2015 (6) TMI 486 - AT - Income Tax

Disallowance of club expenditure - subscription / membership fees - Held that - Perusing the order of the Tribunal in one of the assessment years 2005 06 of assessee s own case wherein the issue is covered in favour of the assessee by the decision of Otis Elevators Co. Ltd. (1991 (4) TMI 53 - BOMBAY High Court) which has been followed by the Tribunal in assessee s own case for the earlier assessment years. - Decided in favour of the assessee. Disallowance of debts written off as irrecoverable in the accounts - Held that - There is a need for examining the statement of the assessee s write off on the Profit 65, 93, 498 the assessee successfully reconciled to the extent of 52, 93, 803 that constitute 80% of the entire transaction. Regarding the balance of 12, 99, 690 the Assessing Officer did not provide the necessary details to enable the assessee to reconcile the same. It is a settled issue that merely non reconciliation of the AIR data and does not lead to sustainable addition in the assessment. In our opinion there is a need for remanding this issue to the file of the Assessing Officer. Consequently we set aside the impugned order passed by the learned CIT(A) on this issue and restore the issue back to his file with a direction to furnish requisite specific information to the assessee calling for reconciliation. Normally the AIR data is generic as well as general in nature. The Assessing Officer is required to first examine the specific of the transaction that require reconciliation - Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
1. Adjustment for proportionate element of CENVAT under section 145A
2. Disallowance of club expenditure
3. Disallowance of bad and doubtful debt written off
4. Disallowance of subscription/membership fees paid to clubs
5. Disallowance of debts written off as irrecoverable
6. Alleged unreconciled transactions

Issue 1: Adjustment for proportionate element of CENVAT under section 145A
The appellant appealed against the addition to total income due to the adjustment for the proportionate element of CENVAT under section 145A. The appellant decided not to press this ground, and it was dismissed accordingly as "not pressed."

Issue 2: Disallowance of club expenditure
The appellant contested the disallowance of club expenditure, citing a previous Tribunal decision in their favor. The Tribunal found that the issue was settled in favor of the appellant based on previous judgments and allowed the ground raised by the appellant.

Issue 3: Disallowance of bad and doubtful debt written off
The appellant challenged the disallowance of bad and doubtful debt written off, citing a Supreme Court judgment and consistent accounting practices. The Tribunal remanded the issue to the Assessing Officer for verification based on a subsequent Tribunal decision and allowed the ground raised by the appellant for statistical purposes.

Issue 4: Disallowance of subscription/membership fees paid to clubs
The appellant disputed the disallowance of subscription/membership fees paid to clubs. The Tribunal noted that this issue was common to a previous assessment year where the ground was allowed in favor of the appellant. Consequently, the Tribunal set aside the impugned order and allowed the ground raised by the appellant.

Issue 5: Disallowance of debts written off as irrecoverable
The appellant contested the disallowance of debts written off as irrecoverable. The Tribunal found this issue common to a previous assessment year and remanded it to the Assessing Officer for denovo adjudication, allowing the ground raised by the appellant for statistical purposes.

Issue 6: Alleged unreconciled transactions
The appellant challenged the disallowance on account of alleged unreconciled transactions. The Tribunal directed the issue to be remanded to the Assessing Officer for providing specific information to enable the reconciliation. The ground was allowed for statistical purposes.

In conclusion, the Tribunal partially allowed the appellant's appeals for the assessment years 2006-07 and 2007-08 on various grounds, remanding some issues for further verification and denovo adjudication while allowing others based on settled legal precedents and consistent accounting practices.