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2018 (5) TMI 249 - AT - Income TaxAddition made on account of disallowance of club membership fee - Held that - The issue now stands settled by the decision of the Hon ble Supreme Court in United Glass Manufacturing Co. Ltd. (2012 (9) TMI 914 - SUPREME COURT), wherein held that such expenditure is allowable under section 37(1) of the Act. Accrual of income - Addition made on account of professional income - assessee accounted for such income and offered it to tax in the subsequent assessment year - Held that - On a perusal of the orders passed by the Co ordinate Bench in assessee s own case for assessment years 2009 10, 2010 11 and 2011 12, as referred to above, it is seen that identical issue has been decided in favour of the assessee considering the fact that the assessee has accounted for the income in the assessment year, wherein, the bills were raised and income was received. Moreover, as held by the Hon ble Supreme Court in case of CIT v/s Excel Industries Ltd. (2013 (10) TMI 324 - SUPREME COURT), when the tax rate applicable in both the years are same there is no loss to the Revenue if the income is assessed in the subsequent assessment year. Addition account of un reconciled AIR / ITS data - Held that - The minimum the Assessing Officer could have done is to issue notices under section 133(6) or 131 of the Act to the concerned parties whose identities were available before the Assessing Officer, to ascertain the correct fact. When the assessee has asserted before the Assessing Officer that it has not received any such income, the Assessing Officer is duty bound to make proper enquiry before concluding that the disputed amount was earned by the assessee during the relevant assessment year. Instead of doing that the Assessing Officer has made the addition simply on the basis of AIR information, which, in our view is absolutely incorrect. Addition on account of un reconciled AIR data - Held hat - As mentioned specific instances why the assessee could not reconcile certain entries in the AIR information, reason being, wrong mention of assessee s PAN. Thus, the aforesaid facts clearly reveal that the figure shown in the AIR information in reality do not represent assessee s income. Only on the basis of AIR information no addition can be made. In the case before us this exactly is the factual position. Addition deleted.
Issues Involved:
1. Deletion of addition made on account of disallowance of club membership fee. 2. Deletion of addition made on account of professional income. 3. Deletion of addition made on account of un-reconciled AIR/ITS data. Issue-wise Detailed Analysis: 1. Deletion of Addition Made on Account of Disallowance of Club Membership Fee: The Revenue challenged the deletion of the addition made on account of the disallowance of club membership fees amounting to ?15,60,876 for the assessment year 2008-09. The Assessing Officer (AO) disallowed this amount, treating it as capital expenditure providing enduring benefits. However, the Commissioner (Appeals) deleted the disallowance, relying on the Supreme Court decision in CIT v/s United Glass Manufacturing Co. Ltd., which held that such expenditure is allowable under section 37(1) of the Income Tax Act. The Tribunal upheld the Commissioner (Appeals)’s decision, dismissing the Revenue’s ground. 2. Deletion of Addition Made on Account of Professional Income:The Revenue contested the deletion of an addition of ?1,48,39,217 made by the AO, who argued that the professional income received in April 2008 should be considered as income for the financial year 2007-08. The assessee contended that the bills were raised and income was received in April 2008, thus correctly offered to tax in the subsequent assessment year 2009-10. The Commissioner (Appeals) deleted the addition, noting that similar additions in subsequent years were also deleted, and the Tribunal upheld this decision, referencing the Supreme Court’s stance in CIT v/s Excel Industries Ltd. that there is no revenue loss if the tax rate is the same in both years. The Tribunal dismissed the Revenue’s ground. 3. Deletion of Addition Made on Account of Un-reconciled AIR/ITS Data:For the assessment year 2010-11, the Revenue challenged the deletion of an addition of ?54,65,656 made by the AO due to un-reconciled AIR/ITS data. The assessee failed to reconcile this amount with its books, despite efforts to obtain confirmations from concerned parties. The Commissioner (Appeals) deleted the addition, noting that the AO did not conduct any independent enquiry to verify the disputed amount. The Tribunal upheld this decision, dismissing the Revenue’s ground. In another appeal for the same assessment year, the Revenue contested the deletion of an addition of ?22,50,000 on account of club membership fees of the director. This ground was identical to a previously decided ground, and the Tribunal upheld the Commissioner (Appeals)’s decision, dismissing the Revenue’s ground. For the assessment year 2010-11, the Revenue raised an issue regarding the deletion of an addition of ?38,94,599 based on un-reconciled AIR/ITS data. The AO added this amount, rejecting the assessee’s claim that the bills were raised by its sister concern. The Commissioner (Appeals) deleted the addition, and the Tribunal upheld this decision, noting that the AO made the addition without proper enquiry. For the assessment year 2011-12, the Revenue challenged the deletion of an addition of ?1,92,37,081 based on un-reconciled AIR data. The assessee could not reconcile this amount despite efforts to obtain confirmations from concerned parties. The Commissioner (Appeals) deleted the addition, observing that the AO made the addition solely based on AIR information without independent enquiry. The Tribunal upheld this decision, dismissing the Revenue’s ground. Conclusion:All appeals by the Revenue were dismissed, with the Tribunal upholding the decisions of the Commissioner (Appeals) on all contested grounds.
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