SARDA CONSTRUCTION P.TD, MUMBAI V. ITO 1(3)(2), MUMBAI

ITA 1632/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9135 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 21-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD , JUDICIAL MEMBER ITA NO. 1632/MUM/2016 : A.Y : 2010 - 11 SARDA CONSTRUCTIONS PVT. LTD., G - 3, MANAK MAHAL, 90, V.N. ROAD, CHURCHGATE, MUMBAI 400 020 (APPELLANT) PAN : AADCS0741A VS. ITO - 1(3)(2), MUMBAI (RESPONDENT) APPELLANT BY : SHRI MAYUR KISNADWALA RESPONDENT BY : SHRI V. JUSTIN DATE OF HEARING : 06/07/2017 DATE OF PRONOUNCEMENT : 03 /10/2017 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 3 , MUMBAI DATED 29.01.2016 , PERTAINING TO THE ASSESSMENT YEAR 2010 - 11 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER, MUMBAI DATED 22.03.2013 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE ONLY DISPUTE IS WITH REGARD TO THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES OF RS.5,80,000/ - . 2 SARDA CONSTRUCTIONS PVT. LTD. ITA NO. 1632/MUM/2016 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE APPELLANT IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS, INTER - ALIA , ENGAGED IN DIVERSE BUSINESSES COMPRISING OF CONSTRUCTION AND HOTELING, RUNNING HEALTH CLUB, RESTAURANT AND READYMADE GARMENT SHOP. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT FOREIGN TRAVEL EXPENSES OF RS.5,80,000/ - WERE INCURRED FOR WHICH THERE WAS NO JUSTIFICATION. THE ASSESSING OFFICER NOTED THAT SUCH EXPENDITURE DID NOT RELATE TO THE BUSINESS OF THE ASSESSEE INASMUCH AS THE ASSESSEE DOES NOT HAVE ANY EXPORT - ORIENTED ACTIVITY. HE, THEREFORE, DISALLOWED THE SAME, WHICH HAS ALSO BEEN AFFIRMED BY THE CIT(A). 4. BEFORE US, THE LEARNED REPRESENTATIVE POINTED OUT THAT THE LOWER AUTHORITIES HAVE COMPLETELY MISDIRECTED THEMSELVES IN MAKING THE IMPUGNED DISALLOWANCE INASMUCH AS THE ASSESSEE WAS, INTER - ALIA, ENGAGED IN THE BUSINESS OF RUNNING A CLUB AND THAT IT HAD RECI PROCAL ARRANGEMENTS/AGREEMENTS WITH FOREIGN CLUBS, WHICH REQUIRED OVERSEAS TRAVEL BY THE DIRECTORS. IN THIS CONTEXT, OUR ATTENTION HAS BEEN DRAWN TO PAGES 27 TO 64 OF THE PAPER BOOK WHEREIN IS PLACED A LIST AS WELL AS COPIES OF RECIPROCAL ARRANGEMENTS WIT H VARIOUS OTHER CLUBS EXISTING DURING THE YEAR AND ON THIS BASIS IT IS SOUGHT TO BE SUBMITTED THAT THE FOREIGN TRAVEL EXPENSES ARE INCURRED IN THE COURSE OF BUSINESS ACTIVITY. 5. ON THE OTHER HAND, THE LD. DR HAS REITERATED THE STAND OF THE LOWER AUTHORIT IES, SO HOWEVER, THERE IS NO NEGATION TO THE ASSERTIONS MADE BY THE ASSESSEE. 6. HAVING CONSIDERED THE RIVAL STANDS, WE FIND THAT THE LOWER AUTHORITIES HAVE MISDIRECTED THEMSELVES IN DISALLOWING THE FOREIGN 3 SARDA CONSTRUCTIONS PVT. LTD. ITA NO. 1632/MUM/2016 TRAVEL EXPENSES COMPLETELY IGNORING THE EXPLANAT ION PUT FORTH BY THE ASSESSEE. IN FACT, THE EXPLANATION FURNISHED BY THE ASSESSEE HAS BEEN REPRODUCED BY THE CIT(A) IN HIS ORDER, BUT THE SAME HAS BEEN BRUSHED ASIDE ONLY ON THE GROUND THAT THE AFFILIATION WITH A PARTICULAR CLUB WAS ONLY ACQUIRED IN THE Y EAR 2012 AND THAT THERE WAS NO JUSTIFICATION FOR THE FOREIGN TRAVEL EXPENSES DURING THE PREVIOUS YEAR 2010 - 11 CORRESPONDING TO THE ASSESSMENT YEAR UNDER CONSIDERATION. IN OUR CONSIDERED OPINION, SUCH AN APPROACH IS QUITE UNJUSTIFIED ; IN ANY CASE, OUR ATTE NTION HAS BEEN DRAWN TO PAGE 27 OF THE PAPER BOOK WHEREIN IS PLACED A LIST OF FOREIGN CLUBS WITH WHICH ASSESSEE HAS RECIPROCAL AGREEMENTS AND TH IS TABULATION ALSO CONTAINS THE DATES OF CORRESPONDENCE AND AFFILIATION WITH THE RESPECTIVE CLUBS. THE DETAILS CLEARLY BRING OUT THAT THE AFFILIATIONS ARE OVER A PERIOD OF TIME STARTING FROM 1999 AND ALSO EXIST IN THE PERIOD UNDER CONSIDERATION AND THUS, THE OBSERVATION OF THE CIT(A) IS COMPLETELY OFF THE MARK. CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES O F THE CASE, IN OUR VIEW, THERE IS NO JUSTIFICATION TO UPHOLD THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES OF RS.5,80,000/ - , WHICH IS HEREBY DIRECTED TO BE DELETED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPE N COURT ON 3 R D OCTOBER, 2017. SD/ - SD/ - (RAVISH SOOD) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 3 R D OCTOBER, 2017 *SSL* 4 SARDA CONSTRUCTIONS PVT. LTD. ITA NO. 1632/MUM/2016 COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI