Dalmia (Bros) Pvt. Ltd. Vs DCIT (ITAT Delhi)
No Double Taxation – Perquisites Taxed in Director’s Hands – ITAT Deletes Disallowance u/s 37
During assessment, AO noted that Rs.4,00,204/- was incurred on vehicle maintenance paid to Patel Auto Services Pvt. Ltd. Since the vehicle was used by Director, AO held it to be personal expenditure & disallowed the same u/s 37. AO further disallowed Rs.6,04,196/- incurred on club expenses of Directors & employees, treating them as personal in nature. CIT(A) upheld both disallowances.
Before Tribunal, Assessee submitted that similar disallowances were deleted by CIT(A) in earlier years. It was demonstrated that vehicle expenses were treated as perquisites in the hands of Director, duly reflected in Form 12BA & subjected to TDS. Hence, no further disallowance was warranted. Regarding club expenses, it was argued that they were incurred for business purposes & also treated as perquisites in employees’ hands.
Tribunal observed that identical issues had been considered in A.Y. 2013-14 by CIT(A) who allowed the claims after verifying evidence. In the present year also, details were furnished before AO & the perquisite value was taxed in the hands of Director/employees. Since the expenses were incurred wholly & exclusively for business & already subjected to tax in the hands of beneficiaries, further disallowance was unjustified. Accordingly, Tribunal allowed Assessee’s appeal & directed deletion of both additions.
