Enterprising Enterprises, CHENNAI V. DCIT, CHENNAI

ITA 101/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86301 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 21-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . ! '# , $ % BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ./ ITA NO.101/MDS/2013 $ # '# / ASSESSMENT YEAR : 2008-09 M/S ENTERPRISING ENTERPRISES, 9, 50 TH STREET, ASHOK NAGAR, CHENNAI - 600 083. PAN : AAAFE 0195 N V. THE DEPUTY COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE III, CHENNAI - 600 034. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI PHILIP GEORGE, ADVOCATE +,)* - . / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT ! - / / DATE OF HEARING : 13.01.2015 0' - / / DATE OF PRONOUNCEMENT: 20.02.2015 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V III, CHENNAI, DATED 27.11.2012 FOR THE ASSESSMENT YEAR 2008-09. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE HAD FILED R ETURN OF INCOME BY DECLARING A TOTAL INCOME OF ` 5,52,020/-. THE CASE OF THE 2 I.T.A. NO. 101/MDS/2013 ASSESSEE WAS SELECTED FOR SCRUTINY AND THE ASSESSME NT WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME-TAX AC T, 1961 (IN SHORT 'THE ACT'). IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE A.O. HAS OBSERVED THAT IT IS SEEN FROM THE RECORDS THAT THE ASSESSEE HAD EXPENDED AN AMOUNT OF ` 32.91 LAKHS ON ACCOUNT OF FAIR EXPENSES MET IN FOREIGN COUNTRIES WHICH INCLUDED TR AVELLING EXPENDITURE OF ` 18.44 LAKHS. THE ASSESSEE HAD TAKEN PART IN TRADE FAIRS IN CHINA, GERMANY AND ITALY. A SUBSTANTIAL P ART OF SUCH EXPENDITURE INCLUDED TRAVEL AND STAY EXPENSES. CON SIDERING THAT THERE WAS A POSSIBILITY OF PERSONAL EXPENDITURE, TH E A.O. DISALLOWED ` 5,00,000/- AS THE EXPENDITURE INCURRED FOR NON-BUS INESS PURPOSES. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(APPEALS). THE LD. CIT(APPEALS) HAS OBSERVED TH AT THE TOTAL EXPENDITURE SHOWN AS INCURRED BY THE ASSESSEE WAS ` 53,28,864/-. THE LD. CIT(APPEALS) WAS OF THE OPINION THAT AS THE RE WAS NO EVIDENCE THAT THE ASSESSEE MET THE ABOVE EXPENSES F OR CANVASSING/ADVERTISING IN PROMOTING THE EXPORT SALE S TURNOVER AND IN THE ABSENCE OF DIRECT NEXUS BETWEEN THE FAIR AND FO REIGN TRAVEL EXPENDITURE AND BUSINESS PROMOTION, THE EXPENDITURE MET ON ACCOUNT OF FOREIGN TRAVEL, FAIR AND STAY EXPENSES C ANNOT BE FULLY ALLOWED AT ` 53,28,864/-. HOWEVER, KEEPING IN VIEW THE NATURE OF 3 I.T.A. NO. 101/MDS/2013 THE EXPENSES, THE LD. CIT(APPEALS) HELD THAT A REAS ONABLE AMOUNT OF ` 10,00,000/- IS ALLOWED FOR INCURRING FOREIGN TRAVE L, FAIR EXPENSES, STAY EXPENSES RELATABLE TO THE BUSINESS OF THE ASSE SSEE AND THE BALANCE AMOUNT OF ` 43,28,864/- IS TREATED AS PERSONAL EXPENDITURE AND ADDED TO THE INCOME OF THE ASSESSEE. 4. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE THE TRIBUNAL. THE LD.COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE LD. CIT(APPEALS) ENHANCED THE DISALLOWANCE WITHOUT APPRECIATING THE FACTS OF THE CASE PROPERLY AND SUBMITTED THAT T HE ORDER PASSED BY THE LD. CIT(APPEALS) HAS TO BE SET ASIDE. 5. ON THE OTHER HAND, THE LD. D.R. POINTED OUT THAT THE ASSESSEE HAS NOT FILED ANY DETAILS BEFORE THE A.O. WITH REGARD TO FOREIGN TRADE EXPENSES AND BUSINESS PROMOTION EXPEN DITURE AND THEREFORE, THE LD. CIT(APPEALS) HAS RIGHTLY DISALLO WED THE EXPENDITURE CLAIMED BY THE ASSESSEE. 6. WE HAVE HEARD BOTH SIDES AND PERUSED THE RECORDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS FILED A RETURN OF INCOME BY DECLARING A TOTAL INCOM E OF ` 5,52,020/-. IN ITS RETURN OF INCOME, IT HAS CLAIMED BUSINESS PR OMOTION EXPENDITURE OF ` 32.91 LAKHS INCLUDING TRAVELLING EXPENSES OF ` 4 I.T.A. NO. 101/MDS/2013 18.44 LAKHS. BEFORE THE A.O., NO DETAILS WERE FILE D BY THE ASSESSEE. BEFORE US, STATEMENT OF EXPENDITURE AND COPIES OF C REDIT CARD STATEMENTS AND BILLS WERE FILED. WE FIND THAT THE ASSESSEE HAD INCURRED A HUGE EXPENDITURE AND ALL THE DETAILS IN CONNECTION WITH BUSINESS PROMOTION EXPENDITURE AND FOREIGN TRAVEL E XPENSES NEED TO BE VERIFIED. HENCE, WE SET ASIDE THE ORDER PASS ED BY THE LD. CIT(APPEALS) AND DIRECT THE ASSESSEE TO FILE ALL TH E DETAILS IN RESPECT OF BUSINESS PROMOTION EXPENDITURE AND FOREIGN TRAVE L EXPENSES. AFTER CONSIDERING THE DETAILS FILED BY THE ASSESSEE , THE A.O. IS DIRECTED TO ADJUDICATE THE ISSUE AFRESH AND PASS A DE NOVO ORDER IN ACCORDANCE WITH LAW. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 20 TH OF FEBRUARY, 2015 AT CHENNAI. SD/- SD/- ( . ) ( . ! '# ) (A. MOHAN ALANKAMONY) (V. DURGA RAO) /ACCOUNTANT MEMBER $ /JUDICIAL MEMBER /CHENNAI, = /DATED, THE 20 TH FEBRUARY, 2015. KRI. 5 I.T.A. NO. 101/MDS/2013 > - +$/?@ A@'/ /COPY TO: 1. )* /APPELLANT 2. +,)* /RESPONDENT 3. ! B/ () /CIT(A)-VIII, CHENNAI 4. ! B/ /CIT-VI, CHENNAI-34 5. @D' +$/$ /DR 6. 'E# F /GF.