PATRA ENTERPRISERS,CUTTACK vs. ACIT, CIRCLE-1(2), CUTTACK

This is an appeal filed by the assessee against the order of CIT(A)-

Cuttack, dated 20.6.2016, for the assessment year 2007-08.

requires no separate adjudication by me.

the CIT(A) erred in disallowing Puja expenses incurred by the assessee

firm.

2 ITA No. 350/CT K/ 2016 Asse ssment Year :20 07- 08 4. I have heard the rival submissions and perused the orders of lower

authorities and materials available on record. The undisputed facts of the

case are that the Assessing Officer found that the assessee had debited a

sum of Rs.1,32,101/- towards donation and puja expenses. In the opinion

of the Assessing Officer, the said expenses were not incidental to the

business of the assessee. Hence, he disallowed deduction for the same.

by following the decision of Chhatisgarh High Court in the case of Hira Ferro

Alloys Ltd vs. DCIT, (2009) 227 CTR 508 (Chh), wherein, it was held that

puja expenses incurred by the assessee are not incidental to the business

of the assessee and should not be allowed u/s.37 of the act.

that puja expenses were incurred by the assessee for the welfare of the

staff of the assessee and recreation of staff and hence, was incidental to

the business of the assessee and, therefore, deduction for the same should

be allowed.

orders of lower authorities.

I find that Hon’ble P&H High Court in the case of ATLAS CYCLE 8.

INDUSTRIES LTD. vs. COMMISSIONER OF INCOME TAX, 134 ITR 458

(P&H) has held that “ no curbs can be placed on the discretion of the

assessee to provide the type of recreation, which, according to it, would

3 ITA No. 350/CT K/ 2016 Asse ssment Year :20 07- 08 best advance the interests of the business. If the recreation provided, even

if it is in the nature of religious activities, has direct nexus with the welfare

of a class of the workers engaged by the assessee, it is wholly immaterial

if the recreation provided is directly or indirectly connected with the

religious tenets of a section of the society”. Further, the Hon’ble Allahabad

High Court in the case of BRIJRAMAN DAS & SONS vs. COMMISSIONER

OF INCOME TAX, 142 ITR 509 (All) has held that Ganesh Puja expenses,

which are incurred by Hindu traders in a customary way at the time of

Mahurat or opening of their account books on the auspicious occasion of

Diwali are to be treated as expenditure laid out wholly and exclusively for

the purposes of the assessee's business and, therefore, allowable u/s.37(1)

of the Act, 1961. Still further, the CBDT Circular No.13/A/20/68-IT(A-II)

dated 3.10.1968 has stated that as the expenses incurred on the occasion

of Diwali and mahurat are in the nature of business expenditure, it has

been decided not to lay down any monetary limits for the purpose of their

allowance in the income-tax assessments subject to the Income-tax Officer

being satisfied that the expenses are admissible as a deduction under the

law and are not expenses of a personal, social or religious nature.

issue and none of which is Hon’ble Jurisdictional High court, then the

decision in favour of the assessee should be followed in view of the decision

of Hon’ble Supreme Court in the case of CIT vs. Vegetable Products Ltd.,

88 ITR 192 (SC). In view of above, respectfully following the decisions of

4 ITA No. 350/CT K/ 2016 Asse ssment Year :20 07- 08 Hon’ble Punjab & Haryana High Court and Allahabad High Court, I set aside

the orders of lower authorities and delete the addition of Rs.1,32,101/-

made on puja expenses and allow this ground of appeal of the assessee

at Rs.2,500/-.

assessee during the course of hearing. Hence, this ground is dismissed as

not pressed.

Order pronounced in the open court on 08/03/2017 in the presence of parties. Sd/- (N.S Saini) ACCOUNTANT MEMBER

Cuttack; Dated 08/03/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : M/s. Patra Enterprises, , Palash Kumar Patra, Malgodown, Cuttack 2. The respondent :ACIT, Circle 1(2), Cuttack 3. The CIT(A) Cuttack 4. Pr.CIT, Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack