Deputy Commissioner Of Income Tax Circle 6 Jaipur v. Rajasthan Patrika P Ltd Jaipur

Vk Dj Vihyh Vf Kdj K T Iqj U K Ihb T Iqj In The Income Tax Appellate Tribunal Jaipur Benches Jaipur Jh Fot Iky Jko U Kf D Lnl Oa Jh Hkkxpan Ys Kk Lnl Ds Le K Before Shri Vijay Pal Rao Jm Shri Bhagchand A M Vk Dj Vihy La Ita No 737 738 Jp 2017 Fu Kzkj K Ok Z Assessment Years 2013 14 2014 15 Deputy Commissioner Of Income Tax Circle 6 Jaipur Cuke Vs M S Rajasthan Patrika Pvt Ltd Keshargarh Jln Marg Jaipur Lfkk H Ys Kk La Thvkbzvkj La Pan Gir No Aaacr 7856 G Vihykfkhz Appellant Izr Fkhz Respondent Jktlo Dh Vksj Ls Revenue By Shri R A Verma Addl Cit Fu Kzkfjrh Dh Vksj Ls Assessee By Shri Manish Agarwal Ca Shri O P Agarwal Ca Lquokbz Dh Rkjh K Date Of Hearing 20 12 2017 Mn Kksk Kk Dh Rkjh K Date Of Pronouncement 22 12 2017 Vknsk Order Per Bhagchand A M Both These Appeals Are Filed By The Revenue Emanat Es From The Two Separate Orders Of The Ld Cit A 2 Jaipur Both Dated 31 07 2017 For The A Ys 2013 14 2014 15 2 Brief Facts Of The Case Are That The Assessee Is A Private Limited Company Incorporated On 20 12 1974 Under The Compan Ies Act 1956 And Is Running A Leading Daily Newspaper Titled As Rajasthan Patrika Which Is One Of The Oldest And Widely Read Newspaper A Cross The Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 2 Country Having One Of The Largest Reader Base Besi Des Publishing Of Daily Newspaper The Assessee Company Is Also Having Fm Radio Known As 95 Fm Tadka Out Of Home Advertising Activity Event Management Publication Of Various Magazines And Online Portal And The Assessee Company Has 25 Branches And 12 Divisions Further D Uring The Year Under Appeal Assessee Company Had Commissioned 2 M W Solar Pv Power Generation Project At Tehsil Kolayat District B Ikaner In Rajasthan Return Of Income For The A Y 2013 14 Was Filed On 29 09 2013 Declaring Total Income At Rs 65 74 34 820 Assessm Ent Was Completed U S 143 3 Of The Income Tax Act 1961 In Short The Act After Making Various Additions Disallowances To The Tune Of Rs 1 10 34 006 And Thereby Assessing Total Income At Rs 66 84 68 830 For The A Y 2014 15 The Brief Facts Of The Case A Re That The Return Of Income For The Year Under Consideration Wa S Filed Declaring Total Income At Rs 39 05 95 580 On 27 09 2014 Whi Ch Was Subsequently Revised Three Times To Rectify Certain Mistakes In The Computation Of Depreciation As Per Income Tax Rules And Further For Claim Of Tds Which Could Not Be Claimed While Filing T He Original Return Such Revision Of The Return Was Accepted By The Ld A O While Completing The Assessment Under Appeal The Books Of Accounts O F The Assessee Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 3 Are Duly Audited By The Statutory Auditors And Are Also Subject To The Audit By The External Agencies Who Certified The Dai Ly Circulation Of The News Paper Published By The Assessee And No Adverse Comments Have Been Made By Them Towards The Books Of Accounts Main Tained By The Assessee Or The Figures Of Circulation Published The Assessing Officer Completed The Assessment U S 143 3 Of The Act At A Total Income Of Rs 39 95 83 380 By Making Addition Disallowances Of Rs 89 87 800 Which Includes Disa Llowances Of Rs 55 65 299 Out Of Various Indirect Expenses Claim Ed In P L A C And Out Of Depreciation Claimed On Civil Structure Of S Olar Power Plant Amounting To Rs 34 22 501 By Holding That It Is Not Eligible For Higher Rate Of Depreciation The Ld Cit A Has Given Part Relief To The Assessee In Both These Appeals 3 Now The Revenue Are In Appeals Before The Itat By Taking Following Grounds Of Appeal Grounds Of Ita No 737 Jp 2017 I Whether On The Facts And In The Circumstances O F The Case And In Law The Cit Appeals Has Erred In Deleting The Dis Allowance Of Sales Promotion Expenses Of Rs 20 31 655 Ii Whether On The Facts And In The Circumstances Of The Case And In Law The Cit Appeals Has Erred In Deleting The Dis Allowance Of Telephone Expenses Of Rs 5 00 000 Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 4 Iii Whether On The Facts And In The Circumstances Of The Case And In Law The Cit Appeals Has Erred In Deleting The Dis Allowance Of Festival Celebration Expenses Of Rs 8 84 368 Iv Whether On The Facts And In The Circumstances Of The Case And In Law The Cit Appeals Has Erred In Deleting The Dis Allowance Of Travelling Expenses Of Rs 6 53 788 V Whether On The Facts And In The Circumstances O F The Case And In Law The Cit Appeals Has Erred In Deleting The Dis Allowance Of Hospitality Expenses Of Rs 4 58 133 Vi Whether On The Facts And In The Circumstances Of The Case And In Law The Cit Appeals Has Erred In Deleting The Dis Allowance Of Additional Depreciation On Solar Plant Of Rs 9 00 001 Grounds Of Ita No 738 Jp 2017 I Whether On The Facts And In The Circumstances O F The Case And In Law The Cit Appeals Has Erred In Deleting The Dis Allowance Of Sales Promotion Expenses Of Rs 26 53 227 Ii Whether On The Facts And In The Circumstances Of The Case And In Law The Cit Appeals Has Erred In Deleting The Dis Allowance Of Telephone Expenses Of Rs 2 00 000 Iii Whether On The Facts And In The Circumstances Of The Case And In Law The Cit Appeals Has Erred In Deleting The Dis Allowance Of Festival Celebration Expenses Of Rs 8 02 085 Iv Whether On The Facts And In The Circumstances Of The Case And In Law The Cit Appeals Has Erred In Deleting The Dis Allowance Of Travelling Expenses Of Rs 5 11 151 V Whether On The Facts And In The Circumstances O F The Case And In Law The Cit Appeals Has Erred In Deleting The Dis Allowance Of Hospitality Expenses Of Rs 6 91 015 Vi Whether On The Facts And In The Circumstances Of The Case And In Law The Cit Appeals Has Erred In Deleting The Dis Allowance Of Foundation Day Ceremony Expenses Of Rs 5 07 824 Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 5 Vii Whether On The Facts And In The Circumstances Of The Case And In Law The Cit Appeals Has Erred In Deleting The Dis Allowance Of Additional Depreciation On Solar Plant Of Rs 34 22 501 4 The Ld Cit A Has Allowed The Appeal Of The Assess Ee By Following The Decision Of The Honble Itat Jaipur Ben Ch In Assessees Own Case For The A Y 2011 12 And 2012 13 In Ita No 555 556 Jp 2015 5 Now The Revenue Are In Appeals Before The Itat The Ld Sr Dr Has Vehemently Supported The Order Of The Assessing Officer 6 The Ld Ar Of The Assessee Has Submitted That The All The Issues Raised In Grounds No I To V In Both The Appeal S Of The Revenue Are Covered By The Decision Of The Honble Itat In Asses Sees Own Case For The Earlier Years And The Ld Ar Has Further Submitt Ed As Under Departmental Grounds Of Appeal No I To V These Grounds Of Appeal Relate To Deletion Of Disal Lowances Deleted By Ld Cit A Out Of Various Expenses I E Sales Promo Tion Publicity Expenses Telephone Expenses Festival Expenses Travelling Expenses And Hospitality Expenses In This Regard At The Outset As Submitted That Abo Ve Grounds Of Appeal Are Squarely Covered By Orders Of Honble Itat In Asses Sees Own Case For Earlier Years Therefore The Same Deserves To Be Deleted Our Submission On Merits Is As Under Following Are The Disallowances Deletion Of Which Has Been Challenged In This Ground Of Appeal S No Particulars Amount Claimed Amount Disallowed Percentage Disallowed Of Expenses Claimed To Turnover Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 6 1 Sales Promotion Publicity Expenses Total Expenses Claimed Rs 6 83 05 290 Expenses Not Doubted Rs 2 76 72 195 Expenses Doubted Rs 4 06 33 095 20 31 655 5 Of 4 06 33 095 1 09 2 Telephone Exp 1 86 74 298 00 5 00 000 00 Lump Sum 0 30 3 Festival Celebration Exp 88 43 685 00 8 84 368 00 10 0 14 4 Travelling Exp Total Expenses Claimed Rs 2 63 43 604 00 Expenses Not Doubted Rs 1 98 05 724 00 Expenses Doubted Rs 65 37 880 00 6 53 788 00 10 0 42 5 Hospitality Business Exp 45 81 331 00 4 58 133 00 10 0 07 45 27 944 00 In This Regard It Is Submitted That Nature Of Expen Ses Alongwith The Detailed Chart Containing The Branch Wise Expenses Incurred And Co Pies Of Few Vouchers Were Furnished On Various Dates During The Course Of Ass Essment Proceedings Further Books Of Accounts Were Also Produced Which Were Exa Mined By Ld Ao And He Failed To Point Out Any Single Instance Where The E Xpenses Claimed Could Be Alleged As Either Excessive Or Not Supported By Leg Ible Legal Bill Voucher Or Were Not Incurred For Business Purposes And By Maki Ng General Remarks Disallowances Have Been Made In An Arbitrary Manner From The Perusal Of The Above Table It Clearly Tran Spires That The Disallowances Were Made By Ao Merely On The Basis Of Allegation O F Possibility Of Personal Use Or Non Business Use Or Non Verifiable Without Making Any Effort To Establish Such Allegation And By Ignoring The Fact That The A Ssessee Is A Private Limited Company Where Allegation Of Personal Use Cannot Be Made And Also Ignoring The Evidences In The Shape Of Vouchers Submitted During The Course Of Assessment Proceedings It Is Submitted That Out Of The Total Addition Made At Rs 45 27 944 Which Has Been Worked Out From The Total Expenses O F Rs 12 67 48 208 Claimed Under Various Heads In The Profit Loss A C As Well As On Account Of Additional Depreciation The Ld Ao Miserably Fail Ed To Bring On Record A Single Incidence Where Any Expense Even As Small As Of Rs 100 Can Be Alleged To Be Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 7 Incurred For Non Business Purpose Or Not Supported By Bill Voucher More Particularly When Complete Details Of The Expenses Incurred Were Filed Before The Ld Ao And Books Of Accounts Were Examined By Him As Per His Convenience It Is Trite Law That The Ao Cannot Walk Into The Shoes Of The Businessman To Judge The Business Expediency Of A Particular Expense Inc Urred At A Particular Point In Particular Circumstances The Honble Supreme Court In The Case Of Indian Molasses Co Pvt Ltd V Commissioner Of Income Tax Reported In 37 Itr 66 Sc Has Categorically Laid Down The Conditions Which Should Be Satisfied For Allowability Of Business Expenditure Which Is Repro Duced As Under I The Expenditure In Question Should Not Be Of The N Ature Described Under The Specific Provisions Of Sections 30 To 36 Ii The Expenditure Should Not Be Of The Nature Of Capi Tal Expenditure Iii It Should Not Be A Personal Expenditure And Iv The Expenditure Should Have Been Laid Out Or Expend Ed Wholly And Exclusively For The Purposes Of The Business Or Profession It Is Thus Clear That Conditions At I Ii And Iii Above Are Negative Conditions Whereas The Condition At Iv Above Is A Positive C Ondition If The Expenditure Satisfies The Negative Conditions It Has To Satisf Y The Positive Condition In Order To Be Eligible For Deduction Under Section 37 1 Of Th E Act Thus Section 37 1 Allows Deduction Of Any Expenditure Subject To Co Nditions Noticed Above The Case Of The Assessee Fulfils All The Conditions Lai D Down Therefore The Expenditure As Claimed Is Allowable In Terms Of The Provisions Of Section 37 1 Of The Income Tax Act 1961 The Submission On Each Individual Expense Is As Und Er 1 Sales Promotion And Publicity Expenses A Sum Of Rs 20 31 655 Was Disallowed 5 Out Of Advertisement And Publicity Expenses Claimed At Rs 4 06 33 095 By The Assessee Company In Its Profit Loss Account The Break Up Of Which Is As Under Nature Amount Advertisement And Publicity I On Circulation 1 02 93 582 00 Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 8 Ii On Others 3 03 39 513 00 Total 4 06 33 095 00 The Ld Ao While Making Disallowance Made Following Allegations A The Expenditure Claimed Are Primarily In The Nature Of Entertainment B Assessee Has Failed To Give Evidences Of Distributi On Of Gifts To Customers C The Expenses Are For Non Business Purposes In This Regard It Is Submitted That Assessee Compan Y Is Publishing A Well Known Daily Newspaper Rajasthan Patrika From The State Of Rajasthan Karnataka Tamilnadu Gujarat And West Bengal And Patrika In M P And Chhatisgarh Besides The Publications From Various States During The Year Under Consideration Fresh Edition From Chhindwara Mp Wa S Also Started In Order To Establish The Newspaper Patrika In The Majority Part Of The States Of Madhya Pradesh And Chhatisgarh And To Cope Up With The Stiff Competition From The Other Competitive Newspapers In Those States T He Assessee Had To Make Extensive Publicity By Way Of Hoardings Banners R Oad Shows Events Fm Publicity Flex Displays Advertisement In Other Me Dia And Many Other Ways Besides Launching Various Promotional Schemes Like Vote Win To Establish Increase The Circulation Of Its Newspaper Offer Some Petty Schemes Depending Upon The Place And The Circulation Where Free Concessional Gifts Were Also Provided To The Readers During The Course Of Assessment Proceedings Summary Of The Branch Wise Expenses Was Submitted B Efore The Ld Ao Copies Enclosed Details And Evidences Were Also Filed Bef Ore The Ld Ao Who Though Have Not Doubted The Expenses Which Includes The Gi Fts And Prizes Distributed To The Hawker However In The Assessment Order At Page 5 In Para 2 He Has Observed As Under 12 Th Line From The Bottom Even The Assessee Has Not Submitted Any Evidence In Support Of Its Contention That The Gifts Were Given To Various Cu Stomers Under The Scheme To Hawkers Selling Agents Etc So The Same Also Remai Ns Unverified Since Observation Of Ld Ao Is Based On Wrong Facts And Contrary To The Fact That No Disallowance Is Made And The Expenses Claimed We Re Accepted By The Ld Ao As Incurred For Business Purposes Thus Same Deserv Es To Be Ignored Or Excluded Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 9 It Is Also Relevant To State That In Order To Estab Lish In The New Market In The State Of Madhya Pradesh And Chhattishgarh The Total Expe Nditure Incurred By Patrika At Indore Bhopal Jabalpur Gwalior Raipur And Bi Laspur Branch Have Costed Around 1 32 Crores Which Amounts To Approx 32 51 O F The Total Expenses Incurred On Advertisement And Publicity Expenses In Curred At Rs 4 06 Crores During The Year Under Appeal Understandably This Expenditure Was Very Necessary Keeping In View The Need Of Establishing Business In A New Market In As Much As Advertising And Publicity Play A Major R Ole For An Enterprise In Establishing Itself In A New Market Therefore The Heavy Expenses Incurred On The New Branches In The State Of Madhya Pradesh Is Clea Rly Justified Besides Giving Thrust On The Publicity And Sales Promotion In The State Of Madhya Pradesh Various Promotional Schemes Were Also Launched In O Ther States I E Rajasthan Karnataka And Gujarat Where Substantial Amount Was Spent And The Necessary Details Of Such Expenditure Were Also Submitted Bef Ore Ld Ao Who Failed To Appreciate The Same Thus In Light Of The Above Facts It Becomes Clear That The Expenses Claimed By Assessee Completely Genuine And Any Doubt Raised By Ld Ao In Respect Of These Expenses Is Baseless And Therefore Deserves To Be Ignored And Excluded Especially When He Has Made The Disallowance Merely On Estimate Basis By Alleging Personal User Without Establishing The Sam E At This Juncture Kind Attention Of Your Honour Is Invited To The Judgment Of Honble Punjab Haryana High Court In The Case Of Cit Vs Avery Industries Ltd Reported In 2006 206 Ctr 347 Wherein The Court Has Categorically Held That The Expenses Incurred On Distributing Prize Items T O Dealers And Selling Agents Is An Allowable Business Expenditure In This Case It Was Held That Dealers Selling The Products Of A Manufacturer Are Certainly Its Lifeline And If Amount Is Spent On Distribution Of Prizes To Them T Hat Certainly Promotes Goodwill And Enhances Business And Hence Allowable As Revenue Expenditure In Our Case We Are Distributing The Prizes Not To The Dealers Out To The Customers Directly Similarly In The Case Of Hero Honda Motors Ltd Vs Jt Cit Reported In 103 Itd 157 Itat Delhi The Company Had Incurred An Expenditu Re Of Rs 25 93 750 On Presentation Of Articles Out Of Thi S Amount A Sum Of Rs 21 93 750 Was Spent On Refrigerators Presented To Dealers For Achieving Target Under The Incentive Scheme Of The Company The Expe Nditure Was Rightly Considered To Be An Incentive To The Dealers To Boo St Its Sales And It Was Wholly Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 10 Exclusively Related To The Business Of The Assessee And Was Held Fully Allowable In This Regard Reliance Is Also Placed On The Follo Wing Honda Siel Cars India Ltd V Acit 2010 1 Itr T Rib 497 Delhi Cit Vs Spice Communications Ltd 2010 35 Sot 78 Delhi Other Gifts Include Gifts Given Mainly To Hawkers Selling Agents Advertisement Agencies On Ceremonial Occasions Suc H An Expenditure Is Held As Allowable Business Expenditure In The Case Of Cit Vs Varinder Agro Chemicals Ltd 205 Ctr 334 P H Thus It Can Be Seen That The Assessee Had Produced All The Possible Evidences In Order To Support Its Claim However Ld Ao Without Taking Any Pain To Look Into The Material And Evidences Available On Record And Also Without Verifying The Same From Books Of Accounts Produced Had Arbitraril Y Observed That Even The Assessee Has Not Submitted Any Evidence In Support Of Its Contention That The Gifts Were Given To Various Customers Under The Sch Eme To Hawkers Selling Agents Etc So The Same Also Remains Unverified Since Observation Of Ld Ao Is Based On Wrong Facts And Without Considering The Material Available On Record Thus Same Deserves To Be Ignored Or Excluded Attention Of Your Honour Is Invited To The Fact Tha T Disallowance Of Similar Nature Was Also Made In The Preceding Assessment Years Sta Rting From 2007 08 To 2012 13 Wherein Similar Allegations And Observation S About The Expenses Claimed Were Made By The Assessing Officer However In Appeal The Additions So Made By Ld Ao Stood Deleted By The Honble Cit A And Such Orders Of Ld Cit A Were Further Confirmed By Honble Itat Therefore In View Of The Above Observations It Is Submitted That The Disallowance Of Rs 20 31 655 Made On Account Of Disallowance Of Sales Promotion And Publicity Expenses May Please Be Dele Ted With Regard To Other Expenses Such As Telephone Exp Enses Festival Celebration Expenses Traveling Expenses Hospitality Busines S Expenses And Foundation Day Ceremony Expenses It Is Submitted That Disallowanc Es Of Similar Nature Were Also Made In The Preceding Assessment Years Starting Fro M 2007 08 To 2012 13 Wherein Similar Allegations And Observations About The Expenses Claimed Were Made By The Assessing Officer However In Appeal The Disallowances So Made By Ld Ao Stood Deleted By The Honble Cit A It I S Also A Matter Of Fact That Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 11 The Above Stated Orders Of Ld Cit A Stood Confirm Ed By The Honble Itat Jaipur Bench In All The Assessment Years On Merits Head Wise Submission Is Made As Under Telephone Expenses A Lump Sum Disallowance Of Rs 2 00 000 Was Made Out Of Telephone Expenses Claimed At Rs 1 86 74 298 In This Regard It Is Submitted That The Assessee Company Has Branches And Units Spread All Over The Country Which Are More Than 37 25 Branches And 12 Units In Numbers And Lookin G To The Nature Of Business It Is Well Understood That The Usage Of Telephone Is The Back Bone Of The Business Which Is Mainly Dependent Upon The Fast News Networ K Which Is Possible Only Through Telecommunication Network During The Cours E Of Assessment Proceedings Summary Of The Branch Wise Expenses Was Submitted Before The Ld Ao Copies Enclosed However The Ld Ao Has Merely On The Basis Of Assumption And Presumption Has Disallowed The Lump Sum Amount Out Of The Total Expenditure Claimed It Is Practically Not Possible To Maintain Call Reg Ister In A Case In The Case Of A Company Whose Turnover Is More Than 621 56 Crores A Nd 37 Branches And Units Situated At Different Places Throughout The Country Keeping In View The Fact That Use Of Telecommunication Services Is Very Crucial T O The Business Carried On By Assessee It Has To Be Examined From The View Point Of A Businessman Nature Of Business Time Involved For Noting A Call May Not Be Fruitful Rather A Cost Bearing Exercise And Looking To The Cost Involved I T Is Practically Not Viable To Maintain Such Record In The Kind Of Business Assess Ee Is Involved The Collection Of News From Other Part Of World Is Possible Only W Ith The Help Of Telecommunication Services Which Fact Cannot Be Den Ied During The Course Of Assessment Proceedings Branch Wise Details And Copy Of Ledger Accounts Of Telephone Expenses As Appearing In The Books Of Accounts Of Respective Branches Were Submitted Before The Ld A O Which Remained Uncontroverted The Entire Expenditure Is Verifiabl E And Therefore No Disallowance Could Have Been Made In The Facts And Circumstances Of The Case Since The Assessee Company Is A Corporate Entity P Ersonal Use In Respect Of The Expenses Claimed Cannot Be Evaluated Or Considered In This Regard Reliance Is Placed On The Following Decisions Acit Vs M S Anil Special Steel Industries Ltd It At Jaipur 2014 52 Tw Iv 189 Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 12 Adverting The Last Ground Regarding Adhoc Disallowa Nce On Vehicle And Telephone Expenses The Assessee Has Paid Fbt Tax T Hereon Besides This Issue Stands Decided In Favour Of The Assessee By The Ho Nble Gujarat High Court In The Case Of Sayaji Iron And Engg Co Vs Cit 253 I Tr 749 Holding As Under In The Circumstances In Our Opinion The Tribunal Was Wrong While Disallowing 1 6th Of The Total Car Expenditure And Depreciation Claimed By The Assessee On Account Of The Personal Use Of The Cars Which Were Used By The Directors We Therefore Answer The Question In The Negative I E In Favour Of The Assessee And Against The Revenue Thus In View Of The Facts And Circumstances And By Respectfully Following The Judgment Of Honble Gujarat High Court In The Case Of Sayaji Iron And Engg Co Vs Cit Supra Order Of Cit A Is Upheld Sayaji Iron And Engg Co Vs Cit 253 Itr 749 The Directors Of The Assessee Were Entitled To Use The Vehicles For Their Personal Use In Accordance With The Terms And Conditions On Which They Were Appointed And The Perquisites Given To The Directors Formed P Art Of Their Remuneration Under The Explanation To Section 198 Of The Compani Es Act 1956 For The Purpose Of Determining Their Remuneration Under Sec Tion 309 Of That Act Once Such Remuneration Was Fixed As Provided In Section 309 It Was Not Possible To State That The Assessee Incurred The Expenditure Fo R The Personal Use Of The Directors Even If There Was Any Personal Use By Th E Directors That Was As Per The Terms And Conditions Of Service And In So Far As T He Assessee Was Concerned It Was Business Expenditure And No Part Of The Expendi Ture Could Be Disallowed Therefore It Is Prayed That The Disallowance So Ma De May Kindly Be Deleted Festival Celebration Expenses During The Year Under Consideration Assessee Compa Ny Had Claimed A Sum Of Rs 88 43 685 On Account Of Festival Celebration Exp Enses Included In The Head Miscellaneous Expenses Out Of Which A Sum Of Rs 8 84 368 10 Of 88 43 685 Was Disallowed In This Regard It Is Submitted That The Entire Exp Enditure Claimed Was Incurred On Festival Of Diwali Which Has Been Laid Out Expe Nded Wholly And Exclusively For The Purpose Of Business During The Course Of A Ssessment Proceedings Summary Of The Branch Wise Expenses Was Submitted B Efore The Ld Ao Copies Enclosed It Is Further Submitted That Wholly And E Xclusively Do Not Mean Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 13 Necessarily The Businessman And Not The Tax Collec Tor Is To Judge For The Justification Of The Expenditure There Have Been S Pecific Instructions Of Cbdt About Diwali And Mohurat Expenses And The Same Have Been Considered Allowable 13 A 20 68 Dated 03 10 1968 In Support Of The Above Contentions Reliance Is Pl Aced On The Following Case Laws Punjab Power Packs Ltd Vs Dy Cit 71 Itd 163 C Hd 79 Itd 233 Pune Cit Vs Shalimar Ind Ltd 78 Taxman 521 Cal Cit Vs Mohan Meakin Ltd 189 Taxman 377 Delhi It Is Further Submitted That Most Of Payments Were Made Through Cheques A Very Nominal Amount Was Paid In Cash The Entire Ex Penditure Is Supported By Vouchers And Duly Audited And Verifiable It Need N Ot Be Mentioned That In Our Society The Gifts Given Are Customary In Nature Pa Rticularly When The Occasion Is Of A Festival As Auspicious As Diwali There Is A Nd Can Be No Personal Element Of Directors In These Gifts The Articles Were Give N In Gifts To Advertising Agents Officials Of Banks And Persons Connected Wi Th The Business Of The Assessee So As To Enable Itself To Maintain Healthy And Harmonious Relationships Which Is Necessary For The Enlargement Of The Busin Ess Of The Assessee Company The Expenditure Incurred On Distribution Of Gifts I S Justified Keeping In View The Nature Of Business Turnover And Other Related Fact Ors 205 Ctr 334 P H Any Disallowance Under This Head Will Not Be Justifiabl E In View Of The Judgments Of Honble Tribunal In Assessees Cases For Asstt Yea Rs 1993 94 To 1997 98 Further The Ld Ao Has Also Ignored The Fact That D Iwali Is One Of The Main Festivals Of The Country And A Company As Big And P Opular As The Assessee Whose Presence In Every House Cannot Be Ignored Therefore The Company Cannot Live In Isolation And Should Discharged Its Social Obligati Ons During The Course Of Assessment Proceedings Assessee Has Submitted Branc H Wise Expenses Incurred On Various Head And Copies Of Few Vouchers Were Als O Submitted Ld Ao While Making Disallowance Mainly Alleged The Personal Ele Ment Involved In Such Expenses By Grossly Ignoring The Fact That Assessee Is A Private Limited Company Having Separate Legal Entity And Looking The Bills And Vouchers Of The Expenses Incurred It Is Very Clear That They Have Been Incur Red On The Occasion Of Diwali And Are In The Nature Of Petty Sweets And Gift Dist Ributed To Business Associates And Customers Thus The Expenses Incurred Is Wholly And Exclusively Incurred For Business Purposes And Is Allowable U S 37 1 Of The Income Tax Act 1961 Travelling Expenses Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 14 A Disallowance Of Rs 6 53 788 Out Of The Total E Xpenses Claimed At Rs 2 63 43 604 Has Been Made The Travelling Expense S Include The Following Items S No Head Amount Remarks 1 Domestic Travelling Of Staff 1 93 77 202 00 Not Doubted 2 Foreign Traveling Staff 4 28 522 00 Not Doubted 3 Local Traveling Directors 33 81 469 00 10 Disal Lowed 4 Foreign Traveling Directors 31 56 411 00 10 Dis Allowed Total 2 63 43 604 00 From The Perusal Of The Above Details Your Honour Would Observe That A Sum Of Rs 1 98 05 724 Was Incurred On The Traveling And Conveyance Of The Staff Who Had Undertaken Journey In Performance To Their Offi Cial Duties As The Assessee Company Has Its Offices At Various Places Throughou T The India Which Has Not Been Doubted By The Ld Ao In Fact The Ld Ao Has Found That The Expenses Incurred By Assessee Company On Travelling Of The S Taff Persons Is Acceptable And He Had Not Doubted The Same However He Alleged Th At The Remaining Amount Of Rs 65 37 880 Was Spent On The Travelling Of Dire Ctors And Therefore The Same Is Liable To Be Disallowed And Certain Vouchers Are Se Lf Made Merely By Observing So The Ld Ao Disallowed The Amount Of Rs 6 53 78 8 Being 10 Of The Amount Spent On The Travelling Of Directors Without Exactl Y Specifying As To How The Said Amount Was Not Allowable During The Course Of Asse Ssment Proceedings Summary Of The Branch Wise Expenses Was Submitted B Efore The Ld Ao Copies Enclosed Ld Ao Failed To Appreciate That The Dire Ctors Had Undertaken Those Travels Not For Personal Purpose Or For Pleasure R Ather Travelling Was Done For Business Purposes And The Directors Were On Officia L Duty Of The Company While Traveling And Therefore No Allegation Of Personal Use Can Be Made Further The Assessee Is A Private Limited Company Which Is Quit E Different From Partnership Proprietary Concerns In A Private Limited Company A Director Cannot Use The Resources Of The Company For His Personal Use One Of The Director I E Shri Gulab Kothari Is A Re Nowned Journalist And Writer And Had Undertaken Extensive Travelling To Attend V Arious Seminars And To Interact With Various Dignitaries Of The Country An D Also Outside The Country And The Information Data Experience Gathered Coll Ected By Him From Such Meetings Seminars Visits Manifested Itself In T He Form Of Articles Published In The Newspaper Which Ultimately Benefited The Assess Ee Company Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 15 Looking To The Nature Of The Business Of The Assess Ee Where Day To Day Updation About The Information Of The Events Happened Around The World Is The Backbone And For Which Travelling Is One Of The Mode To Coll Ect Such Information And Update About The Latest Print And Media Technology Adopted By Other Organizations Engaged In The Similar Kind Of Busine Ss Within The Country And Outside The Country These Visits Since Being The B Ackbone Of The Business Of The Assessee Are Regularly Undertaken By Its Directors And Senior Officials Out Of Which The Journey Undertaken By The Officials Have Been Allowed But Disallowances Have Been Made Out Of The Journey Und Ertaken By The Directors Who Also Visited For The Purposes As Stated Above The Journey Undertaken Are Not Only For Collecting Information But Also With A Vie W To Explore New Business Avenues And Also To Understand The Latest Printing Technology Available In The World So As To Reduce The Print Cost And The Time U Ndertaken In The Process Of Printing Of A Newspaper Therefore In The Circumstances It Is Submitted Tha T The Expenses Claimed Deserved To Be Allowed In Toto And Hence The Disal Lowances Made By Ld Ao Deserve To Be Deleted With Regard To The Allowability Of The Expenses As Detailed Above It Is Further Submitted That All These Expenses Have Been Incurre D In The Normal Course Of Business And Are Under Business Expediency And Thus Are Allowable As Per The Provisions Of Section 37 1 Of The Income Tax Act 1961 It Is Further Submitted That None Of The Payment Was Made To Any Related Pa Rty Nor Has Been Alleged By Ld Ao As Being Excessive Or Unreasonable The Expe Nses Have Been Disallowed Merely On The Basis Of Assumptions And Presumptions The Expenditure So Incurred By The Assessee Qualifi Es For Deduction Under The Provisions Of Section 37 1 Of The Act As It Fulfil S And Meets All The Conditions For Allowablility Of Expenditure Under That Section T He Provisions Of Section 37 Of The Act Is Reproduced Herein Below For The Sake Of Ready Reference 1 Any Expenditure Not Being Expenditure Of The Nature Described In Sections 30 To 36 And Not Being In The Nature Of Capital Exp Enditure Or Personal Expenses Of The Assessee Laid Out Or Expended Who Lly And Exclusively For The Purposes Of Business Or Profession Shall Be Allowed In Computing The Income Chargeable Under The Head Profits And Gains Of Bus Iness Or Profession Explanation For The Removal Of Doubts It Is Hereb Y Declared That Any Expenditure Incurred By An Assessee For Any Purpose Which Is An Offence Or Which Is Prohibited By Law Shall Not Be Deemed To H Ave Been Incurred For The Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 16 Purpose Of Business Or Profession And No Deduction Or Allowance Shall Be Made In Respect Of Such Expenditure 2 B Notwithstanding Anything Contained In Sub Sect Ion 1 No Allowance Shall Be Made In Respect Of Expenditure Incurred By An Assessee On Advertisement In Any Souvenir Brochure Tract Pam Phlet Or The Like Published By A Political Party It Is Submitted That The Expenditure Has Been Incur Red By The Assessee Wholly Exclusively For The Purpose Of Its Business And Is Not A Personal Or Capital Expenditure And Is Therefore Eligible As Deduction U S 37 1 Of The Act Being An Expenditure Incurred In The Ordinary Course Of Busi Ness It Is Also Pertinent To Mention That None Of The Payment Has Been Made To A Ny Related Parties Whatsoever Since The Expenditure Claimed Under The Se Heads Duly Passes Through The Acid Test Mentioned Above Therefore In The Circumstances It Is Submitted That The Expenditure Being Made In The N Ormal Course Of Business Therefore The Disallowance Of Rs 6 53 788 Deser Ves To Be Deleted In Toto Hospitality Business Expenses During The Year Under Consideration Assessee Compa Ny Has Claimed A Sum Of Rs 45 81 331 On Account Of Hospitality Expenses In Cluded In The Head Miscellaneous Expenses Out Of Which A Sum Of Rs 4 58 133 Being 10 Of Total Expenses Was Disallowed By Ld Ao In This Regard It Is Submitted That These Expenses Were Incurred In Respect Of Lodging And Boarding Air Tickets Expenses Etc Of The Representatives Suppliers And Other Officials During The Course Of Assessmen T Proceedings Summary Of The Branch Wise Expenses Was Submitted Before The Ld A O Copies Enclosed The Entire Amount Is Spent On Various Business Connecte D Persons Such As Newspapers Representatives Suppliers Of Raw Mater Ial And Stores Items And Foreign Dignitaries In This Line Of Business Of Th E Assessee It Is Customary To Invite Humanities And Dignitaries For Publicity And Coverage In Newspapers Most Of Expenses Were Incurred Through Account Payee Che Ques And Payments Of Some Very Small Amounts Were Made In Cash And Such Insta Nces Are Very Small In Count During The Course Of Assessment Proceedings Summary Of The Branch Wise Expenses Was Submitted Before The Ld Ao Which Rem Ained Uncontroverted Such Payments Are Also Supported By Proper Vouchers And Receipts It Is Also Submitted That The Disallowance Of Similar Nature W Ere Also Made In A Y 2007 08 2008 09 Ay 2012 13 Which Were Deleted By The Ld Cit A Further Such Orders Of Ld Cit A Were Affirmed By Honble I Tat Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 17 Therefore In View Of The Principle Of Consistency The Same Deserves To Be Allowed In The Year Under Appeal As Well Given That There Is No Change In The Facts And Circumstances Of The Year Under Appeal 7 The Ld Cit A Has Granted Relief To The Assessee On These Issues By Holding As Under 2 2 I Have Perused The Facts Of The Case The Asse Ssment Order And The Submissions Of The Appellant The Facts Of This Iss Ue Are Similar To The Facts In The Preceding Year In Assessment Year 201 1 12 2012 13 In The Assessees Case The Itat Jaipur In Ita No 5 55 556 Jp 2015 Has Decided The Matter In Favour Of The Assessee By Holding As Under The Id Cit A Has Given A Finding Of Fact That The Assessee Had Submitted Summary Of Sales Promotion And Publicity Expenditure Copies Of Bills Vouchers Etc Before The Ao During The Course Of Assessment Proceedings For Verification The Ao Has Not Pointed A Single Instance To Show That The Expenditure Incurr Ed By The Assessee Were Not Wholly And Exclusively For The Purpose Of Business This Finding Of Id Cit A Is Not Contradicted By The Revenue By Placing Any Contrary Material On Record Moreover The Case Of The Asses See Is Covered By The Decision Of Coordinate Bench In The Case Of Ass Essee In Ita Nos 519 Jp 2012 Others In Favour Of The Assessee The Refore We Do Not See Any Reason To Interfere In The Order Of Id Cit A Which Is Hereby Upheld In View Of The Above Decision Disallowance Made B Y The Assessing Officer Out Of Sales Promotion Publicity Expenses Telephone Expenses Festival Celebration Travelling Expenses Hospitality Business Expenses Are Directed To Be Deleted 8 We Have Heard Both The Sides On This Issue Sinc E The Issues Raised In Both The Appeals Of The Revenue Are Cover Ed By The Decision Of The Coordinate Bench Of The Itat Jaipur In Assessee S Own Case For The A Y 2011 12 And 2012 13 In Favour Of The Assessee The Ld Dr Was Not Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 18 Able To Controvert The Finding Of The Ld Cit A Th Erefore We Find No Merit In These Grounds Of Appeals Of Revenue Hence The Same Are Dismissed 9 Regarding The Issue Involved In Ground No Vi Of Ita No 737 Jp 2017 And Ground No Vii Of Ita No 738 Jp 2017 Is Deleting The Disallowance Made On Account Of Solar Plant Inst Alled The Ld Cit A Has Dealt The Issue As Under I Have Perused The Facts Of The Case The Assessmen T Order And The Submissions Of The Appellant In View Of The Decisi On Of The Jurisdictional High Court In The Case Of M S Gangour Exports Pvt Ltd I N Db Income Tax Appeal No 14 2017 Wherein After Considering The Observations Of The Honble Rajasthan High Court In An Earlier Order Of M S K K Enterpri Ses The Court Has Decided The Issue In Favour Of The Assessee The Relevant P Ortion Is Reproduced Below The Issue Involved In These Appeals Has Been Consi Dered By The Honble Gujarat High Court In Tax Appeal No 604 2012 Deci Ded On 29 1 2013 In Commissioner Of Income Tax Ahmedabad Lii V Par Ry Engineering And Electronics Pvt Ltd In The Case Aforesaid Honble Gujarat High Court Held That Windmill Would Require A Scientifically Designed Machinery In Order To Harness The Wind Energy To The Maximum Pot Ential Such Device Has To Be Fitted And Mounted On A Civil Constructio N Equipped With Electric Fittings In Order To Transmit The Electric Ity So Generated Such Civil Structure And Electric Fittings Therefore I T Can Be Well Imagined Would Be Highly Specialized Thus Such Civil Const Ruction And Electric Fitting Would Have No Use Other Than For The Purpos E Of Functioning Of The Windmill On The Other Hand It Can Be Easily I Magined That Windmill Cannot Function Without Appropriate Installation An D Electrification In Other Words The Installation Of Windmill And The C Ivil Structure And The Electric Fittings Are So Closely Interconnected And Linked As To Form The Common Plant As Already Noted The Legislature Has Provided For Higher Rate Of Depreciation Of 80 Per Cent On Renewable En Ergy Devises Including Windmill And Any Specially Designed Devis E Which Runs On Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 19 Windmill The Civil Structure And The Electric Fitt Ing Equipments Are Part And Parcel Of The Windmill And Cannot Be Separated From The Same The Assessees Claim For Higher Depreciation On Such Inv Estment Was Therefore Rightly Allowed In View Of The Above The Issue Is Required To Be Decided In Favour Of Assessee Against The Department In View Of The Above The G Round Of Appeal Of The Assessee Is Allowed 10 The Ld Sr Dr Has Relied On The Order Of The Ass Essing Officer On The Contrary The Ld Ar Of The Assessee Has Subm Itted As Under In This Ground Of Appeal Department Has Challenge D The Action Of Ld Cit A In Deleting The Disallowance Of Additional Depreciatio N On Solar Plant Of Rs 9 00 001 Made By Ld Ao Brief Facts Pertaining To These Grounds Of Appeal A Re That During The Year Under Appeal Assessee Company Had Installed A Solar Powe R Plant Having Capacity Of 2 Mw At Kisnayat Kolayat Bikaner And Claimed Higher Depreciation However The Ld Ao Allowed Higher Rate Of Depreciation Only Qua The Plant And Machinery But On Civil Construction Such Claim Was Restricte D To The Normal Rate Accordingly The Ld Ao Has Restricted The Allowabl E Depreciation To Rs 7 34 89 397 As Against The Amount Of Rs 7 43 86 398 Claimed By Assessee Merely By Alleging That Depreciation At Higher Rat E Is Allowable Only On The Energy Devices But Not On The Civil Structure And F Oundation Buildings Upon Which It Has Been Installed In This Regard It Is S Ubmitted That It Is An Admitted Fact That The Civil Structure Building Upon Which Deprec Iation At Higher Rate Is Claimed Is The Foundation Of The Solar Plant Upon Which The Same Is Installed It Is Submitted That The Solar Plant Essentially Requires A Foundation For Installation Inasmuch As It Cannot Be Installed Without A Suppo Rting Structure The Ld Ao Himself Has Admitted The Fact That Plant Is Mounted On This Foundation Which Clearly Leads To The Inference That Without This Ci Vil Structure The Solar Plant Cannot Be Installed Therefore This Structure Is A N Integral Part Of The Solar Plant Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 20 And Cannot Be Segregated However The Ld Ao Has C Onsidered This Structure As Something Separated From The Solar Plant And Accord Ingly Disallowed Depreciation At Higher Rate On The Same In This Re Gard Kind Attention Of Your Honour Is Invited To The Fact That The Civil Struct Ure Upon Which Solar Plant Is Mounted And Installed Is So Planned Designed And Constructed So As To Serve The Assessees Special Technical Requirements And There Fore It Is An Integral Part Of The Solar Plant In This Regard Reliance Is Placed Upon The Judgment Of Honble Supreme Court In The Case Of Cit Vs Karnataka Power Corporation Reported In 2001 247 Itr 268 Sc Wherein The Honble Court Has Held As Under Investment Allowance Plant Building Building Whether Plant Is A Question Of Fact Finding That Assessee S Generating Station Building Had Been Constructed To Be An Inte Gral Part Of Its Power Generation System Building Constitut Ed Plant Entitled To Investment Allowance Income Tax Act 1961 S 32 A The Question Is Whether A Building Can Be Treated A S Plant Basically Is A Question Of Fact And Where It Is Found As A Fa Ct That A Building Has Been So Planned And Constructed As To Serve An Asse Ssees Special Technical Requirements It Will Qualify To Be Treat Ed As A Plant For The Purposes Of Investment Allowance Held Accordingly That There Was A Finding By The F Act Finding Authority That The Assessees Generating Station Bu Ilding Was So Constructed As To Be An Integral Part Of Its Genera Ting System It Was Plant Entitled To Investment Allowance The Same Issue Has Been Decided By The Honble Raja Sthan High Court In The Favour Of Assessee In The Case Of Pr Cit Vs M S Gangaur Exports P Ltd Dbita No 14 2017 Wherein The Honble Court Held As Under 4 Counsel For The Respondent Contended That Issue Is Squarely 2 Of 2 Ita 14 2017 Covered By The Decision Of This Court In Tax Appeal No 53 2012 Cit Vs K K Enterprises Decided On 1 8th July 2014 Wherein This Court Observed As Under The Issue Involved In These Appeals Has Been Consi Dered By The Honble Gujarat High Court In Tax Appeal No 604 20 12 Decided On 29 1 2013 In Commissioner Of Income Tax Ahmedabad Iii V Parry Engineering And Electronics Pvt Ltd In The Case Aforesaid Honble Gujarat High Court He Ld That Windmill Would Require A Scientifically Designed M Achinery In Order To Harness The Wind Energy To The Maximum Pot Ential Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 21 Such Device Has To Be Fitted And Mounted On A Civil Construction Equipped With Electric Fittings In Or Der To Transmit The Electricity So Generated Such Civil Structure And Electric Fittings Therefore It Can Be Well Imagined Would Be Highly Specialized Thus Such Civil Construction And Elec Tric Fitting Would Have No Use Other Than For The Purpose Of Fun Ctioning Of The Windmill On The Other Hand It Can Be Easily I Magined That Windmill Cannot Function Without Appropriate Instal Lation And Electrification In Other Words The Installation O F Windmill And The Civil Structure And The Electric Fittings Are S O Closely Interconnected And Linked As To Form The Common Pla Nt As Already Noted The Legislature Has Provided For Hig Her Rate Of Depreciation Of 80 Per Cent On Renewable Energy Dev Ises Including Windmill And Any Specially Designed Devis E Which Runs On Windmill The Civil Structure And The Elect Ric Fitting Equipments Are Part And Parcel Of The Windmill And Cannot Be Separated From The Same The Assessees Claim For Hi Gher Depreciation On Such Investment Was Therefore Rig Htly Allowed 5 In View Of The Above The Issue Is Required To Be Decided In Favour Of Assessee Against The Department The Above Judgment Of Honble Rajasthan High Court Has Been Followed By The Honble Itat Jaipur Bench Jaipur In The Following Cases 1 Dcit Vs Harshdeep Singh Sethi Ita No 891 Jp 2016 And 2 M S Mehru Electricals Mechanical Engineers P Ltd Ita No 519 Jp 2016 Therefore In Light Of The Above Settled Position O F Law It Is Clear That The Civil Structure Upon Which The Assessee Has Installed The Solar Plant Is An Integral Part Of The Same And Therefore Has To Be Considered As Plant For The Purpose Of Section 32 Of The Act Hence It Is Submitted That The Assessee Is Entitled To The Higher Rate Of Depreciation 80 And Additional De Preciation 20 On The Civil Structure As Well Accordingly It Is Prayed That Orders Passed By Ld Cit A May Please Be Upheld Similar Identical Submissions Have Also Been Submit Ted By The Ld Ar Of The Assessee In The Case For The A Y 2014 15 Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 22 11 We Have Heard Both The Sides On This Issue The Ld D R Is Not Able To Controvert The Findings Recorded By The Ld Cit A Hence These Grounds Of Both The Appeals Are Dismissed 12 In Ground No Vi Of Ita No 738 Jp 2017 The Issue Involved Is Deleting The Addition Of Foundation Day Ceremony Ex Penses Of Rs 5 07 824 The Ld Cit A Has Deleted The Addition By Holding As Under I Have Perused The Facts Of The Case The Assessmen T Order And The Submissions Of The Appellant The Facts Of This Iss Ue Are Similar To The Facts In The Preceding Year In Assessment Year 2011 12 20 12 13 In The Assessees Case The Itat Jaipur In Ita No 555 556 Jp 201 5 Has Decided The Matter In Favour Of The Assessee By Holding As Under The Id Cit A Has Given A Finding Of Fact That T He Assessee Had Submitted Summary Of Sales Promotion And Publicity Expenditur E Copies Of Bills Vouchers Etc Before The Ao During The Course Of Assessment Proceedings For Verification The Ao Has Not Pointed A Single Instance To Show Th At The Expenditure Incurred By The Assessee Were Not Wholly And Exclusively For The Purpose Of Business This Finding Of Id Cit A Is Not Contradicted By T He Revenue By Placing Any Contrary Material On Record Moreover The Case Of The Assessee Is Covered By The Decision Of Coordinate Bench In The Case Of Ass Essee In Ita Nos 519 Jp 2012 Others In Favour Of The Assessee Therefore We D O Not See Any Reason To Interfere In The Order Of Id Cit A Which Is Hereby Upheld In View Of The Above Decision Disallowance Made By The Assessing Officer Out Of Sales Promotion Publicity Expenses Postage Telephone Expenses Festival Celebration Travelling Expenses Hospital Ity Business Foundation Day Ceremony Expenses Are Directed To Be Deleted Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 23 13 The Ld Sr Dr Has Relied On The Order Of The As Sessing Officer The Ld Ar Of The Assessee Has Reiterated The Argumen Ts As Made Before The Ld Cit A And Further Submitted As Under A Sum Of Rs 5 07 824 Was Disallowed Out Of Total Expenses Of Rs 50 78 243 Claimed By Assessee In This Regard It Is Submitte D That The Assessee Company Has Been Celebrating Its Foundation Day From Year T O Year Which Is Attended By All The Employees Of The Company Its Associates Wh Ich Includes The Selling Agents Hawkers And Advertisement Agents Besides Th E Leading Personalities Of The City During The Course Of Assessment Proceedin Gs Summary Of The Branch Wise Expenses Was Submitted Before The Ld Ao Copi Es Enclosed Besides Copies Of Bills And Vouchers As Submitted Before Ao From A Perusal Of The Same Your Honour Would Observe That The Expenditure Incurred Is Most Reasonable And Genuine And Therefore Cannot Be Disa Llowed It May Be Mentioned That The Disallowance Of Simila R Nature Was Made In The A Y 2007 08 To 2012 13 Also Wherein The Honble Ci T A Had Deleted The Same In Appeal After Considering The Facts And Circ Umstances Of The Case And The Submissions Of The Assessee And Such Orders Were Co Nfirmed By Honble Itat The Expenditure On Such Function Is Totally Allowab Le In The Light Of Decisions Of Cit Vs Mehsana Distt Co Operative Milk Producers U Nion Ltd 1994 207 Itr 140 Guj Cit Vs Aditya Mills Ltd 1994 209 Itr 933 Raj Cit Vs Chemcrown India Ltd 262 Itr 177 Cal Further The Entire Expenditure Was Incurred In The Normal Course Of Business And Its Utility To The Business Cannot Be Denied Merely By Alleging The Personal Element Could Be Involved More Particularly When T He Assessee Being A Private Limited Company Having Separate Legal Entity And Ca Nnot Be Put At Par With A Proprietor Or Partnership Firm Where The Proprietor Partner Has The Full Control Over The Day To Day Business Operation Including Th E Expenses Incurred In The Case Of The Assessee Company It Has More Than 41 B Ranches And Units Spread Throughout India And Where All The Affairs Of The C Ompany Are Taken Care Of By The Employees Staff Of The Assessee Company Ther Efore Personal Involvement Ita 737 738 Jp 2017 Dcit Vs Rajasthan Patrika 24 Of Any Person Cannot Be Alleged In The Facts And Ci Rcumstances Of The Case Further The Ld Ao Has Failed To Justify As To How And In What Manner He Has Calculated The Magic Figure Of The Disallowances Ma De Out Of The Expenses Claimed By Merely Alleging That The Expenses Were I Ncurred For Personal Use In The Circumstances It Is Humbly Prayed That The D Isallowances Of Rs 5 07 824 Made Out Of Foundation Day Expenses Clai Med By The Assessee Deserves To Be Deleted 14 We Have Heard Both The Sides On This Issue The Ld D R Is Not Able To Controvert The Findings Recorded By The Ld Cit A Hence Ground No Vi Of Ita No 738 Jp 2017 Is Dismissed 15 In The Result Both The Appeals Of The Revenue Stand Dismissed Order Pronounced In The Open Court On 22 12 2017 Sd Sd Fot Iky Jko Fot Iky Jko Fot Iky Jko Fot Iky Jko Hkkxpan Hkkxpan Hkkxpan Hkkxpan Vijay Pal Rao Bhagchand U Kf D Lnl Judicial Member Ys Kk Lnl Accountant Member Tk Iqj Jaipur Fnukad Dated 22 Nd December 2017 Ranjan Vknsk Dh Izfrfyfi Vxzsfkr Copy Of The Order Forwarded To 1 Vihykfkhz The Appellant The Dcit Circle 6 Jaipur 2 Izr Fkhz The Respondent M S Rajasthan Patrika Pvt Ltd Jai Pur 3 Vk Dj Vk Qdr Cit 4 Vk Dj Vk Qdrvihy The Cit A 5 Fohkkxh Izfrfuf K Vk Dj Vihyh Vf Kdj K T Iqj Dr Itat Jaipur 6 Xkmz Qkbzy Guard File Ita No 737 738 Jp 2017 Vknskkuqlkj By Order Lgk D Iathdkj Asst Registrar