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TMI Blog2013 (7) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... are of revenue in nature – court direct the AO to allow the claim of the assesse. Disallowance of 50% being expenses incurred through the credit card by employees for subscription, hotel, lodging and other expenses - Held that:- CIT(A) has allowed the claim of expenditure to the extent of 50%, therefore there is no reason to tamper with the findings of the CIT(A) - Nothing has been brought on record to show the nature of the membership , whether the assessee has taken corporate membership in the various clubs or the individual directors/employees are members of these clubs as no such details are available on record – ground dismissed – appeal decided partly in favour of assessee - I.T.A. Nos.5082, 5083 & 5084/Mum/2011 - - - Dated:- 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntinuous basis for manufacture of products of the company. The royalty on sales paid and debited to profit and loss account for earlier period has been allowed. The AO was of the firm belief that royalty payment is in lieu of technical know-how from foreign company which is in the nature of enduring advantage to the assessee company and accordingly held that the royalty payment is capital expenditure and disallowed the same. 5. The assessee agitated this matter before the Ld. CIT(A) but failed to convince that the payment of royalty on sales is a revenue expenditure. 6. Before us, the Ld. Counsel for the assessee relied upon the decision of the High Court of Allahabad in the case of CIT Vs Kanpur Cigarettes (P) Ltd. 287 ITR 485. It is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO to allow the claim of the assessee. Ground No. 2 3 are allowed. 9. Ground No. 4 is not pressed. Therefore it is dismissed as not pressed. 10. Ground No. 5 relates to disallowance of 50% of Rs. 17,21,814/- being expenses incurred through the credit card by employees for subscription, hotel, lodging and other expenses. 11. During the course of the scrutiny assessment proceedings, after considering Annexure'D' of Form 3CD, the AO sought explanation from the assessee as to why the expenses of Rs. 17,21,814/- claimed in respect of payment made to clubs should not be disallowed. The assessee explained that the said expenses are incurred during travel outside the place of work and separate break up of expenses under the head entrance fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tis Elevator Vs CIT 195 ITR 682 and also ITAT, Delhi Bench in the case of Simbhaoli Sugar Mills Ltd Vs ACIT 17 SOT 90 (Del). 14. The Ld. Departmental Representative supported the findings of the Ld. CIT(A). 15. We have considered the rival submissions and perused the orders of the lower authorities and the material evidence brought on record. We have also considered the decisions relied upon by the assessee. The decision of the Hon'ble Bombay High Court in the case of Otis Elevator (supra) is based on different facts. In that case, the payment has been considered by the AO as perquisite for which the Hon'ble High Court has held that payment made to clubs do not come under the head of perquisites. The decision of the Delhi Bench in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance at Rs. 50,000/-. 17. The assessee carried the matter before the Ld. CIT(A). The Ld. CIT(A) was convinced that Rule 8D is applicable from assessment year 2008-09. However, at the same time, the Ld. IT(A) directed the AO to consider the disallowance in the light of the decision of the Hon'ble Jurisdictional High Court in the case of Godrej Boyce Mfg. Co. Ltd. Vs DCIT. 18. Before us, the Ld. Counsel for the assessee could not bring any evidence to substantiate its claim that the assessee has not incurred any expenditure for earning the exempt income. 19. The Ld. Departmental Representative relied upon the findings of the AO. 20. We have considered the rival submissions and perused the orders of the lower authorities. It is now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons, the ground raised by the assessee in ITA No. 5083/M/11 for assessment year 2006-2007 is dismissed. 25. The appeal filed by the assessee is partly allowed. ITA No. 5084/Mum/2011 - A.Y. 2007-08 26. Ground No. 1 is general in nature. 27. Ground No. 2 3 relate to disallowance of Rs. 1,08,70,000/- being royalty on sales paid to M.s. Exedy Corpn. of Japan. This issue has already been discussed in ITA No. 5082/M/2011 for A.Y. 2005-06 at paras 3 to 8. Therefore, on similar lines, similar reasons, the ground raised by the assessee in ITA No. 5084/M/11 for assessment year 2007- 2008 is allowed. 28. Ground No. 4 relates to disallowance of 50% of Rs. 4,25,556/- being expenses incurred through the credit card by employees for subscript ..... X X X X Extracts X X X X X X X X Extracts X X X X
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