C.I.T. - IV Kolkata v. I.M.C. Ltd
[Citation -2015-LL-0209-15]

Citation 2015-LL-0209-15
Appellant Name C.I.T. - IV Kolkata
Respondent Name I.M.C. Ltd.
Court HIGH COURT OF CALCUTTA
Relevant Act Income-tax
Date of Order 09/02/2015
Judgment View Judgment
Keyword Tags entertainment expenditure
Bot Summary: The Revenue has proposed the following two q uestions in respect of assessment year 1996-97 :- Whether on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition made on account of fees paid to the Clubs which is a entertainment expenditure to which sec tion 37(2) of the Income Tax Act is applicable Whether on the facts and in then circumstances of the case, the Tribunal was right in deleting the disallowance made on expenditure relatable to earlier 2 years, with regard to a dispute relating to a dispute relating to rent of the Delhi Office between the assessee and the tenant settled during the year under consideration. In so far as the first question is concerned wee need not give any answer because the learned Tribunal has not given any final verdict and merely remanded the matter to the Assessing Officer. In so far as the second question is concerned the learned Tribunal opined as follows :- We have considered the rival contentions. As there was a dispute regard to the rent of the Delhi Office between the assessee and the tenant and the matter was settled between them during the year under consideration and hence the amount so paid was claimed as deduction during the year under consideration. We do not see any infirmity in the order of the Ld. CIT(A) in deleting the impugned disallowance on account of a arrear of the rent paid during the year. Mr. Khaitan, learned Senior Advocate disputed the submission made by Mr. Dubey. A dispute cropped up which ultimately was settled in the relevant year and therefore payments were made including both the current and the outstanding dues.


IN HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) Original Side Present : Hon ble Justice Girish Chandra Gupta And Hon ble Justice Arindam Sinha 09.02.2015 ITA 495 of 2004 GA 2618 of 2004 C.I.T-IV, Kolkata Vs. I.M.C. Ltd. Mr. O.P. Dubey, Advocate for appellant Mr. J.P. Khaitan, Senior Advocate for respondent Court :- Delay condoned. Revenue has proposed following two q uestions in respect of assessment year 1996-97 :- (i ) Whether on facts and in circumstances of case, Tribunal was justified in deleting addition made on account of fees paid to Clubs which is entertainment expenditure to which sec tion 37(2) of Income Tax Act is applicable (ii) Whether on facts and in then circumstances of case, Tribunal was right in deleting disallowance made on expenditure relatable to earlier 2 years, with regard to dispute relating to dispute relating to rent of Delhi Office between assessee and tenant settled during year under consideration. In so far as first question is concerned wee need not give any answer because learned Tribunal has not given any final verdict and merely remanded matter to Assessing Officer. In so far as second question is concerned learned Tribunal opined as follows :- We have considered rival contentions. Out of total consideration sum of Rs. 9,28,705 pertains to arrear of rent for Delhi Office. As there was dispute regard to rent of Delhi Office between assessee and tenant and matter was settled between them during year under consideration and hence amount so paid was claimed as deduction during year under consideration. As expenditure was crystalised during year. We do not see any infirmity in order of Ld. CIT(A) in deleting impugned disallowance on account of arrear of rent paid during year. learned Tribunal evidently has followed judgment in case of Karam Chand Thapar & Bros P. Ltd. for views taken by them. Mr. Dubey submitted that facts of case are distinguishable and therefore judgment did not apply. Mr. Khaitan, learned Senior Advocate disputed submission made by Mr. Dubey. He also relied upon judgment in case of C.I.T Vs Indian Mica Supply Co. P. Ltd. reported in (1970) 77 ITR 20 SC wherein following views were expressed :- as Tribunal, in present case, had clearly found that it was only as result of compromise that respondent became entitled to remain in possession of demised land, its liability also became ascertained only at that point of time. respondent in incurring expenditure had acted in interest of and for purpose of its business, and expenditure was 3 not laid out for any purpose other than that of carrying on business. deduction was properly admissible under section 10(2)(xv) of Income-tax Act, 1922, and matter being self-evident High Court was justified in rejecting application of Commissioner under section 66(2) of Act. It is not in dispute that assessee was lessee in respect of premises in question and lease has expired by efflux of time and assessee held over. dispute cropped up which ultimately was settled in relevant year and therefore payments were made including both current and outstanding dues. It is in these circumstances that Tribunal was of opinion that liability was crystalised when settlement was arrived at . We are convinced that Tribunal has taken correct view of matter. Therefore question no.2 is answered affirmative. appeal is thus disposed of. (Girish Chandra Gupta, J.) ( Arindam Sinha, J.) ANC. C.I.T. - IV Kolkata v. I.M.C. Ltd
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