however, did not accept the aforesaid view of the AO and allowed the expenditure, which view has been upheld by the Income Tax Appellate Tribunal as well. - 4. Ms. Bansal, learned counsel for the Revenue/appellant, strenuously

been allowed from 1984-85 till 1989-90 treating the same as business expenditure, namely, welfare measures for the employees. Not only this, he also pointed out that the Revenue itself had allowed the claim of the aforesaid expenses incurred from the assessment year 2002-03 onwards. Thus, principle of consistency would clearly become applicable in the instant case. The learned counsel for the assessee/respondent had produced copies of the orders passed by the Tribunal in respect of earlier years holding that the expenditure was incurred for the welfare of the employees and, therefore, treating the same as business expenditure it was allowed.

- 5. Another submission of Ms. Bansal was that even if there is no quarrel that the expenditure is to be treated as business expenditure having incurred for the welfare of the employees, it was necessary for the assessee to prove the same, which was not done. - 6. However, after going through the orders of the authorities below, we find that there was no dispute in this regard. We, thus, are of the opinion that no question of law arises and dismiss these appeals accordingly.

(A.K. SIKRI) JUDGE

![](_page_3_Picture_1.jpeg)

% 15.10.2009

Present: Ms. Prem Lata Bansal with Ms. Anshul Sharma,

Adv. for the appellant.

Mr. C.S.Aggarwal, Sr.Adv. with Mr. Prakash Kumar

for the respondent.

+ ITA Nos. 964/2009, 967/2009, 984/2009, 985/2009, 988/2009, 989/2009, 991/2009, 1003/2009, 1014/2009, 1009/2009, 1013/2009 & 1015/2009

Due to typographical error, these cases have been included in the batch of cases which are dismissed today being ITA No. 964/2009. In fact, they are listed for 21st October, 2009.

It is clarified that the aforesaid cases are not covered by the orders passed in ITA No. 964/2009.

A.K. SIKRI, J.

SIDDHARTH MRIDUL, J.

October 15, 2009

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 →