The ACIT,(OSD), Range-8,, Ahmedabad v. M/s. Shaival Reality Pvt.Ltd.,, Ahmedabad

ITA 3091/AHD/2011 | 2008-2009
Pronouncement Date: 24-04-2015

Appeal Details

RSA Number 309120514 RSA 2011
Assessee PAN AABCS5607F
Bench Ahmedabad
Appeal Number ITA 3091/AHD/2011
Duration Of Justice 3 year(s) 4 month(s) 17 day(s)
Appellant The ACIT,(OSD), Range-8,, Ahmedabad
Respondent M/s. Shaival Reality Pvt.Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 24-04-2015
Appeal Filed By Department
Bench Allotted A
Tribunal Order Date 24-04-2015
Date Of Final Hearing 20-04-2015
Next Hearing Date 20-04-2015
Assessment Year 2008-2009
Appeal Filed On 07-12-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE SHRI PRAMOD KUMAR ACCOUNTANT MEMBER AND SHRI S.S. GODARA JUDICIAL MEMBER ITA NO . 3091 /AHD/20 1 1 A. Y. 200 8 - 0 9 ACIT (OSD) AHMEDABAD. VS SHAIVAL REALITY PVT. LTD. A/1 MAHARAJA PALACE OP P. RASRANJAN NR. VIJAY CROSS ROADS NAVRANGPURA AHMEDABAD. PAN: AABCS 5607F (APPELLANT) (RESPONDENT) REVENUE BY : S HRI P.L. KUREEL SR. D.R. ASSESSEE(S) BY : NONE / DATE OF HEARING : 2 0 / 0 4 /201 5 / DATE OF PRONOUNCEMENT: 24 / 0 4 /201 5 / O R D E R PER SHRI S.S. GODARA JUDICIAL MEMBER THIS ASSESSEE S APPEAL FOR A.Y.200 8 - 0 9 ARISE S FROM ORDER OF CIT(A) - XIV AHM EDABAD DATED 23.09. 201 1 IN CASE APPEAL NO. CIT(A) - XIV/ ADDL. CIT R - /2010 - 11 DELETING DISALLOWANCE/ADDITION OF RS.35 51 000/ - BEING CLUB MEMBERSHIP FEES PAID TO KARNAVATI CLUB IN PROCEEDINGS U/S. 143 (3) OF THE INCOME TAX ACT IN SHORT THE ACT . ITA NO. 30 91 /AHD/201 1 SHAIVAL REALITY PVT. LTD. FOR A.Y. 200 8 - 0 9 - 2 - 2. IN THE COURSE OF HEARING THE REVENUE STRONGLY REITERATES ITS PLEADINGS AND SEEK S TO RESTORE THE IMPUGNED ADDITION OF RS.35. 51 LAC ARISEN FROM DISALLOWANCE OF MEMBERSHIP FEES PAID TO KARNAVATI CLUB. THE ASSESSEE HAS NOT CHOSEN TO APPEAR DESPITE SERVICE OF NOTICE DATED 05.03.2015. THEREFORE IT IS PROCEEDED EX - PARTE. 3. THE ASSESSEE - COMPANY FILED ITS RETURN ON 25.08.2008 ADMITTING INCOME OF RS.2 47 65 473/ - . THE SAME WAS SUMMARILY PROCESSED. THE ASSESSING OFFICER TOOK UP SCRUTINY. HE NOTICED THE ASSESSEE - COMPA NY TO HAVE CLAIMED MEMBERSHIP AND SUBSCRIPTION FEES OF RS.37 50 376 INCLUDES PAYMENTS FOR INSTITUTION LIFE MEMBERSHIP FEES OF RS.1.5 LAC PAID TO THE AHMEDABAD MILITARY AND RIFLE TRAINING ASSOCIATION RS.34 01 000/ - IN CASE OF KARNAVATI CLUB FOR INSTITUTIO NAL MEMBERSHIP FEES ADDITIONAL NOMINEES CHARGES . IT SUBMIT TED TO HAVE OBTAINED CORPORATE MEMBERSHIP AND ENTRANCE. THE ASSESSEE CLARIFIED ABOUT THE NATURE OF THE MEMBERSHIP FEES AND THE FACILITIES FLOWING THEREFROM. IT EXPLAINED THAT THE SAID FACILITIES ARE MEANT FOR ITS EMPLOYEES DIRECTOR AND BUSINESS ASSOCIATES. THE ASSESSING OFFICER PERCEIVED THESE PAYMENTS TO BE NOT BRINGING ANY BENEFIT TO THE ASSESSEE OR HAVING ANY NEXUS WITH ITS BUSINESS. HE NEGATED ASSESSEE S PLEAS QUOTING CASE LAW OF ITA NO. 30 91 /AHD/201 1 SHAIVAL REALITY PVT. LTD. FOR A.Y. 200 8 - 0 9 - 3 - HON BLE DELHI H IGH COURT IN CIT VS. SAMTEL COLOR LIMITED 326 ITR 425 (DEL) AND DISALLOWED/ADDED THIS SUM OF RS.35.51 LAC . 3. THE ASSESSEE S PREFERRED AN APPEAL. THE CIT(A) HAS DELETED THE IMPUGNED DISALLOWANCE AS UNDER: 3.3 I HAVE CAREFULLY PERUSED THE ASSESSMENT OR DER AND THE SUBMISSIONS GIVEN BY THE APPELLANT. THE APPELLANT HAS MADE THE PAYMENT FOR TAKING THE INSTITUTIONAL CLUB MEMBERSHI P OF KARNAVATI CLUB AND RIFLE CLUB. IN THIS CONNECTION THE APPELLANT HAS SUBMITTED THAT THE PAYMENT WAS MADE FOR THE PURPOSE OF B USINESS AND TO GET ADVANTAGE OF COMMERCIAL NATURE. THE APPELLANT HAS ALSO RELIED ON THE CASES OF GUJARAT STATE EXPORT CORPORATION LTD. VS. CIT [209 ITR 649 GUJARAT] AND CIT VS. SAMTEL COLOUR LTD. [326 I TR 425 DEL H I WHEREIN I T WAS HELD T HA T THE PAYMENT OF ENTRANCE FEE FOR BECOMING MEMBER OF THE CLUB CANNOT BE TERMED AS CAPITAL EXPENDITURE. IT WAS IN THE NATURE OF ADVANTAGE IN THE COMMERCIAL SENSE BUT IT IS NOT AN ADVANTAGE IN THE CAPITAL FEE. I AM INCLINED TO AGREE WITH THE SUBMISSION MADE BY THE APPELLANT MORE PARTICULARLY WHEN THERE IS A DIRECT DECISION OF JURISDICTIONAL HIGH COURT ON THE ISSUE. THE EXPENDITURE ON ADMISSION FEE PA I D TOWARDS CORPORATE MEMBERSHIP WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND NOT TOWARDS CAPITAL ACCOUN T AS IT ONLY FACILITATES SMOOTH AND EFFICIENT RUNNING OF BUSINESS ENTERPRISE AND DOES NOT ADD TO THE PROFIT EARNING APPARATUS OF THE BUSINESS ENTERPRISE. ACCORDINGLY THE DISALLOWANCE OF RS 35 51 000/ - MADE BY THE A. O. IS DIRECTED TO BE DELETED. THE GROU ND OF APPEAL IS THEREFORE ALLOWED. 4. WE HAVE HEARD THE REVENUE AND PERUSED THE RELEVANT FINDINGS. THERE IS NO DISPUTE ABOUT THE VERY FACTUM OF THE ASSESSEE HAVING INCURRED THE IMPUGNED EXPENDITURE AS WELL AS THE HEADS THEREOF. THE REVENUE REITERATES TH E ASSESSING OFFICER S FINDINGS . WE FIND FROM A PERUSAL OF THE HON BLE JURISDICTIONAL HIGH COURT DECISION (SUPRA) THAT VERY SIMILAR ITA NO. 30 91 /AHD/201 1 SHAIVAL REALITY PVT. LTD. FOR A.Y. 200 8 - 0 9 - 4 - EXPENSES HAVE BEEN ALLOWED AS REVENUE EXPENDITURE HOLDING IT TO BE INCURRED FOR BUSINESS PROMOTION. THE REVENUE FAILS TO QUOT E DISTINCTION OF FACTS . A ND ALSO DOES NOT REFER ANY CASE LAW TO THE CONTRARY. IN THESE CIRCUMSTANCES WE DRAW CUE FROM HON BLE HIGH COURT DECISION AND HOLD THAT THE IMPUGNED EXP E N DITURE I S MEANT FOR SMOOTH RUNNING OF BUSINESS. THE CIT(A) S FINDINGS ARE AFF IRMED. THE REVENUE S GROUND IS REJECTED. 5. THE REVENUE S APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON THIS DAY THE 24 APRIL 201 5 AT AHMEDABAD. SD/ - SD/ - ( PRAMOD KUMAR ) ( S.S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 24 / 0 4 / 20 1 5 PRABHAT KR. KESARWANI SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III AHMEDABAD 5. / DR ITAT AHMEDABAD 6. / GUARD FILE . / BY ORDER / ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD