9911796707
TMI Blog2024 (7) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... s produced by the assessee to show that amount spent towards fitness program. However, what was required to be produced by the assessee was that he had joined in fitness program of any club or at any fitness coach and had paid the said amount for that purposes. Since no evidence was brought on record by the assessee to substantiate his claim, therefore, lower authorities have rightly restricted the claim of the assessee to an extent of 50% thus making the addition. Physical Fitness Expenses - Though the physical fitness was a part and parcel of assessee s profession but it cannot be held to be incurred wholly and exclusively for the profession of the assessee. Even the assessee has not filed any evidence to show that he underwent any weight loss program to fulfill his professional commitment. Hence, we do not find any reason to interfere with the finding of ld.CIT(A) on this issue. Thus, this ground of the assessee dismissed. 20% of other expenses considered as personal expenses - No fault can be found in the reasoning of Assessing Officer / ld.CIT(A) as nature of expenses claimed by assessee comes under mixed basket of profession and personal expenses and it is not possible to seg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income Tax Appeals, Hyderabad, in upholding the order of the assessing officer in disallowing foreign travel expenses, Other expenses, security service charges , Swimming pool rent, adhoc disallowance under 14A are against the principles of justice, weight of evidence and probabilities of the case of the appellant 2. The Learned Assessing Officer and the Appellate Commissioner have erred in justifying the disallowance of 50% of foreign travel expenses and ignoring the fact that the appellant as a professional in the field of film industry and thus has to enrich his knowledge and new trends in the industry and this foreign travel is expense incurred wholly and totally, necessary and absolutely required for the appellant in carrying his profession. 3. The Learned Assessing Officer and Commissioner of Income Tax, Appeals were wrong in disallowing/ upholding a sum of Rs. 43797/- (25% of physical fitness expenses) as physical fitness is a part and parcel of the appellant's profession as a film artiste and disallowance of same on adhoc basis is against the provisions of the Act 4. The Learned Assessing Officer and Commissioner of Income Tax, Appeals are not justified in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of natural justice. 10. The Learned assessing officer and Commissioner of Income Tax, Appeals erred in charging/ upholding interest under section 234D when the refund due was not been issued or granted to the assessee. 4. The brief facts of the case are that assessee is a film artist and doing business of film production and distribution. Assessee filed his return of income electronically on 28.09.2009 for the A.Y. 2009-10 admitting total income of Rs. 2,34,65,640/- and the same was processed u/s 143(1) of the Act. The case was selected for scrutiny under CASS and notice u/s 143(2) of the Act dt. 23.08.2010 was issued. During the course of assessment, Assessing Officer noticed that assessee has claimed Rs. 5,28,703/- as foreign travel expenditure stating that the same was incurred as legitimate professional expenses. However, the Assessing Officer disallowed the said expenditure stating that the same cannot be said to be incurred wholly and exclusively for the purpose of assessee s profession. Assessee has debited an amount of Rs. 1,75,188/- towards his physical fitness in the profit and loss account. As the difference in the said amount worked out to Rs. 53,695/- and 20% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat for any professional weather a Doctor, Lawyer, Chartered Accountant, Company Secretary or a business person the necessity of maintaining the individual physique is of paramount importance but to claim that the individual can only be healthy by studying the latest trends in the industry in abroad is not acceptable, since such expenditure cannot be said to be incurred wholly and exclusively for the purpose of his profession. Hence, 50% of the travel expenditure of Rs. 528703/- is disallowed and added to the total income of the assessee. 6.1. Ld. AR has also drawn our attention to Para 6 of the order of ld.CIT(A) which is to the following effect : 6. The Decision : In the instant case, the assessment was completed u/s 143(3) by making, the following additions / disallowances: Sl.No Nature of addition/disallowance Amount. 1 50% of-foreign travel expenses 2,64,351/- 2 20% of Other expenses Considered as personal expenses . 41,2981/- 3 10% oh security charges 32,7831- 4 Rent for swimming pool 5 Diff. in physical fitness expenses at 20% 10,739/- 6 Loss in Venkatesh Enterprises (Proprietary concern) 902/- 7 Disallowance u/s 14A 3,30,506/- With regard to foreign. travel expenses, the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... important for everyone as such and cannot be held. to be incurred wholly and exclusively for the profession of the appellant. However, considering the profession of the appellant, it has much more significance compared to other individuals and it is 'imperative for the appellant to maintain physical well-being for its profession. It is a matter of fact that certain professions like sports, films etc require more emphasis on physical well-being to ensure better performance and incentives, However, as stated above, physical well-being is essential for everyone and cannot wholly- and exclusively related to the profession of the appellant and. accordingly the Assessing Officer is directed to disallow 25% of the total physical fitness expenses of Rs. 1,75,1.88/-. Thus, the total disallowance with regard to Physical fitness expenses works out to Rs .43,17/- and the appellant in all is allowed a sum of Rs. 1,31,391/- 'on this account, the Assessing Officer -has made an addition of Rs. 10,739/- over and above Rs. 1,21,493/- which make's it a total disallowance of Rs. 1,32,232/-, the -appellant thus gets a relief of Rs. 88,435/- on this account and the ground no.5 is partly allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... security charges and 50% of a-swimming pool charges is upheld and the ground no.6, 7 and 8 are dismissed accordingly. With regard to disallowance U/s 14A of Rs. 3,30,306/-, it is seen that the disallowance has been double of the actual disallowance. Thus, the actual disallowance would be only Rs. 1,65,253/-. The appellant gets necessary relief to that extent. Further, it is Seen that- the expenses have been in the nature of personal expenses have already been disallowed in the case of the appellant. The appellant has investment in Shares and partnership firm. The agriculture land purchase cannot form part of exempt asset within the meaning of 14A unless agriculture activity is carried out and explicit maintenance charges are brought out by the Assessing Officer ha- view of the same, it would be fair to disallow an adhoc sum of Rs. 50,000/- to cover up for any expenses as such with regard to exempt income. In view of the same, the ground no.9, 10 and 11 arc partly allowed accordingly. With regard to disallowance on loss froth proprietary concern of the appellant, the Assessing Officer did not make any specific observation with regard to the same but for taking the disallowance whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 Ch issued to Travel Masters India Pvt. Ltd t/w Foreign Travel Tickets purpose. 1,25,790.00 Chintakayala Ravi Shotting / Analysing new trends at USA 5 20.06.2008 Ch issued to AEBC credit card t/w Circus Circus Hotel at USA 34,354.00 Chintakayala Ravi Shotting / Analysing new trends at USA 6 27.01.2009 Ch issued to Hyderabad Forex Ltd t/w purchase of foreign currency for USA travel trip purpose 1,49,578.00 Fitness program purpose Total Foreign Travel Expenses: 5,28,703.00 9.2. From the perusal of page 1 of the paper book, we are not able to draw an inference that the expenditure incurred by the assessee has co-relation with the professional activities of the assessee, for example, the assessee had claimed Rs. 1,81,125/- towards the foreign currency purchased for US Travel for 4500 USD. The said amount spent by the assessee was merely for converting Indian currency into foreign currency. However, what is required to be demonstrated by the assessee before was for what purposes, the US Dollars were spent by the assessee in U.S. but nothing was brought on record to show for what purposes the amount of Rs. 1,81,125/- was spent. 9.3. Similarly, the assessee had claimed another foreign cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to show that he underwent any weight loss program to fulfill his professional commitment. Hence, we do not find any reason to interfere with the finding of ld.CIT(A) on this issue. Thus, this ground of the assessee dismissed. 11 . GROUND NO.4 Other Expenses With respect to ground no.4 i.e., 20% of other expenses considered as personal expenses, ld. AR has submitted that the lower authorities are not justified in upholding 20% of other expenses which are exclusively come under profession expenses like costume expenses, telephone bills, water bills, club payment, credit card bills etc, totally amounting to Rs.41,298/-. In this regard, he has drawn our attention to Page 4 of the order of Assessing Officer, which is to the following effect : Miscellaneous Expenses : The assessee has claimed the following expenses in his profit and loss account. 1. Costume Rs. 63,423/- 2. Water Charges Rs. 10,066 3. Telephone and Trunk Call charges (includes purchase of mobile telephone) Rs. 1,07,564/- 4. Club Payment Rs. 25,440/- The assessee is using his residence for the purpose of his professional / business activities and therefore, there is a definite element of personal expenditure with rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer / ld.CIT(A) as nature of expenses claimed by assessee comes under mixed basket of profession and personal expenses and it is not possible to segregate preciously professional with personal expenses. Hence, we do not find any reason to interfere with the decision of learned lower authorities. Thus, this ground is dismissed. 16 . GROUND NO.5 Security Charges With respect to security charges, ld. AR has submitted that lower authorities have erred in disallowing / upholding of 10% of security charges stating that there is personal element without any basis. In this regard, he has drawn our attention to Page 5 of the order of Assessing Officer, which is to the following effect : A perusal of the details submitted during the course of assessment proceedings and also debited security charges in the profit and loss account that the assessee has incurred an amount of Rs. 3,27,382/- towards security expenses. The payment is in respect of monthly security charges paid towards office cum residence in Jubillee Hills, Hyderabad as seen from the evidence filed. Since the assessee is using the said premises for his residential purpose also disallowance of 10% is made towards personal elem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure incurred by the assessee. 19.2. Per contra, ld. DR submitted that the orders of lower authorities are in accordance with law. 19.3. We have heard the rival contentions and perused the material on record. On perusal, we find that ld.CIT(A) while passing his order has categorically mentioned that on perusal of nature of expenses, it is clear that there was a certain amount of personal expenditure involved with regard to the said expenses. Before us, Ld. AR reiterated the contentions made by the assessee before the lower authorities. The contentions of the assessee are that he assessee has constructed swimming pool exclusively for his use on the land belonging to his sister to whom he was paying rent @ Rs.60,000/- p.m and that being a film star, he cannot use public swimming pool. If he constructed the pool on the land belonging to his sister itself, then obviously, there will be a probability of using the facility by his family members also. Hence, we cannot deny the involvement of personal element in this aspect. In view of the above, we do not find any reason for disagreeing with the findings of the ld.CIT(A) on this issue. Thus, this ground of the assessee is dismissed. ..... 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