9911796707
TMI Blog2016 (6) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... peals) erred in sustaining disallowance of Rs. 25,00,000 (being payment made by the appellant to Global Vipassana Foundation), without appreciating that the payment was made under an agreement entitling the appellant to certain benefits, and was a payment made out of commercial expediency and wholly and exclusively for the purposes of its business. 2. The learned Commissioner of Income-tax (Appeals) erred in holding that the amount was a "donation" paid on by the appellant's directors only for their spiritual satisfaction, without appreciating the correct interpretation of the agreement between the appellant and Global Vipassana Foundation, which makes it clear that the payment was made on account of commercial expediency. 3. The learned Commissioner of Income-tax (Appeals) erred even in his alternative reasoning that the payment was a capital expenditure and that no TDS had been made. He failed to appreciate that the payment was wholly of revenue character and allowable u/s 37 of the Income Tax Act. Even if the payment was assumed to be in the nature of "royalty, even then, it was not open to the learned Commissioner of Income-tax (Appeals) to invoke s. 40(a)(ia) and dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of meditation which has transformed the lives of numerous people. The assessee company submitted that the money has been paid to ensure access to various Vipassana Courses for its employees , which are an important management/refresher courses. Thus, the assessee company submitted that the expenses have been incurred for business expediency and are allowable as a business expenditure. It was submitted that there is no capital element in it and the same should be allowed. The A.O. rejected the contentions of the assessee company and observed that the assessee company has claimed that the payments have been made to Global Vipassana Foundation towards use of the "Global Pagoda" mark by the assessee company for its existing businesses and in conjunction with any other business for a period of ten years, vide agreement dated 23/03/2009. It was observed by the AO that It has not been specified by the assessee company as how the valuation of Rs. 20 lacs was arrived at and how it can be quantified vis-à-vis the future potential of the expansion of the business of the assessee company . The AO observed that no such justification has been provided by the assessee company as to how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company's products in the market, thus, it is a business promotion expense which should be allowed as revenue expenditure. The assessee company submitted that an agreement was entered into between assessee comapny and Global Vipassana Foundation and the payments were made in the month of March, 2009 towards the end of the relevant previous year which was for 'right to use' for a period of 10 years and for access for the employees and there was no condition that the mark had necessarily to be actually used . The assessee company submitted that relief may be allowed u/s 80G of the Act. The assessee company relied upon the decision of the Hon'ble Supreme Court in the case of Sassoon J. David & Company Private Limited v. CIT, (1979)118 ITR 261(SC), in the case of CIT v. Dhanrajgirji, (!973)91 ITR 544(SC), ITAT decision in the case of Brightest Circle Jewellery v. ACIT in ITA No. 4511/Mum/2011 . The assessee company also relied upon the decision in the case of CIT v. Pruthvi Brokers in ITXA No. 3908/2010 decided by the Hon'ble Bombay High Court on 21.6.2912. The learned CIT(A) observed that an amount of Rs. 25 lacs was paid to Global Vipassana Foundation as donation. The Global Vipassa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erfere with the orders of the CIT(A) in the case of sister concern of the assessee company, M/s. Chemito Technologies Private Limited(supra). The learned CIT(A) in the instant case of the assessee treated the amount as donation and not business expenses vide para 2.4 of the CIT(A) orders dated 31.10.2012. The ld. Counsel submitted that the said payment may be allowed as deductions u/s. 80G of the Act subject to the fulfillment of all the conditions prescribed for availing the deduction u/s. 80G of the Act. 9. The ld. D.R. submitted that the assessee company was asked by the learned CIT(A) to produce the receipt but the same was not produced by the assessee company. The assessee company may be directed to produce the receipt's issued by Global Vippassana Foundation. 10. We have considered the rival contentions and also perused the material available on record including the relied upon case laws. We have observed that the assessee company has made payment of Rs. 25 lacs to Global Vipassana Foundation during the previous year relevant to the assessment year and the assessee company has claimed it as business promotion expenses (Rs. 20 lacs) and staff welfare expenses (Rs. 5 lacs) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, on appraisal of the assessment order, it reveals that the AO has rightly declined the claim of assessee on seeing the case of the assessee from different angles. In fact the actual claim of the assessee was to the tune of rupees sixty lacs which was paid to GVF and on seeing the account book of assessee the claim to the tune of rupees ten lacs was allowed which was the actual expenditure of the assessee upon the employee. No expenditure of any kind upon the employee of the assessee was shown before any authority. The assessee may pay any amount to anyone but the relevancy with the business is liable to be viewed. If assessee donated certain fund to the charitable institution then he can raise the claim under section 80G.The alternate claim of the assessee u/s 80G of the Act has rightly been allowed by the learned CIT(A) in his order. Therefore, in the said circumstances, we are of the view that the learned CIT(A) has passed the order in question rightly and correctly which does not require to be interfered with at this stage. Accordingly, we uphold his order on this count and dismiss ground No. l of the appeal of the assessee." We decide the appeal accordingly as per detailed ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
