M/s. Vaishnavi Corporate Communications Pvt. Ltd., New Delhi V. ACIT, New Delhi

CO 261/DEL/2014

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2800 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-02-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 26-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: UMESH CHAND DUBEY SENIOR
• Keywords: Gift
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH D DD D : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT AND AND AND AND SHRI K. NARASIMHA CHARY SHRI K. NARASIMHA CHARY SHRI K. NARASIMHA CHARY SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 6760/DEL/2013 6760/DEL/2013 6760/DEL/2013 6760/DEL/2013 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2005 2005 2005 2005 - -- - 06 0606 06 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRC CENTRAL CIRC CENTRAL CIRC CENTRAL CIRCLE LELE LE- -- -25, 25, 25, 25, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S VAISHNAVI CORPORATE M/S VAISHNAVI CORPORATE M/S VAISHNAVI CORPORATE M/S VAISHNAVI CORPORATE COMMUNICATIONS PVT.LTD., COMMUNICATIONS PVT.LTD., COMMUNICATIONS PVT.LTD., COMMUNICATIONS PVT.LTD., A AA A- -- -14, DUGGAL COLONY, 14, DUGGAL COLONY, 14, DUGGAL COLONY, 14, DUGGAL COLONY, DEVLI ROAD, KHANPUR, DEVLI ROAD, KHANPUR, DEVLI ROAD, KHANPUR, DEVLI ROAD, KHANPUR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 062. 110 062. 110 062. 110 062. PAN : AABCV2775K. PAN : AABCV2775K. PAN : AABCV2775K. PAN : AABCV2775K. (APPELLANT) (RESPONDENT) CROSS OBJECTION CROSS OBJECTION CROSS OBJECTION CROSS OBJECTION NO NONO NO .261/DEL/2014 .261/DEL/2014 .261/DEL/2014 .261/DEL/2014 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2005 2005 2005 2005 - -- - 06 0606 06 M/S VAISHNAVI CORPORATE M/S VAISHNAVI CORPORATE M/S VAISHNAVI CORPORATE M/S VAISHNAVI CORPORATE COMMUNICATIONS PVT.LTD., COMMUNICATIONS PVT.LTD., COMMUNICATIONS PVT.LTD., COMMUNICATIONS PVT.LTD., A AA A- -- -14, DUGGAL COLONY, 14, DUGGAL COLONY, 14, DUGGAL COLONY, 14, DUGGAL COLONY, DEVLI ROAD, KHANPUR, DEVLI ROAD, KHANPUR, DEVLI ROAD, KHANPUR, DEVLI ROAD, KHANPUR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 062. 110 062. 110 062. 110 062. PAN : AABCV2775K. PAN : AABCV2775K. PAN : AABCV2775K. PAN : AABCV2775K. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -25, 25, 25, 25, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI UMESH CHAND DUBEY, SENIOR DR. ASSESSEE BY : SHRI CHANDRA SHEKHAR, CA. DATE OF HEARING : 07.02.2017 07.02.2017 07.02.2017 07.02.2017 DATE OF PRONOUNCEMENT : 10.02.2017 10.02.2017 10.02.2017 10.02.2017 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: :- -- - THE APPEAL BY THE REVENUE AND THE CROSS-OBJECTION BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06 ARE DIRECT ED AGAINST THE ORDER OF LEARNED CIT(A)-I, NEW DELHI DATED 23 RD OCTOBER, 2013. ITA-6760/D/2013 & C.O.NO.261/D/2014 2 2. IN THE REVENUES APPEAL, THE ONLY GROUND RAISED IS AGAINST THE REDUCTION IN THE DISALLOWANCE OF FOREIGN TRAVEL EXP ENSES WHILE, IN THE CROSS-OBJECTION, THE ASSESSEE HAS CHALLENGED THE AD DITION SUSTAINED. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE CLAI MED THE EXPENDITURE OF `39,57,985/- ON THE FOREIGN TRAVEL W HICH WAS DISALLOWED IN ITS ENTIRETY BY THE ASSESSING OFFICER. ON APPEA L, LEARNED CIT(A) REDUCED THE DISALLOWANCE TO `5,45,375/-. THE ASSES SEE IS IN APPEAL AGAINST THE RELIEF ALLOWED BY THE LEARNED CIT(A) WH ILE THE ASSESSEE IS IN CROSS-OBJECTION AGAINST THE DISALLOWANCE SUSTAINED. 4. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. LEARNED DR HAD ARGU ED AT LENGTH SO AS TO CLAIM THAT THE ASSESSEE HAS NOT PRODUCED SUFFICI ENT EVIDENCE BEFORE THE ASSESSING OFFICER TO ESTABLISH THAT THE FOREIGN TRAVEL EXPENSES WERE FOR THE PURPOSE OF BUSINESS. IN THE ABOVE CIRCUMST ANCES, LEARNED CIT(A) WAS NOT JUSTIFIED EVEN IN ALLOWING THE PART RELIEF. HE STATED THAT THE ONUS IS UPON THE ASSESSEE TO PROVE THAT THE EXP ENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, POINTE D OUT THAT ALL THE DETAILS WERE FURNISHED BEFORE THE ASSESSING OFFICER AND LEARNED CIT(A) HAS ONLY CONSIDERED THOSE DETAILS AND THEREAFTER HA S PARTLY ALLOWED THE RELIEF TO THE ASSESSEE. HE SUBMITTED THAT THE ORDE R OF LEARNED CIT(A) SHOULD BE PARTLY MODIFIED AND THE DISALLOWANCE SUST AINED BY HIM SHOULD BE DELETED. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES. THE FINDING OF LEARNED CIT(A) IS REPRODUCED BELOW F OR READY REFERENCE :- 5.3 I HAVE CONSIDERED THE ASSESSMENT ORDER, THE DE TAILS FILED AND THE SUBMISSIONS MADE. I FIND FROM THE DE TAILS FILED THAT THESE EXPENSES WERE MAINLY INCURRED BY T HE DIRECTORS AND EMPLOYEES/CONSULTANTS FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. THUS IN ALL CASES, EXCE PT FIVE ITA-6760/D/2013 & C.O.NO.261/D/2014 3 INSTANCES, THE NEXUS BETWEEN THE EXPENDITURE AND TH E BUSINESS OF THE APPELLANT STANDS ESTABLISHED. IN O NE INSTANCE, WHERE THE PERSONS, WHO TRAVELLED ABROAD A ND THE EXPENSES WERE INCURRED BY THE APPELLANT, COULD NOT BE PROPERLY IDENTIFIED BY THE APPELLANT. THEREFORE, T HE NEXUS BETWEEN THE EXPENDITURE AND THE BUSINESS OF THE APP ELLANT COULD NOT BE ESTABLISHED IN THAT CASE. 5.4 THERE ARE ALSO FOUR INSTANCES INVOLVING FOREIGN VISITS BY JOURNALISTS WHO ARE NOT ITS EMPLOYEES OR CONSULT ANTS, AND WHO DO NOT HAVE ANY DIRECT BUSINESS RELATION WI TH THE APPELLANT COMPANY. THE PRESS COUNCIL ACT, 1978 ENT RUSTS THE PRESS COUNCIL OF INDIA (PCI) THE RESPONSIBILITY TO ENSURE FREEDOM OF THE PRESS AND TO MAINTAIN AND IMPROVE TH E STANDARDS OF NEWSPAPERS AND NEWS AGENCIES IN INDIA. TOWARDS THIS PURPOSE, THE SAID ACT EMPOWERS THE PCI TO BUILD UP A CODE OF CONDUCT FOR NEWSPAPERS, NEWS AGE NCIES AND JOURNALISTS ACCORDING TO HIGHEST PROFESSIONAL S TANDARDS. ACCORDING TO THE NORMS OF JOURNALISTIC CONDUCT PRES CRIBED BY THE PCI UNDER THE SAID ACT, JOURNALISTS SHOULD N OT ACCEPT GIFTS, LOANS, TRIPS, DISCOUNTS, PREFERENTIAL SHARES OR OTHER CONSIDERATIONS WHICH COMPROMISE OR ARE LIKELY TO COMPROMISE HIS POSITION. ACCORDING TO THE GUIDELIN ES ON UNDUE FAVOURS TO JOURNALIST, 1998, PRESCRIBED BY TH E PCI UNDER THE SAID ACT, JOURNALISTS ARE PROHIBITED FROM AIR TRAVEL SPONSORED BY COMPANIES/AIRLINES AS IT IS AN INDUCEM ENT TO WRITE FAVOURABLY ABOUT THEIR PRODUCTS AND SERVICES. THEREFORE, THE EXPENDITURE INCURRED BY THE APPELLAN T COMPANY ON SPONSORING FOREIGN TRAVEL OF THE JOURNAL ISTS IS AGAINST THE LAW AND NOT AN ALLOWABLE EXPENSE AS PER EXPLANATION TO SECTION 37(1) OF THE INCOME TAX ACT, 1961, WHICH STATES AS UNDER : EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HER EBY DECLARED THAT ANY EXPENDITURE INCURRED BY AN ASSESS EE FOR ANY PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBI TED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR T HE PURPOSE OF BUSINESS OR PROFESSION AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDIT URE. 5.5 IN VIEW OF THE ABOVE, OUT OF THE DISALLOWANCE O F RS.39,57,985/- MADE BY THE REVENUE ON FOREIGN TRAVE L EXPENSES, EXPENDITURE TO THE EXTENT INCURRED ON THE UNIDENTIFIED PERSONS AMOUNTING TO RS.68,528/-, AND ON JOURNALISTS AMOUNTING TO RS.4,76,847/-, TOTALING RS.5,45,375/-, IS CONFIRMED AND THE BALANCE AMOUNT OF RS.34,12,610/- IS TREATED AS EXPLAINED AND DELETED. THESE GROUNDS OF APPEAL ARE DISPOSED OF ACCORDINGLY. ITA-6760/D/2013 & C.O.NO.261/D/2014 4 6. WE FIND THAT LEARNED CIT(A) HAS CONSIDERED THE D ETAILS FURNISHED BY THE ASSESSEE WITH REGARD TO FOREIGN TRAVEL EXPEN SES AND AFTER CONSIDERING EACH AND EVERY EXPENDITURE, HE ARRIVED AT THE CONCLUSION THAT THE EXPENDITURE OF `5,45,375/- WAS NOT FOR THE PURPOSE OF BUSINESS AND ACCORDINGLY, HAS DISALLOWED THE SAME. AFTER CON SIDERING THE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNE D CIT(A). THE SAME IS UPHELD. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS CROSS- OBJECTION OF THE ASSESSEE IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 10.02.2017 . SD/- SD/- (K. NARASIMHA CHARY (K. NARASIMHA CHARY (K. NARASIMHA CHARY (K. NARASIMHA CHARY ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. REVENUE : ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -25, N 25, N 25, N 25, NEW DELHI. EW DELHI. EW DELHI. EW DELHI. 2. ASSESSEE : M/S VAISHNAVI CORPORATE COMMUNICA TIONS PVT.LTD., M/S VAISHNAVI CORPORATE COMMUNICATIONS PVT.LTD., M/S VAISHNAVI CORPORATE COMMUNICATIONS PVT.LTD., M/S VAISHNAVI CORPORATE COMMUNICATIONS PVT.LTD., A AA A- -- -14, DUGGAL COLONY, DEVLI ROAD, KHANPUR, 14, DUGGAL COLONY, DEVLI ROAD, KHANPUR, 14, DUGGAL COLONY, DEVLI ROAD, KHANPUR, 14, DUGGAL COLONY, DEVLI ROAD, KHANPUR, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 062. 110 062. 110 062. 110 062. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR