ROSSELL INDIA LIMITED (EARLIER KNOWN AS ROSSELL TEA LIMITED),KOLKATA vs. DCIT, CIRCLE - 4, KOLKATA, KOLKATA

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ITA 212/KOL/2016Status: DisposedITAT Kolkata03 November 2017AY 2012-20133 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that club membership fees and expenses incurred for employees are considered pure business expenses under Section 37(1) of the Income-tax Act. The Tribunal followed a Supreme Court decision on this matter.

What were the facts?

The Assessing Officer disallowed club expenses claimed by the assessee, treating them as non-business expenditure. The CIT(A) confirmed this disallowance. The assessee appealed this decision.

What were the issues?

Whether club expenses incurred by the assessee are allowable as business expenditure under Section 37(1) of the Income-tax Act.

Which sections of the Income-tax Act were involved?

Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH: KOLKATA

Hearing: 12.10.2017Pronounced: 03.11.2017

ORDER Per Shri A.T.Varkey, JM All these appeals filed by the assessee are against the orders of Ld. CIT(A)-2, Kolkata dated 26.11.2015 for AY 2010-11 and 2011-12; and against the order dated 01.01.2016 for AY 2012-13. 2. At the time of hearing before us, the Ld. Counsel for the assessee pressed only ground no. 1 of appeal for AY 2010-11. Hence, we dismiss all other grounds of appeal s of the assessee except ground no. 1 of appeal for AY 2010-11. Ground no. 1 of appeal of assessee for AY 2010-11 reads as under:

1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the disallowance made by the Assessing Officer in respect of club expenses amounting to Rs.2,77,052/- as expenditure incurred for non-business purposes.”

3. Briefly stated facts are that ground No. 1 relates to disallowance of club expenses. The AO based on disclosure made in Tax Audit Report disallowed expenditure amounting to Rs.50,738/-, Rs.1,54,299/- and Rs. 72,015 as incurred towards entrance fees, subscription and club facilities respectively u/s. 37 of the Income-tax Act, 1961 (hereinafter referred to 2 to 212/Kol/2016 Rossell India Ltd.., AYs 2010-11 to 2012-13 as the “Act”) as expenditure incurred for non-business purposes. On appeal, Ld. CIT(A) confirmed the action of AO. Aggrieved, assessee is in appeal before us.

4.

We have heard rival submissions and gone through the facts and circumstances of the case. At the time of hearing, Ld. Counsel for the assessee submitted before us that the issue is squarely covered in favour of the assessee by the decision of Hon’ble Supreme Court in the case of CIT Vs. United Glass Mfg. Co. Ltd. (2012-TIOL-1-2-SC-IT). On the other hand, the Ld. DR vehemently relied on the orders of the authorities below. We find that the issue is squarely covered by the decision of Hon’ble Supreme Court in the case of United Glass Mfg. Co. Ltd.(supra), wherein the Hon’ble Supreme Court has held that club membership fees/expenses for employees incurred by the assessee is a pure business expenses u/s. 37(1) of the Act. And we note that the AO only in this assessment year has disallowed the claim. We note that in the previous assessment years and subsequent assessment years, no disallowance of club expenditure was made by the AO, so the department ought to have followed the rule of consistency. Moreover, when the issue is squarely covered in favour of the assessee by the decision of the Hon’ble Supreme Court (supra) and the Ld. DR was unable to produce any material to distinguish the case law before us, following the aforesaid binding precedent of the Hon’ble Supreme Court, cited supra, we allow this ground of appeal

of the assessee.

5. Coming to appeals preferred for AYs. 2011-12 and 2012-13 the Ld. Counsel did not press the ground of appeal, so these appeals stand dismissed.

6. In the result, appeal of assessee for AY 2010-11is allowed and appeal of assessee for AYs. 2011-12 and 2012-13 stands dismissed. Order is pronounced in the open court on 3rd November, 2017.

Sd/- Sd/- (Waseem Ahmed) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 3rd November, 2017 Jd.(Sr.P.S.)

3 to 212/Kol/2016 Rossell India Ltd.., AYs 2010-11 to 2012-13 Copy of the order forwarded to: 1. Appellant – Rossell India Limited, (earlier known as Rossell Tea Limited), 21/1A/3, Darga Road, Jindal Towers, Block-B, 4th floor, Park Circus, Kolkata-700 017 Respondent – DCIT, circle-4, Kolkata. 2 3. The CIT(A) , Kolkata.

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