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Facts
The assessee's appeal for AY 2017-2018 arises from an order passed under section 154 of the Income Tax Act, 1961, by the NFAC Delhi. The grievance pertains to the disallowance of club expenditure amounting to Rs.34,52,143/- claimed as wholly and exclusively for business purposes.
Held
The Tribunal found that the disallowance of the club expenditure made by way of CPC's section 143(1)(a) processing was incorrect. Section 143(1)(a)(i) to (iv) prescribes disallowance only for arithmetic errors or incorrect claims based on available information or audit reports.
Key Issues
Whether the disallowance of club expenditure under section 143(1)(a) by the CPC is valid when the claim was considered to be for business purposes?
Sections Cited
154, 143(1)(a)
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Income Tax Appellate Tribunal, MUMBAI “D” BENCH : MUMBAI
Before: SHRI SATBEER SINGH GODARA & SHRI GIRISH AGRAWAL
ORDER PER SATBEER SINGH GODARA, J.M. This assessee’s appeal, for assessment year 2017-2018, arises against the National Faceless Appeal Centre [in short the “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/250/2023-24/ 1057313029(1) dated 25.10.2023, in proceedings u/s.154 of the Income Tax Act, 1961 (in short “the Act”).
2 ITA.No.4330/MUM./2023 Heard both the parties. Case file perused.
The assessee pleads the following substantive grounds in the instant appeal :
“The Learned Commissioner of Income Tax (Appeals)-National Faceless Appellate Centre [CITA] has erred in law and in facts and circumstances of the case in upholding the intimation Order dated 31.10.2019 passed u/s.154 r.w.s.143(1) of the Act bearing DIN-CPC/1718/U3/1946649051 in determining the income at Rs.1,71,59,230/- as against the returned income of Rs.1,37,07,110/-.
2. The Ld. CITA has erred in law and in facts in passing the order without observing the principles of natural justice. 3. The Ld. CITA has erred in upholding that the Ld. Assessing Officer - Central Processing Centre [CPC] has jurisdiction to make adjustments u/s.143(1)(a) of the Act in respect of debatable issue. 4. The Ld. CITA has erred in law and in facts in confirming the disallowance of Rs.34,52,143/- being Club Fees.
3 ITA.No.4330/MUM./2023 5. The Appellant craves leave to add to, amend, alter and/or delete any of the forgoing grounds of appeal.”
3. Coming to the assessee’s sole substantive grievance challenging correctness of it’s club expenditure disallowance amounting to Rs.34,52,143/- claimed as having incurred ‘wholly and exclusively for the purpose of business’; it emerges at the outset that the same came to be made by way of CPC’s sec.143(1)(a) “processing” at Bengaluru.
3. Mrs. Nair has vehemently supported the impugned disallowance that such a claim is not allowable as regular business expenditure in light of the various case laws.
4. We note in this factual backdrop tht sec.143(1)(a)(i) to (iv) prescribes for such a disallowance only as based on either any arithmetic error in the return or an incorrect claim borne from any information therein under sub-clause (a) or that indicated in the audit report but not taken into account in computing such total income; as the case may be. Learned DR could not pinpoint any supportive material in the case file suggesting the assessee’s
4 ITA.No.4330/MUM./2023 impugned claim as falling in either sec.143(1)(a) or (a)(i)(ii) or (iv) of the Act. We are of the considered view in this factual backdrop that both the learned lower authorities have erred in law andon facts in disallowing the assessee’s impugned claim in sec.143(1)(a) “processing”. The same stands deleted. Ordered accordingly.
This assessee’s appeal is allowed in above terms.
Order pronounced in the open Court on 18.07.2024