2018 (11) TMI 547 - AT - Income Tax

Disallowance under the head incentive paid to the players - eligible reasons for disallowance - Held that - There is no reason or justification for the disallowance made by the learned assessing officer. He further noted that assessee has produced before the AO books of accounts, bills, and vouchers during proceedings. The above findings of the learned commissioner appeals were not disputed by the revenue. We also do not find any infirmity in the order of the learned commissioner appeals in deleting the disallowance. AO has not given any reasons for disallowance. It was also not pointed out before us by the revenue that what further documents were required to be produced by assessee before assessing officer to justify its claim for the allowance of this expenditure. - Decided against revenue Addition made of hospitality services - allowable busniss expenditure - Held that - It is not the case of the learned assessing officer that the above expenditure is not incurred wholly and exclusively or the purposes of the business. The learned AO has merely disallowed the above expenditure holding that it is excessive. To prove anything excessive the learned assessing officer should have compared the expenditure with independent evidence of third parties, which has not been done. In the result, we do not find any infirmity in the order of the learned commissioner appeals in deleting the above disallowance, which is purely made, based on conjectures and surmises and on ad hoc basis. - Decided against revenue

Summary

Issues involved: Disallowance of incentive paid to players; Disallowance of hospitality services expenses.

Analysis of the judgment:

1. Disallowance of incentive paid to players: The appeal was filed against the order of the Commissioner of Income Tax Appeals for the assessment year 2013-14. The Assessee, engaged in adventure tourism, had claimed incentive expenses for foreign hockey players and IPL support staff as business expenses. The assessing officer disallowed the claim due to lack of proper supporting documents. However, the CIT (A) deleted the disallowance, considering the payments as contractual expenses incurred for business purposes. The ITAT upheld the CIT (A)'s decision, noting that the Assessee had provided sufficient evidence, including agreements, vouchers, and tax deduction certificates, to justify the expenses. The ITAT found no reason for the disallowance and dismissed the appeal.

2. Disallowance of hospitality services expenses: The assessing officer disallowed 25% of the hospitality services expenses paid by the Assessee to a company for IPL, considering it excessive and not wholly for business purposes. The CIT (A) overturned this decision, stating that the disallowance was based on conjectures without a proper basis. The ITAT agreed with the CIT (A), noting that the Assessee had provided detailed evidence of the expenses, including agreements, invoices, and tax deduction certificates. The ITAT found no evidence to support the excessive claim and dismissed the appeal, emphasizing that the expenses were genuine and allowable for business purposes.

In conclusion, the ITAT upheld the decisions of the CIT (A) in both issues, dismissing the appeal of the assessing officer. The judgment emphasized the importance of providing proper documentation and justification for expenses claimed as business expenditures, and rejected disallowances made on ad hoc or conjectural grounds.