9911796707
TMI Blog2022 (8) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... no. 105 of the paper book shows that in clause 21(a) of the particulars of expenditures incurred, under head of club entrance fees and subscription has been shown with regard to Gymkhana Club at Rs. 14,407/- , Holiday Club Rs.3,263/- and Panchshila Club rs. 22,610/-, totaling to Rs. 42,280/-. The auditors have not shown these expenditure to be disallowable as required to be disclosed in Annexure available at page no. 73 of the paper book. When admittedly the assessment was completed with intimation u/s 143(1) of the Act then the disallowance based upon comments of auditor in audit report could not have been made as none of the specific circumstances mentioned u/s 143(1)(a)(ii) or 143(1)(a)(iv) of the Act are met out. If at all a disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urcing. During the relevant assessment year, the appellant had filed its return of income on 29.10.2017 at a total income of Rs. 2,08,91,050/-. The Ld. AO vide communication dated 17.07.2018 asked the appellant to file a response against the proposed adjustment of Rs. 1,11,216/-, being the amount of club expenditure reported in tax audit report. Against such communication, the appellant filed a response on 13.08.2018. The said response was not considered and an intimation under section 143(1) was passed on 04.02.2019 whereby the said amount was disallowed, and the total income was computed at Rs. 2,10,02,263/-. The appellant, thereafter, filed a rectification against the said intimation. However, vide rectification order, dated 14.05.2019, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return as per section 143(l)(a)(iv) of the Act. 2. That the learned CIT(A) has erred in not adjudicating the ground related to not allowing the TDS credit of Rs. 2,57,252 by the learned Assessing Officer, which was rightly claimed by the appellant and which is also duly reflecting in Form 26AS. 3. The Appellant craves to leave, add, amend, modify, delete and/or change all or any of the grounds on/or before the date of hearing. 4. Heard and perused the record. 5. At the time of arguments, Ld. AR for the assessee submitted that the assessee is not pressing the ground no. 2 and endorsement was made on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the issue regarding allowability of club expenses is no more res integra in view of the judgment of the Hon'ble Supreme Court in the case of CIT v. United Glass Mfg. Co. Ltd. 2012] 28 taxmann.com 429. It was submitted by Ld AR that the said expenditure of Rs. 40,280/- was reported only for disclosure purpose and no portion of the same is disallowable under section 37 of the Act. Making of disallowance of such expenditure under section 143(1)(a) or 154 without giving proper opportunity to the assessee is against the principles of Natural Justice. Information contained in tax audit report does not enable Assessing Officer to make any prima facie adjustments under section 143(1)(a) of the Act and reliance was placed on judge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to Gymkhana Club at Rs. 14,407/- , Holiday Club Rs.3,263/- and Panchshila Club rs. 22,610/-, totaling to Rs. 42,280/-. The auditors have not shown these expenditure to be disallowable as required to be disclosed in Annexure available at page no. 73 of the paper book. When admittedly the assessment was completed with intimation u/s 143(1) of the Act then the disallowance based upon comments of auditor in audit report could not have been made as none of the specific circumstances mentioned u/s 143(1)(a)(ii) or 143(1)(a)(iv) of the Act are met out. If at all a disallowance was to be made an opportunity of hearing by issuance of notice u/s 142(1) was therefore required. In Chetas Gulabbhai Desai v. DCIT, CPC Bangalore ( supra ) the Mumbai B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been disallowed by way of an intimation under section 143(1)(a) of the Act. . 6. In view of the undisputed facts and the decision of Hon ble Bombay High Court, referred above, we find that the authorities below have erred in disallowing assessee s claim of expenditure in proceedings u/s. 143(1) of the Act and thereafter, rejecting assessee s application u/s. 154 of the Act. Ergo, the impugned order is set-aside and appeal by the assessee is allowed. 10. Assessee infact had had claim on merits also on the basis of judgment of Hon ble Supreme Court of India in CIT v. United Glass Mfg. Co. Ltd. (supra) wherein Hon ble Apex Court has considered the question of club expenses and held that the Club Membership Fees for subscription is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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