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Income Tax Appellate Tribunal, CUTTACK
Before: SHRI N.S SAINI
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.
Ground Nos.1,4 & 5 of the appeal are general in nature and hence,
requires no separate adjudication by me.
In Ground No.3 of the appeal, the grievance of the assessee is that
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.
On appeal, the CIT(A) confirmed the action of the Assessing Officer
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.
Before me, ld Authorised Representative of the assessee submitted
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.
On the other hand, ld Departmental Representative relied on the
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.
Where there are contrary decisions of Hon’ble High Courts on an
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
Ground No.3 of the appeal relates to disallowance of professional tax
at Rs.2,500/-.
This ground was not pressed by the authorized representative of the
assessee during the course of hearing. Hence, this ground is dismissed as
not pressed.
In the result, the appeal filed by the assessee is partly allowed.
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