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TMI Blog2019 (4) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... running business. It has also been observed therein that these expenses are incurred by way of staff welfare and allowable as revenue expenditure on ground of commercial expediency and to develop good relationship with employees/dealers so as to further business interest of assessee. Tribunal in assessee’s own case for assessment year 1978-79 allowed the expenses. Disallowance of Subscription fees - HELD THAT:- these payment made towards Gymkhana Club and other Associations which are being provided toto Sr.Executives of the company to entertain dealers/suppliers and other business associates. As further observed that out of total claim AO has only disallowed on the ground that they are personal in nature. There has been no basis that has been attributed by Ld.AO for an ad-hoc disallowance. It is observed that these expenses have been regularly incurred by assessee in preceding assessment years which has been allowed as business expenses. There are a series of judgements passed by Hon’ble Supreme Court and High Courts holding subscription fees paid to Clubs on behalf of employees are incurred for business purposes and are allowable expenses. Disallowance of consultancy expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has 4000 dealers nationwide and company executives need to visit these dealers from time to time since company products can only be sold through network of these dealers. These amounts are spent on entertainment of dealers, who are selling products of the company. Further it is observed that Ld.AO has not expressed reason for disallowance apart from saying that expenses were not justified. - A.O. made addition on mere surmises and therefore deserves to be deleted. We do not find any infirmity in the view taken by Ld.CIT(A) and same is upheld. Expenses incurred under the head ‘prize and rewards’ - HELD THAT:- Counsel submitted that these are clubbed with head ‘salary and wages’ and has been paid to their employees as a matter of company policy to reward extraordinary work done by its employees. It has also been observed that TDS has been deducted on these payments. Such payments are very much necessary for large magnitude business carried out by assessee. We therefore do not find any infirmity in view taken by Ld. CIT (A) and same is upheld. Addition under the head ‘sales promotion’ - HELD THAT:- Admittedly these expenses are un-vouched and assessee has not been able to prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,091/-. It is observed that most of foreign travel expenses are in connection of foreign travelling of the Kapoor family who are top management of the company. The Ld.CIT(A) has also erred in deleting the addition of ₹ 88,468/- under the head entertainment wine beer being personal in nature and ₹ 75,000/- under the sub head prize and rewards which remained unexplained and un vouched. 6. The Ld.CIT(A) has also erred in law and in facts in deleting the addition of ₹ 3,00,000/- under the head sales promotion being unvouched and for which no bills were furnished. 2. Brief facts of case are as under: Assessee filed its return of income declaring total income of ₹ 3,67,83,740/-on 30/09/11 electronically. The case was selected for scrutiny and subsequently notice under section 143(2) along with questionnaire was issued. In response to statutory notices, representative of assessee appeared before Ld.AO and filed requisite details, books of accounts along with bills, vouchers which were examined by Ld.AO on test check basis. 2.1. Ld.AO observed that assessee was having 5 units namely Unit I: Sonepat Unit, Unit II: Sahibabad Unit, Unit III: Mal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hdrawn through embezzlement and fraud conducted by Sh. Arun Kapoor against which FIRs have also been lodged. It was submitted that since the assessee has not given these amounts out of its own free will but the same have been taken through fraud, the AO has been wrong in concluding that such amounts have been diverted by the assessee for the non business purposes. It was submitted that the company has terminated the services of Sh. Arun Kapoor and legal recourse has been taken to resolve the issue. It was also submitted that the company had surplus funds amounting to ₹ 105.94 as on 31st March, 2002, therefore, the AO s conclusion that interest bearing funds have been utilized is also factually incorrect. 2.4 We have heard the rival submissions and have also perused the records. Atlas Cycles (Haryana) Sonepat Page 6 of 70 It is seen that the Ld. CIT (Appeals) has examined the issue in detail in his order for AY 2006-07 and has agreed with the aforesaid contentions of the assessee. The copies of FIRs have also been placed on record and the contention of the assessee about having surplus funds as on 31.03.2002 is also correct. Hence, we find no reason to interfere with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t page 1-20 of paper book 2, wherein it has been observed that marriage gifts to dependents of employees are given in accordance with scheme laid down by company. It has been observed that these expenses are incurred towards marriage gifts to family members/dependents of staff/dealers are normal business courtesy incurred in course of running business. It has also been observed therein that these expenses are incurred by way of staff welfare and allowable as revenue expenditure on ground of commercial expediency and to develop good relationship with employees/dealers so as to further business interest of assessee. There is nothing contrary that has been brought on record by Ld.Sr.D.R. 8. Respectfully following the view taken by this Tribunal in assessee s own case for assessment year 1978-79 (supra), we do not find any infirmity with view taken by Ld.CIT(A) and same is upheld. 9. As regards subscription fees of ₹ 3,16,136/-, it has been submitted by Ld.Counsel that issue has been allowed by this Tribunal in assessee s own case for assessment year 2007-08, 2008-09 and 2009-10, copies of order of Tribunal placed at pages 10-44 of paper book 1. 9.1 . Whereas Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Ld.CIT(A) and the same is upheld. 14.2 . Insofar as expenses towards advertisement in Hindustan Times is concerned, it has been submitted that Sh. Janki Dass Kapur who was the founder of assessee, and, it was under his able leadership that company achieved tremendous growth and excellence in field of cycle manufacturing. It has been submitted that these expenses have been incurred in loving memory of Sh. Janki Dass Kapur s death anniversary to pay tribute/homage on behalf of management, staff and workers of all 5 units of company. Looking into cause, we do not find any infirmity in view taken by Ld. CIT (A) and same is upheld. Accordingly this ground raised by revenue stands dismissed. 15. Ground No. 4 has been raised by revenue against deleting addition of ₹ 2,21,978/-under sub-head Glow Sign Board expenses and ₹ 5,00,000/-under the head workers and staff welfare for which no basis or vouchers were furnished during assessment proceedings. 15.1. Ld.Sr.DR placed reliance upon order of Ld. AO. 15.2 . Ld.Counsel placing reliance upon observations of Ld.CIT(A) submitted that these were ad-hoc disallowances made by Ld.AO. He submitted that asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03-04 to 2010-11. 18. We have perused submissions advanced by both sides in light of records placed before us. 18.1 . It is observed that addition of foreign travel expenses has been deleted by this Tribunal on ground that FBT has been duly paid on such expenses. For year under consideration there is no such clarity arises out of assessment order neither has Ld. Counsel submitted anything in respect of the same. Further on perusal of order passed by Ld.AO, it is categorically clear that family members of Kapoor family have undertaken foreign travel. Since assessee has not provided any details of personnel travelled abroad, we do not find any infirmity in disallowance made by Ld.AO and same is upheld. 18.2. Insofar as addition on account of entertainment wine and beer is concerned, it has been submitted that assessee has 4000 dealers nationwide and company executives need to visit these dealers from time to time since company products can only be sold through network of these dealers. These amounts are spent on entertainment of dealers, who are selling products of the company. Further it is observed that Ld.AO has not expressed reason for disallowance apart from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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