ITO, New Delhi V. Ms. Neena Wadhwa, New Delhi

ITA 1079/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97272 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 20-08-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 25-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: SAN T KAPOOR
• Keywords: Business expenditure; Additional evidence; Cost of acquisition; Valuation report
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH E NEW DELHI BEFORE : SHRI I.C. SUDHIR, JUDICIAL MEMBER & SHRI L.P. SAHU , ACCOUNTANT MEMBER ITA NO. 1079/DEL./2013 ASSTT. YEAR : 2002 - 03 INCOME - TAX OFFICER, VS. MS. NEENA WADHWA, WARD 24(3), NEW DELHI. 60 - B,SAINIK FARMS, C - 5 STREET, NEW DELHI. [PAN:AAAPW5822G] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P. DAM KANUNJNA, SR. DR RESPONDENT BY : SHRI SANT KAPOOR, ADVOCATE DATE OF HEARING : 20.08.2015 DATE OF PRONOUNCEMENT : 14 .09.2015 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 21.11.2012 PASSED BY THE LD. CIT(A) - XXXI, NEW DELHI FOR THE ASSESSMENT YEAR 2002 - 03 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING DISALLOWANCE MADE BY AO ON ACCOUNT OF FOREIGN TRAVEL EXPENSES OF RS.2,24,968/ - BY ADMITTING ADDITIONAL EVIDENCE WITHOUT ALLOWING AO TO EXAMINE THE SAME, THUS VIOLATING RULE 46A(3) OF THE IT RULES, 1962. 2. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS.19,17,126/ - ON ACCOUNT OF CAPITAL GAIN DETERMINED ON THE VALUATION OF DVO WHEN THE HON BLE ITAT IN THE SAME ORDER HAD UPHELD THE VALUE DETERMINED BY THE DVO IN THE CASE OF ANOTHER PROPERTY ALBEIT AT LITTLE LESSER PRICE. ITA NO. 1079/DEL./2013 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PROPRIETOR OF WADCO EXPORTS ENGAGED IN THE BUSINESS OF IMP ORT AND EXPORT AND HER HUSBAND WAS HAVING THE NRI STATUS AND MAINLY RESIDING AT RUSSIA. DURING THE RELEVANT YEAR, THE ASSESSEE HAS DEBITED RS.2,24,968/ - ON ACCOUNT OF TRAVELLING EXPENSES INCURRED ON THE FOREIGN TRAVEL OF ASSESSEE. THE ABOVE EXPENDITURES HA VE BEEN ADDED BY THE ASSESSING OFFICER ASSUMING THAT THE ASSESSEE HAS NOT PROCURED ANY BUSINESS ORDER FROM ABROAD TO JUSTIFY THIS CLAIM OF DEDUCTION OF EXPENDITURE. 3. THE ASSESSEE HAD ALSO SOLD A PLOT OF LAND ON 23.04.2001 FOR RS.7,10,000/ - SITUATED AT K HASRA NO. 412 AT SULTANPUR ESTATE MEHROLI, NEW DELHI. THE ASSESSING OFFICER RELYING ON THE DVO S REPORT RECEIVED VIDE LETTER NO. F. NO. DCIT/CC - 11 - NEENA WADHWA/03 - 04/335 DATED 12.01.2004, MADE VALUATION OF THE PROPERTY AT RS.21,41,900/ - AS ON 31.03.2001. C ONSIDERING THE ABOVE SALE PRICE OF RS.21,41,900/ - AND DEDUCTING THE INDEXED COST OF ACQUISITION OF THE PLOT OF RS.2,24,474/ - , THE ASSESSING OFFICER MADE AN ADDITION OF RS.19,17,126/ - AS CAPITAL GAIN EARNED BY THE ASSESSEE. 4. THE ASSESSEE CHALLENGED THE AS SESSMENT ORDER BEFORE THE LD. CIT(A), WHERE THE LD. CIT(A) ACCEPTED THE CONTENTIONS OF THE ASSESSEE OBSERVING AS UNDER : 3.1.2. I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR. THE WHOLE OF TRAVEL EXPENDITURE HAS BEEN DISALLOWED ON TH E ASSUMPTION THAT PERSONAL ELEMENT IN THE EXPENDITURE CANNOT BE RULED OUT BECAUSE HER HUSBAND IS AN NRI. IT IS SEEN THAT THE ASSESSEE S HUSBAND IS A RESIDENT OF RUSSIA WHILE THE ASSESSEE HAS VISITED HONGKONG, MALAYSIA AND CHINA. THE ITA NO. 1079/DEL./2013 3 AR HAS STATED THAT THE VISIT TO HONG KONG WAS UNDERTAKEN TO REESTABLISH THE BUSINESS LINK WITH FIRST QUALITY INDUSTRIAL LTD., HONGKONG. DURING CHINA VISIT, ASSESSEE HAS ATTENDED THE CHINA INTERNATIONAL TRADE FAIR FOR APPARELS, FABRICS HOME TEXTILE AND ACCESSORIES. HER MALAYSIAN VISIT WAS TO ATTEND THE FURNITURE TRADE FAIR. ALL THESE VISITS HAVE BEEN UNDERTAKEN FOR THE PURPOSE OF BUSINESS. FURTHER NO FAMILY MEMBER OF THE ASSESSEE ACCOMPANIED HER DURING THESE VISITS. ALL THESE FACTS SUBMITTED BY AR PRIMA FACIE SHOW THAT THE VISITS WERE UNDERTAKEN FOR THE PURPOSE OF BUSINESS. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY ACTUAL PERSONAL ELEMENT IN THE EXPENDITURE, OTHER THAN EXPRESSING HIS VIEW THAT PERSONAL ELEMENT CANNOT BE RULED OUT. THE DISALLOWANCE THEREFORE, CANNOT BE SUSTAINED . HENCE, THE SAME IS DELETED. 5. SIMILARLY, ON THE SECOND ISSUE, THE LD. CIT(A) ACCEPTED THE CLAIM OF THE ASSESSEE OBSERVING AS UNDER : 3.4. THE AO HAS MADE AN ADDITION OF RS.19,17,126/ - ON ACCOUNT OF INCOME FROM CAPITAL GAIN. AO HAD CONSIDERED THE SALE S CONSIDERATION OF PROPERTY (PLOT KHASRA NO. 412 SULTANPUR STATE MAHRAULI) AT RS.21,41,900/ - (AS PER VALUATION REPORT OF DVO) INSTEAD OF RS.7,10,000/ - AS DECLARED BY THE APPELLANT. 3.4.1. THE VALUE ADOPTED BY THE AO IS BASED ON THE DVO S REPORT OBTAINED D URING THE WEALTH TAX ASSESSMENT PROCEEDINGS FOR AY 2001 - 02.THE ASSESSEE HAD APPEALED AGAINST THE VALUE ARRIVED AT BY THE DVO. THE SAID WEALTH TAX ASSESSMENT ORDER HAS REACHED FINALITY WITH ITAT DELETING THE ADDITION AND REJECTING THE VALUATION OF RS.21,41, 900/ - ARRIVED BY THE DVO. IN THESE CIRCUMSTANCES THE SALE CONSIDERATION HYPOTHETICALLY ADOPTED BY THE AO BECOMES MEANINGLESS. FURTHER THERE IS NO EVIDENCE OF THE ASSESSEE HAVING ACTUALLY RECEIVED AMOUNT OVER AND ABOVE RS.7,10,000/ - FROM THE SALE OF THE SAI D PROPERTY. HENCE, THE ADDITION MADE ON THIS ISSUE CANNOT BE SUSTAINED AND IS DELETED. 6. THE LEARNED DR, RELYING ON THE ORDER OF THE AO, SUBMITTED THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN ALLOWING THE DEDUCTION OF TRAVELING EXPENSES OF RS.2,24,968 / - BY ADMITTING THE ADDITIONAL EVIDENCE WITHOUT ALLOWING THE AO TO ITA NO. 1079/DEL./2013 4 EXAMINE THE SAME IN VIOLATION OF RULE 46A. IT WAS ALSO CONTENDED THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF CAPITAL GAIN HAS ALSO BEEN WRONGLY DELETED, WHICH WAS MADE BY THE AO AFTER RELY ING ON THE VALUATION OF THE DVO. 7. THE LEARNED AR, ON THE OTHER HAND, HAS RELIED ON THE ORDER OF THE CIT(A) AND URGED FOR DISMISSAL OF REVENUE S APPEAL. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND HAVE GONE THROUGH THE MATERIAL AVA ILABLE ON RECORD. AS FAR AS THE FIRST ISSUE RELATING TO DELETION OF ADDITION ON ACCOUNT OF FOREIGN TRAVEL EXPENSES CLAIMED BY THE ASSESSEE, WE FIND THAT THE LEARNED CIT(A) HAS RIGHTLY ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE HAS VISITED AB ROAD FOR THE BUSINESS PROMOTION, AS SHE HAS ATTENDED EXHIBITIONS/TRADE FAIR ETC. THEREFORE, IT HAS RIGHTLY BEEN CONSIDERED AS BUSINESS EXPENDITURE U/S. 37(1) OF THE IT ACT. IT IS ALSO NOTABLE THAT THE IMPUGNED ORDER OF THE FIRST APPELLATE AUTHORITY NOWHERE REVEALS AS TO WHICH ADDITIONAL EVIDENCE HAS BEEN PLACED BY THE ASSESSEE BEFORE HIM OR CONSIDERED BY THE CIT(A). THE GROUNDS OF APPEAL ALSO DO NOT SHOW THE NATURE OF ANY SUCH EVIDENCES, WHICH HAS BEEN CONSIDERED BY THE CIT(A) IN THE IMPUGNED ORDER IN VIOLA TION OF RULE 46A. THERE BEING NO CONTRARY MATERIAL AGAINST THE STAND TAKEN BY THE ASSESSEE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL FILED BY THE REVENUE AND THE SAME IS ACCORDINGLY REJECTED. 9. ADVERTING TO THE SECOND ISSUE REGARDING COMPUTATION OF CAPITAL GAIN AND ADDITION MADE ON THIS COUNT OF RS.19,17,126/ - , WE FIND NO INFIRMITY IN THE FINDING ITA NO. 1079/DEL./2013 5 OF FACT ARRIVED AT BY THE LEARNED CIT(A) IN THE IMPUGNED ORDER. THE RECORD REVEALS THAT THE AO HAS MADE AN ADDITION OF RS.19,17,126/ - ON ACCOUNT OF INC OME FROM CAPITAL GAIN AFTER CONSIDERING THE SALE CONSIDERATION OF PROPERTY AT RS.21,41,900/ - VALUED BY DVO DURING THE WEALTH TAX ASSESSMENT PROCEEDINGS FOR A.Y. 2001 - 02. HOWEVER, ONCE THE ITAT IN THE APPEAL ARISING OUT OF WEALTH TAX ASSESSMENT PROCEEDINGS , HAS DELETED THE ADDITION AFTER REJECTING THE VALUATION OF RS.21,41,900/ - ADOPTED ON THE BASIS OF DVO S REPORT, THERE REMAINS NOTHING TO SUPPORT THE VALUATION ADOPTED BY THE ASSESSING OFFICER IN THE PRESENT ASSESSMENT ON THE SAME BASIS, WHICH STANDS COLLA PSED AT THE STAGE OF ITAT. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THIS COUNT ALSO. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.09.2015 . SD/ - SD/ - ( I.C. SUDHIR ) ( L.P. SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 14.09.2015 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES , NEW DELHI