ITC Limited Vs DCIT (ITAT Kolkata)– We have carefully considered the submissions of the ld. representatives of the parties and the orders of the authorities below. We have also gone through the details of the expenditure aggregating Rs. 9,00,111 claimed by the assessee, the break-up of which has already been mentioned herein above. We observe that the assessee has made the contribution to Staff Club/ Recreation Club of its employees.
On perusal of the details, it is observed that the said amounts were reimbursed by the assessee for salary of the staffs employed at the Club, maintenance of library at the Club, expenses for maintenance of indoor game section¸ expenses for conduct of sports competition and their families, reimbursement of expenses towards electricity, expenses incurred on providing cultural recreation to the members/ cultural events, expenses for organising fete for the members/ families of assessee’ s employees, expenses incurred on organising cultural events on different occasions, annual social meets of the employees/ their families, etc., except direct subscription made to one Cooperative Society of Rs. 25,800/-. Considering the facts of the case, we do agree with the assessee that in the assessment year under consideration, the assessee has filed the details of the expenses reimbursed to the Recreation Clubs/ Organisations/ Societies of the employees and their families and it was not an expenditure incurred by the assessee towards setting up formation or giving direct contribution to a fund, Trust, Company, Association of Persons, Body of Individuals, Society registered under Societies’ Registration Act, 1860 (except to one contribution of Rs. 25,800/- as mentioned herein above), but the reimbursement is of the expenditure actually incurred for the welfare activities of the employees and their families. Hence, we are of the considered view that the Staff Recreation Club and Staff Club for which the assessee has incurred the expenses are for the welfare of its employees due to business expediency. Staff Recreation Club and Staff Club are a part and parcel of the Organisation itself. Considering the earlier decision of ITAT, Kolkata in the case of Chloride Industries Ltd. (supra) and also the fact that the assessee has given the break-up of the expenses incurred/ reimbursed, as mentioned herein above, we are of the considered view that the provisions of section 40A(9) of the Act are not attracted for a sum of Rs.8,74,3 11/- and the said expenditure is allowable under section 37(1) of the Act. Therefore, we allow Ground of appeal taken by the assessee in part by restricting the dis-allowance to Rs. 25,800/- and by deleting the sum of Rs.8,74,311/- out of Rs. 9,00,111/-.
