2018 (3) TMI 475 - AT - Income Tax

Disallowance of advertisement and publicity expenses - Held that - The genuineness of the expenditure incurred by the assessee has not been disputed by the Revenue. We find that the intention of the assessee doctor in the instant case is apparently to prevent disease in future by making public awareness. Such a proactive measure taken by the person like assessee should be rather welcomed than to criticize. We hold that the expenditure incurred in the sum of ₹ 202014/- deserves to be allowed as business expenditure of the assessee u/s 37(1). Disallowance of purchase of gift items incurred through credit card - Held that - We find that the purchase of gift items were incurred for handing over to various super specialists who had participated in the seminar organized by the assessee for the purpose of updation of knowledge thereon. This, in our considered opinion, is an expenditure incurred for the purpose of profession of the assessee. We also find that the assessee had given reasonable explanation as to why he had presented gift items to various doctors in lieu of payment of fee. The explanation given is very logical. We hold that the expenditure in the sum of ₹ 90,850/- would have to be allowed as a deduction u/s 37 of the Act Disallowance of Entertainment Expenses - Held that - We find that the entertainment expenses of ₹ 11,096/- incurred by the assessee were only for the purpose of dinner while holding meetings with his seniors in hotels for skill upgradation. This would be squarely allowable as business expenditure. It is not the case of the ld. AO that the same are not supported by any bills or vouchers. Accordingly, the same is allowed as deduction u/s 37. Disallowance of travelling expenses - Held that - We find that the assessee has only made oral submissions to justify his claim and had not produced any evidence in support of his claim of visiting U.K., London for the purpose of medical conference and meeting senior doctors thereon in order to get himself updated and improve his skill. Hence, we hold that the revenue had rightly disallowed the said expenditure in the assessment. Disallowance of meeting and seminar expenses - Held that - It is not in dispute that the assessee is a member of Calcutta Club and Bengal Club. From the details submitted before the ld. AO, it was found that these expenses are incurred towards monthly subscription of club bills and for meager portion towards meeting expenses of doctors on certain occasions. In our considered opinion these expenses are wholly and exclusively meant for the purpose of business and are squarely allowable as deduction u/s 37(1) of the Act. Disallowance of car repair expenses - Held that - We find that the assessee is a doctor by profession and runs a clinic. It is not in dispute that the assessee maintains three cars to support his profession as well as his clinical establishments. The ld. AO had allowed depreciation on these cars in the assessment and hence in our considered opinion, there is no reason to disbelieve the car maintenance expenses. Admittedly, the assessee has not produced bills and vouchers for the aforesaid maintenance expenses. But the usage of these cars for the purpose of business or profession is not in dispute in the instant case. Hence, in our considered opinion, disallowance of ₹ 80,000/- towards the same would meet the ends of justice.

Issues Involved:
1. Disallowance of advertisement and publicity expenses.
2. Disallowance of purchase of gift items incurred through credit card.
3. Disallowance of entertainment expenses.
4. Disallowance of traveling expenses.
5. Disallowance of meeting and seminar expenses.
6. Disallowance of car repair expenses.
7. Charging of interest under sections 234A, 234B, 234C, and 234D.

Detailed Analysis:

1. Disallowance of Advertisement and Publicity Expenses:
The assessee, an Urologist Surgeon, incurred ?202,014 on advertisement and publicity, which was disallowed by the AO under section 37(1) of the Income Tax Act, 1961, citing violation of the Indian Medical Council Regulation Act, 2002. The assessee argued that the expenses were for public awareness about urological diseases and were not intended for personal promotion. The Tribunal found that the expenses were for public welfare and not in violation of statutory law, thus allowable as business expenditure under section 37(1).

2. Disallowance of Purchase of Gift Items Incurred Through Credit Card:
The assessee incurred ?90,850 on gift items for senior doctors and colleagues during seminars, which was disallowed by the AO as personal expenses. The Tribunal accepted the assessee's explanation that the gifts were a professional gesture in lieu of fees for knowledge sharing, allowing the expenditure under section 37(1).

3. Disallowance of Entertainment Expenses:
The assessee's entertainment expenses of ?11,096 for hosting dinners during seminars were disallowed by the AO as personal expenses. The Tribunal found these expenses to be for professional purposes, allowing the deduction under section 37(1).

4. Disallowance of Traveling Expenses:
The assessee claimed ?68,246 for foreign travel to attend a medical conference in London, which was disallowed by the AO due to lack of supporting evidence. The Tribunal upheld the disallowance, noting the absence of documentary proof for the travel expenses.

5. Disallowance of Meeting and Seminar Expenses:
The assessee incurred ?15,478 on club subscriptions and meetings with senior doctors, which were disallowed by the AO as personal expenses. The Tribunal found these expenses to be for professional purposes, allowing the deduction under section 37(1).

6. Disallowance of Car Repair Expenses:
The assessee claimed ?160,000 for car maintenance expenses but failed to provide supporting bills. The AO disallowed the entire amount, which was partly upheld by the Tribunal. The Tribunal allowed ?80,000, considering the professional use of the cars.

7. Charging of Interest under Sections 234A, 234B, 234C, and 234D:
The issue of charging interest under sections 234A, 234B, 234C, and 234D was deemed consequential and did not require specific adjudication.

Conclusion:
The Tribunal allowed the appeal partly, permitting certain professional expenses while upholding some disallowances due to lack of evidence. The order emphasized the importance of substantiating claims with proper documentation for tax deductions.

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