Case Number: ITA 1756/DEL/2020
Appellant: SCV & Co. LLP, New Delhi
Respondent: DCIT CPC, Bangalore
Assessment Year: 2017-18
Case Filed On: 2020-10-22
Order Type: Final Tribunal Order
Date of Order: 2022-08-17
Pronounced On: 2022-08-17
This case involves an appeal filed by SCV & Co. LLP, New Delhi against the DCIT CPC, Bangalore for the assessment year 2017-18. The appeal, registered as ITA 1756/DEL/2020, was filed on October 22, 2020, and concerns the disallowance of club expenditure reported in the tax audit report.
The case was heard by the Delhi Bench ‘G’ of the Income Tax Appellate Tribunal (ITAT) on August 4, 2022, with the order pronounced on August 17, 2022. The bench comprised Accountant Member Sh. Anil Chaturvedi and Judicial Member Sh. Anubhav Sharma.
The primary grounds of appeal were:
The appellant, represented by Advocate Ms. Aditi Gupta, argued that the disallowance of club expenditure was incorrect as it was reported in the audit report for disclosure purposes only, as required by the Guidance Note on Tax Audit under section 44AB. The appellant contended that the disclosure did not amount to an incorrect claim under section 143(1)(a)(ii) or warrant disallowance under section 143(1)(a)(iv) of the Act.
The tribunal noted that the CIT(A) confirmed the disallowance based on the auditor’s comments without considering the facts of the case. The tribunal found that the assessment was completed with intimation under section 143(1) and that disallowance based on the audit report’s comments could not be made without issuing a notice under section 142(1) and providing an opportunity for the assessee to explain.
The tribunal referred to several judgments supporting the appellant’s contention, including:
The tribunal concluded that the disallowance of club expenditure reported in the audit report for disclosure purposes was not justified. The tribunal allowed the appeal of the assessee, directing the Assessing Officer to rectify the disallowance and allow the expenditure as per the provisions of the Income-tax Act, 1961.
In conclusion, the appeal filed by SCV & Co. LLP was allowed. The tribunal directed the Assessing Officer to rectify the disallowance of club expenditure and allow the expenditure as per the provisions of the Income-tax Act, 1961.
The tribunal’s order was pronounced on August 17, 2022, by Accountant Member Sh. Anil Chaturvedi and Judicial Member Sh. Anubhav Sharma, directing the rectification of the error in the disallowance of club expenditure.
Members:
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SCV & Co. LLP vs. DCIT CPC Bangalore – 2017-18 – Club Expenditure Disallowance
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