The ACIT, 3(1), V. M/s Steel Tubes of India Ltd.,

ITA 175/IND/2004

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6036 (ITAT-INDORE)
• Duration Of Justice: 5 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-03-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 19-03-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Assessee Lawyers: M C MEHTA; HITESH CHIMNANI CAS
• Keywords: Gift; Additional evidence; Bad and doubtful debts
• Section: 43B; 115JB; 80G

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI V.K. GUPTA, AM ITA NO.129/IND/2004 ASSESSMENT YEAR: 1999-00 M/S. STEEL TUBES OF INDIA LTD. INDORE (PAN AAECS 3347 P) APPELLANT VS ASSISTANCE COMMISSIONER OF INCOME TAX, CIRCLE-3(1), INDORE RESPONDENT AND ITA NO.175/IND/2004 ASSESSMENT YEAR: 1999-00 ASSISTANCE COMMISSIONER OF INCOME TAX, CIRCLE-3(1), INDORE APPELLANT VS M/S. STEEL TUBES OF INDIA LTD. INDORE (PAN AAECS 3347 P) RESPONDENT ASSESSEE BY : S/SHRI M.C. MEHTA & HITESH CHIMNANI , CAS DEPARTMENT BY : SHRI K.K. SINGH, CIT, DR O R D E R PER JOGINDER SINGH, JM THESE ARE CROSS-APPEALS BY ASSESSEE AS WELL AS BY T HE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-I, INDORE, DATED 26 TH 2 DECEMBER, 2003. FIRST, WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE WHEREIN FIRST GROUND RAISED IS THAT ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFI RMING THE DISALLOWANCE OF TRAVELLING EXPENSES ON OTHERS AMOUNTING TO RS.8,2 5,543/- WHEN THE ENTIRE EXPENSES WERE INCURRED FOR BUSINESS PURPOSES. 2. DURING THE HEARING OF THE APPEAL, IT WAS CLAIMED BY THE LD. COUNSEL FOR THE ASSESSEE, SHRI M.C. MEHTA AND SHRI HITESH CHIMNANI, THAT THE IMPUGNED ISSUE IS COVERED VIDE ORDER OF THE TRIBUNAL DATED 26.11.2009 (ASSESSMENT YEAR 1998-99). THIS ASSERTION OF THE ASSESSEE WAS NOT CONTROVERTED BY SHRI K.K. SINGH, LD. CIT, DR. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. RE PRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON THE FILE. BEF ORE COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF T HE AFORESAID ORDER DATED 26.11.2009: 4. GROUND NO. 1 READS AS UNDER :- THAT THE LD. CIT(A) ERRED IN MAINTAINING DISALLOWANCE OF RS. 7,77,700/-BEING 50% OF TRAVELING EXPENSES OF OTHERS, WHEN THE SAID EXPENSES HAVING BEEN INCURRED ENTIRELY FOR BUSINESS PURPOSES THE SAME ARE ALLOWABLE. 5. THE FACTS, IN BRIEF, ARE THAT THE A.O. DISALLOWED 50% OF TRAVELING EXPENDITURE INCURRED ON OTHERS FOR THE REASON THAT THE WHOLE OF SUCH EXPENDITURE COULD NOT BE CONSIDERED AS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IN APPEAL, THE ASSESSEE SUBMITTED THE BREAK UP OF EXPENSES AND STATED THAT THESE EXPENSES HAD BEEN INCURRED ON TRAVELLING OF AUDITORS, BANKERS, FINANCIAL INSTITUTIONS ADVOCATES, CONSULTANTS, SUPPLIERS ETC. THE DOCUMENTARY EVIDENCES WERE ALSO FILED TO SUBSTANTIATE SUCH CLAIM. THE LD. CIT(A), HOWEVER, HELD THAT FROM SUCH DETAILS, IT COULD NOT BE INFERRED THAT ALL THESE EXPENSES WERE 3 INCURRED FOR BUSINESS PURPOSES AND NO ELEMENT OF PERSONAL EXPENSES WAS INVOLVED. ACCORDINGLY, HE CONFIRMED THE ACTION OF THE A.O. AGGRIEVED BY THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2000-01 DATED 23 RD MAY, 2008, AND REFERRED TO PAGE 93 TO 99 OF THE COMPILATION. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW. 8. IT IS NOTED THAT THE LD. CIT(A) DISPOSED OF THIS APPEAL ON 21.10.2003 AND TILL THAT DATE THE SAID ORDER OF THE TRIBUNAL HAD NOT BEEN PRONOUNCED. HAVING STATED SO, WE FIND THAT IN THAT YEAR ALSO, 50 % OF SIMILAR EXPENSES HAD BEEN DISALLOWED FOR THE SAME REASON AND THE TRIBUNAL AFTER CONSIDERING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF JCIT VS. ITC LIMITED AS REPORTED IN 115 TTJ 45 ( SPECIAL BENCH) AND DECISION OF THE DIVISION BENCH OF THE TRIBUNAL IN THE CASE OF COCA COLA INDIA LIMITED IN 104 TTJ 254, HELD THAT THE AMOUNT SO SPENT WAS TO BE CONSIDERED AS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. SINCE THE FACTS ARE IDENTICAL, HENCE, RESPECTFULLY FOLLOWING THE RATIO OF THIS DECISION, WE HOLD THAT NO SUCH DISALLOWANCE IS WARRANTED. ACCORDINGLY, THIS GROUND OF THE ASSESSEE IS ALLOWED. THE LD. ASSESSING OFFICER HAS DISCUSSED THE ISSUE A T PAGE 2 (PARA 5) OF THE ASSESSMENT ORDER WHEREIN OUT OF THE TOTAL EXPENDITU RE OF RS.94,61,092/-, THE TOTAL TRAVELLING EXPENSES OF RS.16,51,085/- INCLUDES TRAV ELLING OF OTHERS, LIKE CONSULTANTS, AUDITORS, BANK OFFICIALS ETC. AND THE SAME WERE CLA IMED TO BE WHOLLY AND EXCLUSIVELY 4 FOR BUSINESS PURPOSES. THE LD. ASSESSING OFFICER DI SALLOWED RS.8,25,543/- ON THE PLEA THAT THE PURPOSE OF TRAVELLING EXPENSES OF THE IMPUGNED AMOUNT COULD NOT BE EXPLAINED BY THE ASSESSEE FOR BUSINESS PURPOSES. TH E STAND OF THE ASSESSING OFFICER WAS AFFIRMED BY THE LD. CIT(A) WHICH IS UND ER CHALLENGE BEFORE THIS TRIBUNAL. IN THE AFORESAID ORDER, THE TRIBUNAL HAS ALREADY CO NSIDERED THE DECISION OF SPECIAL BENCH IN THE CASE OF JCIT VS. ITC LTD. (SUPRA) AND ALSO ANOTHER DECISION OF DIVISION BENCH IN THE CASE OF COCA COLA LTD. (SUPRA) AND ULT IMATELY, DELETED THE DISALLOWANCE. NO CONTRARY DECISION WAS BROUGHT TO O UR NOTICE, THEREFORE, THIS GROUND OF THE ASSESSEE IS ALLOWED. 3. IN ITS NEXT GROUND, IT HAS BEEN CLAIMED THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN ERRED IN MAINTAINING THE ADDITION OF RS.26,81,45 2/- WHICH RELATES TO DEFERRED SALES- TAX AS PER NEW SCHEME PERTAINING TO NON-CONVENTIONA L POWER GENERATING SYSTEM. THE SUBMISSIONS ON BEHALF OF THE ASSESSEE ARE THAT THE SAID DEFERMENT ON SALES-TAX WAS GRANTED BY M.P. URJA VIKAS NIGAM AND NOT BY M.P .A.K.V.N., ESPECIALLY WHEN M.P. URJA VIKAS NIGAM ISSUED ELIGIBILITY CERTIFICAT E TO AVAIL DEFERRED FACILITY VIDE CERTIFICATE DATED 30.12.95. IT WAS ALSO CLAIMED THA T THIS ISSUE IS ALSO COVERED BY THE ORDER OF TRIBUNAL DATED 26.11.2009 (ASSESSMENT YEAR 1998-99) (SUPRA). THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE REVENUE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON THE FILE. IN THE LIGHT OF THE AFORESAID ASSERTION, WE ARE REPRODUCING HEREWITH THE RELEVANT PORTION OF THE AFORESAID ORDER (ITA NO.1069/IND/2003, DATED 26.11.2009) : 9. GROUND NO. 2 READS AS UNDER :- THAT THE LD. CIT(A) ERRED IN MAINTAINING DISALLOWANCE OF RS. 76,51,709/- U/S 43-B BY TREATIN G 5 THE SAME AS DEFERMENT OF SALES TAX AS IS USUALLY ALLOWED BY THE SALES TAX DEPARTMENT, WITHOUT APPRECIATING THAT THE SAID DEFERMENT OF ALES TAX WA S GRANTED BY M.P. URJA VIKAS NIGAM CONSEQUENT TO GENERATION OF POWER BY INSTALLING WIND MILLS. THE SAID DISALLOWANCE HAVING BEEN MADE WITHOUT APPRECIATING THE NATURE OF THE SAID ITEM IS PATENTL Y WRONG. THAT THE SAID DEDUCTION IS LEGALLY ALLOWABLE IN THIS VERY YEAR. 10. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE VERY OUT-SET, SUBMITTED THAT THIS ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE SAID ORDER OF THE TRIBUNAL AND REFERRED TO PAGE 103 TO 105 OF THE PAPER BOOK. 11. THE LD. DEPARTMENTAL REPRESENTATIVE, HOWEVER, PREFERRED TO RELY ON THE ORDERS OF THE REVENUE AUTHORITIES. 12. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW. 13. WE FIND THAT IN THE ASSESSMENT YEAR 2000-01, THE LD. CIT(A) HAD DELETED THE ADDITION OF RS. 20,90,000/- ON ACCOUNT OF DEFERRED SALES TAX LIABILITY BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF MAHESHWARI APPLIANCES PRIVATE LIMITED, AS REPORTED IN 32 ITC 96, WHICH HAD BEEN CONFIRMED BY THE HON'BLE JURISDICTIONAL HIGH COURT BY DISMISSING THE S.L.P. FILED BY THE REVENUE. THUS, NOW THIS ISSUE HAS ATTAINED FINALITY AS PER THE FACTS ON RECORD. HENCE, RESPECTFULLY FOLLOWING THE ABOVE RATIO, WE ALLOW THIS GROUND OF THE ASSESSEE. 14. BEFORE PARTING, WE MAY MENTION THAT THE LD. CIT(A) CONFIRMED THIS ADDITION IN VIEW OF THE DECISION OF THE INDORE BENCH OF THE TRIBUNAL IN SOME OTHER CASE. HOWEVER, SINCE NOW THIS ISSUE 6 HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE HON'BLE JURISDICTIONAL HIGH COURT AS STATED EARLIER. HENCE, NO OTHER VIEWS ARE POSSIBLE. BEFORE THE LD. ASSESSING OFFICER, IT WAS CLAIMED BY THE ASSESSEE THAT IT IS A NEW SCHEME PERTAINING TO NON-CONVENTIONAL POWER GEN ERATING SYSTEM, WHICH PROVIDES 100% OF DEFERMENT OF SALES-TAX, THEREFORE, ALL THE REQUIREMENTS UNDER THE SAID SCHEME ARE MET BY THE ASSESSEE. HOWEVER, THE L D. ASSESSING OFFICER WAS OF THE VIEW THAT SALES-TAX DEFERMENT WAS NOT COVERED BY TH E LOAN LIABILITY. ON APPEAL, THE STAND OF THE LD. ASSESSING OFFICER WAS AFFIRMED, WH ICH IS UNDER CHALLENGE BEFORE THIS TRIBUNAL. IT IS SEEN THAT THE TRIBUNAL VIDE AFORESA ID ORDER DATED 26.11.2009 HAS ALREADY CONSIDERED THE DECISION IN MAHESHWARI APPLI ANCES P. LTD. (32 ITC 96) WHICH WAS AFFIRMED BY THE HONBLE JURISDICTIONAL HIGH COU RT DECIDED IN FAVOUR OF THE ASSESSEE. NO CONTRARY DECISION WAS BROUGHT TO OUR N OTICE. EVEN OTHERWISE, THE LD. REPRESENTATIVES FROM BOTH SIDES AGREED THAT THE IMP UGNED ISSUE IS COVERED BY THE ABOVE DECISION, CONSEQUENTLY, THIS GROUND OF THE AS SESSEE DESERVES TO BE ALLOWED. 5. THE LAST GROUND PERTAINS TO MAINTAINING THE DISA LLOWANCE OF BAD DEBTS OF RS.2,49,835/- WHILE COMPUTING BOOK PROFIT U/S 115JA OF THE ACT. THIS GROUND WAS NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE, CONSEQ UENTLY, IT IS DISMISSED AS NOT PRESSED. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. 6. NOW, WE SHALL TAKE UP THE APPEAL OF THE REVENUE (ITA NO.175/IND/2004) WHEREIN FIRST GROUND I.E. GROUND NO.1(I) IS THAT TH E ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN ADMITTING ADDL. EVIDENCE IN CONTRAVENTION RULE 4 6A OF THE IT RULES AND CONSEQUENT DELETING THE DISALLOWANCE OF RS.64,60,077/- ON ACCO UNT OF FOREIGN TRAVELLING EXPENSES ESPECIALLY WHEN THE NECESSARY DETAILS AND THE PURPO SE OF TRAVELLING WERE NOT 7 FURNISHED BY THE ASSESSEE. AT THE OUTSET, IT WAS CL AIMED THAT THE IMPUGNED ISSUE IS COVERED BY THE ORDER OF THE TRIBUNAL DATED 26.11.20 09. THIS FACTUAL MATRIX WAS CONSENTED TO BE CORRECT BY THE LD. CIT, DR. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON THE FILE. IN VIEW OF THE AFORESAID ASSERTION, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF T HE ORDER AS DETAILED IN PARA 17 TO 22 OF THE ORDER DATED 26.11.2009: 17. GROUND NO. 1(I) READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 8,01,405/- ON ACCOUNT OF FOREIGN TRAVELING ESPECIALLY WHEN THE ASSESSEE DID NOT FURNISH COMPLETE EVIDENCE OF PURPOSE OF FOREIGN TRAVELING EITHER BEFORE THE A.O. OR BEFORE THE CIT(A). 18. THE ASSESSEE CLAIMED FOREIGN TAVELLING EXPENSES O F RS. 8,01,405/- ON THE TRAVEL. THE A.O. REQUIRED THE ASSESSEE TO FILE THE DETAILS AND EVIDENCES REGARDIN G BUSINESS PURPOSE OF SUCH FOREIGN TOUR, PLACES VISIT ED AND PERIOD OF STAY. THE ASSESSEE MERELY FILED COPY OF ACCOUNT OF FOREIGN TRAVELING. THE A.O. FURTHER FOUN D THAT THERE WERE NO SUBSTANTIAL IMPORTS OR EXPORTS DURING THE YEAR, HENCE, HE DISALLOWED THE ENTIRE EXPENDITURE AS INCURRED FOR NON-BUSINESS PURPOSE. I N APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMITTED VARIOUS DETAILS AND EXPLANATIONS COMPRISING OF THE NAMES OF THE PERSONS AND PLACES VISITED BY THEM AND CONTENDED THAT THESE PEOPLE WERE OFFICERS/EMPLOYEES OF THE ASSESSEE COMPANY, WHO HAD UNDERTAKEN THESE VISITS FOR THE PURPOSE OF ASSESSEES BUSINESS, HENC E, ALLOWABLE. THE ASSESSEE ALSO RELIED ON VARIOUS JUDICIAL DECISIONS AND CIRCULAR NO. 4 OF 1950 FOR T HE PROPOSITION THAT THERE WAS NO NECESSITY TO LINK THE ALLOWABILITY OF SUCH EXPENSES WITH EXPORTS OR IMPOR TS AND SINCE THIS EXPENDITURE WERE OF REVENUE NATURE, 8 HENCE, ALLOWABLE. THE LD. CIT(A) ALSO CALLED FOR REMAND REPORT FROM THE A.O., WHEREIN HE STATED THAT THE ASSESSEE MERELY SUBMITTED INTERNAL DOCUMENTS AN D NO EXTERNAL EVIDENCE WAS SUBMITTED TO SUPPORT THE SAME. HENCE, HE JUSTIFIED DISALLOWANCE. THE LD. CIT(A), HOWEVER, HELD THAT THE A.O. WAS NOT JUSTIFI ED IN SITTING OVER THREE MONTHS WITHOUT MAKING ANY EXERCISE TO VERIFY THE CORRECTNESS OF THE CLAIMS MA DE BY THE ASSESSEE BY MAKING NECESSARY ENQUIRIES. THE LD. CIT(A), THEREAFTER, HELD THAT EXPENDITURE ON FOREIGN TRAVEL WAS MEANT TO PRESERVE THE BUSINESS INTERESTS OF THE COMPANY, EXPLORING THE POSSIBILITY OF IMPROVING EXPORT PROSPECTS AND IMPORT OF RAW MATERIALS AT CHEAPER RATES. HENCE, EXPENSES INCURRE D BY THE EMPLOYEES/CONTRACTORS OF THE ASSESSEE COMPANY COULD NOT BE TREATED AS OF PERSONAL NATURE. HE FURTHER PLACED RELIANCE ON HIS ORDER FOR ASSESSMENT YEAR 2000-01 FOR DELETING THE DISALLOWANCE SO MADE BY THE ASSESSING OFFICER. 19. THE LD. DEPARTMENTAL REPRESENTATIVE NARRATED THE FACTS AND PLACED STRONG RELIANCE ON THE ORDER OF TH E A.O. HE ALSO SUBMITTED THAT ON THE ONE HAND, THE LD . CIT(A) HELD THAT THE A.O. HAD DISALLOWED THE ENTIRE CLAIM ON FLIMSY GROUND FOR THE REASON THAT THE EXPENSES DID NOT BEAR ANY LINK WITH THE EXPORTS OR IMPORTS DURING THE YEAR ITSELF AND, ON THE OTHER HA ND, HE ALSO JUSTIFIED THE INCURRENCE OF THESE EXPENSES FOR EXPLORING POSSIBILITIES OF EXPORTS, HENCE, THE ORDE R OF THE LD. CIT(A) WAS SELF-CONTRADICTORY. 20. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN ASSESSMENT YEAR 2000-01, THE TRIBUNAL BY THE IMPUGNED ORDER DATED 23.5.2008 HAD DECIDED THIS ISSUE AGAINST THE ASSESSEE AND REFERRED TO PAGE 105 TO 108 OF THE PAPER BOOK. HE FURTHER CONTENDED THAT IN THAT YEAR, THE EXPENSES OF RS. 93,917/- WHICH WERE INCURRED ON FOREIGN TOUR OF THE MANAGING DIRECTOR. HOWEVER, IN THE YEAR UNDER CONSIDERATION , THE SENI OR MANAGERS/EXECUTIVES OF THE ASSESSEE COMPANY HAD VISITED FOREIGN COUNTRIES, INCLUDING SINGAPORE, WHE RE THE ASSESSEE WAS HAVING SUBSIDIARY COMPANY, WHOSE 9 SHARES WERE ALSO SOLD BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. HE DREW OUR ATTENTION TO PARA 17 OF THE PAPER BOOK TO SUBSTANTIATE THESE CLAIMS. HE FURTHER CONTENDED THAT ANOTHER REASON FOR CONFIRMATION OF THIS DISALLOWANCE IN THAT YEAR WAS THAT THERE WERE NEGLIGIBLE EXPERTS OF RS. 10.07 LAK HS IN THAT YEAR AS COMPARED TO EXPORTS OF RS. 320.28 LAKHS IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. ON THIS ASPECT, HE FURTHER CONTENDED THAT IN THE YE AR UNDER CONSIDERATION, THERE WERE SUBSTANTIAL IMPORTS AND EXPORTS. IN SUPPORT OF SUCH CLAIMS, HE REFERRED TO INTERNAL PAGE 17 OF THE PAPER BOOK, WHEREIN IMPORTE D RAW MATERIAL AND CONSUMABLE STORE IN THE YEAR UNDER CONSIDERATION, AMOUNTED TO APPROXIMATELY RS. 161.50 LAKHS. HE ALSO DREW OUR ATTENTION TO PAGE 18 TO SHO W THAT THE ASSESSEE HAD EARNED ALMOST RS. 217.50 LAKH S BY WAY OF EXPORT OF ITS PRODUCTS AND SUBMITTED THAT , THUS, THE FACTS OF THIS YEAR WERE SUBSTANTIALLY DIF FERENT FROM THE FACTS OF ASSESSMENT YEAR 2000-01 AND, THEREFORE, THE ORDER OF THE TRIBUNAL WAS NOT REQUIR ED TO BE FOLLOWED. 21. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW. 22. IT IS NOTED THAT THE ASSESSEE IS EXPORTING AND IMPORTING ONLY MINISCULE PORTION OF ITS PURCHASE/TO TAL SALES. THE ASSESSEE HAS ALSO CLAIMED TO HAVE COLLABORATIONS WITH FOREIGN COMPANIES. AT PAGE 17, THE ASSESSEE HAS MERELY SUBMITTED THE DETAILS OF COUNTRIES VISITED AND THE NAMES OF THE PERSONS. FRO M THE PERUSAL OF THESE DETAILS, IT IS NOTED THAT EVEN DESIGNATION OF THE PERSON AND PURPOSE OF VISIT HAS NOT BEEN MENTIONED. IT IS ALSO NOTED THAT OUT OF THE TO TAL EXPENDITURE OF RS. 8,01,405/- A SUM OF RS. 3,72,49 5/- + RS. 70,307/- HAS BEEN SPENT ON THE VISITS OF THE MANAGING DIRECTOR OF THE COMPANY SHRI K.N. GARG AS ADMITTED BY THE ASSESSEE ON A QUERY BY THE BENCH I N THIS REGARD. THE EXPENDITURE OF RS. 70,307/- IS REL ATED TO HIS VISIT TO SINGAPORE AND OTHER EXPENDITURE IS RELATED TO HIS VISITS TO MUSCAT AND JAPAN AND EXCEP T THESE DETAILS, THE ASSESSEE HAS NOT FURNISHED ANY 10 DOCUMENTARY EVIDENCES TO SHOW THE PURPOSE OF THE VISIT OR DETAILS OF MEETINGS WITH FOREIGN COLLABORA TORS, SUPPLIERS/CUSTOMERS ETC. IT IS ALSO NOTED THAT IMPO RTS AND EXPORTS ARE A REGULAR FEATURE AND NO MATERIAL H AS BEEN PLACED ON RECORD THAT SOME NEW CUSTOMERS WERE APPROACHED OR POSSIBILITY OF NEW COLLABORATION AGREEMENT WAS EXPLORED. HAVING STARTED SO, WE, HOWEVER, FIND THAT IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS SOLD SHARES OF ITS SUBSIDI ARY COMPANY SITUATED IN THE SINGAPORE AND HAVING REGARD TO THE FACT THAT IT IS A COMPANY MANAGED PROFESSIONALLY, THE EXPENDITURE INCURRED ON THE VIS ITS OF EMPLOYEES CANNOT BE DISALLOWED FOR PERSONAL PURPOSES UNLESS SOME MATERIAL IS BROUGHT ON RECORD BY THE REVENUE AUTHORITIES. THUS, TAKING INTO CONSIDERATION THE OBSERVATIONS MADE BY THE ASSESSIN G OFFICER IN THE REMAND REPORT IN REGARD TO LACK OF EVIDENCE AND OTHER ASPECTS AS ELABORATED HEREINABOVE, WE ARE OF THE VIEW THAT THE EXPENDITUR E OF RS. 3,72,495/- INCURRED BY THE ASSESSEE ON THE V ISIT OF SHRI K.N. GARG, M. D. TO MUSCAT AND JAPAN IS NOT ALLOWABLE. IN THIS REGARD, WE ALSO DRAW SUPPORT FRO M THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2000-01 CITED SUPRA. THUS, THIS GROUND OF THE REVENUE STANDS PARTLY ALLOWED. ON PERUSAL OF RECORD, WE HAVE FOUND THAT THE AMOUNT OF RS.1,82,411/- WAS CLAIMED TO BE FOR THE TRAVELLING EXPENSES OF MR. K. N. GARG, MD ON 10 TH TO 16 THROUGH OCTOBER, 1998 (PAGE 41 OF THE PAPER BOOK). IN VIEW OF THIS FACT, THE AO IS DIRECTED TO FOLLOW THE AFORESAID ORDER OF THE TRIBUNAL, CONSEQU ENTLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. THE NEXT GROUND PERTAINS TO PAYMENT ON ACCOUNT O F PF MADE AFTER DUE DATE BUT WITHIN THE GRACE PERIOD U/S 43B OF THE ACT. DUR ING HEARING, IT WAS CLAIMED THAT THE PF/ESI WERE DEPOSITED BEFORE FILING OF THE RETURN. RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF ALOME EXTRUSIONS 319 ITR 30 6 (SC). THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT ALL PAYMENTS WERE MADE BEFORE DUE DATES INCLUDING 11 GRACE PERIOD. IT WAS FURTHER CLAIMED THAT THIS ISS UE IS ALSO COVERED BY THE AFORESAID ORDER DATED 26.11.2009. THIS FACTUAL MATRIX WAS NO T CONTROVERTED BY THE REVENUE. IN VIEW OF THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF THE AFORESAID ORDER :- 23. GROUND NO. 1(II) READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUN T OF THE PAYMENT OF PROVIDENT FUND BEYOND DUE DATES. 24. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE V ERY OUT-SET, SUBMITTED THAT THE IMPUGNED PAYMENTS HAD BEEN MADE WITHIN THE TIME AND THE DISALLOWANCE WAS MADE BY THE ASSES SING OFFICER MERELY FOR THE REASON THAT THE CHEQUES WERE REALIZED THEREAFTER. HE FURTHER CONTENDED THAT THIS ISSUE WA S ALSO COVERED BY THE IMPUGNED ORDER OF THE TRIBUNAL AND REFERRE D TO PAGES 110 AND 111 OF THE COMPILATION. THE LD. DEPARTMENTA L REPRESENTATIVE, HOWEVER, PREFERRED TO RELY ON THE O RDER OF THE A.O. 25. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. 26. ON DUE CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE ISSUE INVOLVED, WE FIND THAT THE LD. CIT(A) HAS RIGHTLY D ELETED THIS ADDITION AS THE CHEQUES FOR THE IMPUGNED PAYMENTS H AVE BEEN DEPOSITED WITH THE CONCERNED AUTHORITIES WITHIN THE TIME ALLOWED IN THE RESPECTIVE STATUTES. THUS, THIS GROU ND OF THE REVENUE IS DISMISSED. IN THE CASE OF CIT V. ALOME EXTRUSIONS LIMITED (SUP RA), THE HONBLE APEX COURT PLACED RELIANCE ON THE DECISION IN ALLIED MOT ORS PRIVATE LIMITED V. CIT (224 ITR 677) (SC) AFFIRMED THE DECISION OF THE HONBLE KARN ATAKA HIGH COURT IN CIT V. SABRI ENTERPRISES; 291 ITR 141 AND REVERSED THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN PAMWI TISSUES LIMITED; 313 ITR 137. SINCE THE IMPUGNED AMOUNTS WERE CLAIMED TO BE PAID WITHIN THE TIME ALLOWED WITHIN T HE STATUTE, CONSEQUENTLY, THERE IS 12 NO INFIRMITY IN THE STAND OF THE LEARNED CIT(A), TH EREFORE, THIS GROUND OF THE REVENUE IS DISMISSED. 9. THE NEXT GROUND I.E. GROUND NO. 1(III) PERTAINS TO DELETING THE DISALLOWANCE OF RS.1,50,000/- ON ACCOUNT OF SEMINAR AND CONFERENCE EXPENSES. AT THE OUTSET IT WAS CLAIMED THAT THIS ISSUE IS ALSO COVERED BY THE AFOR ESAID DECISION DATED 26.11.2009. THE LEARNED CIT DR CONSENTED TO THE ASSERTION OF TH E ASSESSEE. ON PERUSAL OF RECORD AND AFTER HEARING THE RIVAL S UBMISSIONS, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF THE A FORESAID ORDER AS CONTAINED IN PARA 27 ONWARDS :- 27. GROUND NO. 1(III) READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,00,000/- ON ACCOUNT OF PRESENTATION AND GIFTS INCLUDED IN SEMINAR/CONFEREN CE EXPENSES AND SALES PROMOTION EXPENSES. 28. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE GAVE GIF TS IN THE COURSE OF SEMINAR AND CONFERENCES, WHICH WERE DISALLOWED B Y THE ASSESSING OFFICER AS EXPENDITURE OF THE NATURE OF E NTERTAINMENT. THE ASSESSEE, IN APPEAL, BEFORE THE CIT(A), PLEADED THAT THESE EXPENSES WERE INCURRED IN THE COURSE OF BUSINESS AN D PLACED RELIANCE ON THE VARIOUS JUDICIAL DECISIONS FOR ALLO WANCE THEREOF. THE LD. CIT(A) FOUND THAT THE A.O. DISALLOWED THE E XPENSES OUT OF SALES PROMOTION EXPENSES ON AD HOC BASIS WIT HOUT POINTING OUT ANY SPECIFIC EXPENSES, WHICH COULD BE TERMED AS PERSONAL OR INCURRED FOR NON BUSINESS PURPOSES. THE LD. CIT(A), ACCORDINGLY, DELETED THE IMPUGNED ADDITION. 29. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 30. THE LD. DR NARRATED THE FACTS AND PLACED RELIANCE O N THE ORDER OF THE AO. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT( A). BESIDES PLACING RELIANCE ON THE DECISION OF THE HON'BLE DEL HI HIGH COURT IN THE CASE AS REPORTED IN 258 ITR 575 AND DE CISION OF THE 13 TRIBUNAL IN THE CASE OF WIPRO INFORMATION TECHNOLOG IES LIMITED, AS REPORTED IN 88 TTJ 778. 31. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 32. IT IS NOTED THAT INCURRENCE OF EXPENSES IS NOT IN D ISPUTE AND NO SPECIFIC OBSERVATIONS HAVE BEEN GIVEN BY THE ASSESS ING OFFICER IN REGARD TO PERSONAL EXPENSES BEING CLAIMED AS BUS INESS EXPENSES. HENCE, HAVING REGARD TO THE CUSTOMARY PRA CTICES OF BUSINESS COMMUNITY OF GIVING GIFTS ON DIFFERENT OCC ASIONS, WE HOLD THAT THE LD. CIT(A) HAS RIGHTLY DELETED THIS A DDITION. THUS, THIS GROUND OF THE REVENUE IS DISMISSED. IN THE LIGHT OF THE ADMISSION MADE BY THE LEARNED C OUNSELS FROM BOTH THE SIDES THAT THE ISSUE IS COVERED AND THE FACTUAL FIN DING MENTIONED IN THE IMPUGNED ORDER, THIS GROUND OF THE REVENUE IS ALSO HAVING NO MERIT, CONSEQUENTLY, IT IS DISMISSED. 10. THE NEXT GROUND PERTAINS TO DEDUCTION OF BAD DE BT WRITTEN OFF AMOUNTING TO RS.5,96,198/-. IT WAS CLAIMED THAT THIS ISSUE IS A LSO COVERED BY THE AFORESAID DECISION OF THE TRIBUNAL DATED 26.11.2009. THIS ASS ERTION OF THE ASSESSEE WAS NOT CONTROVERTED BY THE REVENUE. ON PERUSAL OF RECORD AND AFTER HEARING THE RIVAL S UBMISSIONS AND SPECIFICALLY THE CLAIM OF THE ASSESSEE, WE ARE REPRODUCING HEREU NDER THE RELEVANT PORTION OF THE AFORESAID ORDER DATED 26.11.2009 AS CONTAINED IN PA RA 33 ONWARDS :- 33 GROUND NO. 1(IV) READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 6,25,966/- ON ACCOUNT OF THE BAD DEBTS WRITTEN OFF, ESPECIALLY WHEN THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE OF BECOMING THESE DEBTS BAD. 34. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD ACTUALLY WRITTEN OFF THESE BAD DEBTS I N THE BOOKS OF ACCOUNT AND THE LD. CIT(A) HAS DELETED THE DISALLOW ANCE AFTER 14 TAKING INTO CONSIDERATION THIS FACT. HE FURTHER SUB MITTED THAT NOW THIS ISSUE WAS SQUARELY COVERED IN FAVOUR OF THE AS SESSEE BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN TH E CASE OF OMAN INTERNATIONAL BANK AS REPORTED IN 286 ITR 8 ( A.T. ). HE FURTHER CONTENDED THAT THE HON'BLE M.P.HIGH COURT HAD ALSO DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE IN THE CASE OF CIT VS. NAI DUNIA, AS REPORTED 295 ITR 346. 35. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS ACTUALLY WRITTEN OFF THESE BAD DEBTS IN THE BOOKS OF ACCOUNT IN THE YEAR UNDER CONSIDERATION NOR THERE IS ANY DISPUTE REGARDING THE NATURE OF SU CH BAD DEBTS. HENCE, IN VIEW OF THE DECISION OF THE HON'BLE M.P.H IGH COURT IN THE CASE OF NAI DUNIA (SUPRA) AND OF THE SPECIAL BE NCH IN THE CASE OF OMAN INTERNATIONAL BANK (SUPRA), WE HOLD THAT TH E LD. CIT(A) HAS RIGHTLY DELETED THESE DISALLOWANCES 11. IN THE AFORESAID ORDER, THE TRIBUNAL HAS ALREAD Y CONSIDERED THE DECISION FROM THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT V. NAI DUNIA; 295 ITR 346 AND ALSO THE SPECIAL BENCH OF THE TRIBUNAL IN THE C ASE OF OMAN INTERNATIONAL BANK; 286 ITR 8 (AT) AND DECIDED THE ISSUE IN FAVOUR OF T HE ASSESSEE. IN THE PRESENT APPEAL, SINCE THE BAD DEBTS WERE ACTUALLY WRITTEN O FF IN THE ACCOUNTS OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION, CONSEQUENTLY, THER E IS NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). IT IS UPHELD RESULTING INTO DISMISS AL OF THIS GROUND OF THE REVENUE. 12. THE NEXT GROUND PERTAINS TO DIRECTING THE AO TO ALLOW PRIOR PERIOD EXPENSES OF RS. 12,00,990/- AFTER ASCERTAINING THE YEAR OF CRYS TALISATION OF THE EXPENSES ON THE BASIS OF RELEVANT DETAILS. THE LD. COUNSEL FOR TH E ASSESSEE ADVANCED HIS ARGUMENT WHICH IS IDENTICAL TO THE GROUND RAISED. ON THE OT HER HAND, THE LEARNED CIT DR CONTENDED THAT AS ON TODAY THERE IS NO GRIEVANCE TO THE ASSESSEE. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. RE PRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HA VE FOUND THAT THE LEARNED 15 CITA(A) DIRECTED THE AO TO CALL FOR RELEVANT DETAIL S AND EXAMINE AS TO WHETHER THE LIABILITY OF SUCH EXPENSES ACTUALLY GOT CRYSTALISED DURING THE RELEVANT YEAR OR NOT AND ONCE IT IS ESTABLISHED THAT THEY GOT ASCERTAINED DU RING THE YEAR ITSELF, THE SAME IS TO BE ALLOWED. IN VIEW OF THIS DIRECTION, WE ARE OF T HE VIEW THAT NO GRIEVANCE IS CAUSED UNLESS AND UNTIL A DECISION IS TAKEN BY THE AO PURS UANT TO THE AFORESAID DIRECTION, THEREFORE, AS ON TODAY THIS GROUND OF THE REVENUE I S INFRUCTUOUS, CONSEQUENTLY, IT IS DISMISSED AS SUCH. 13. THE NEXT GROUND PERTAINS TO ALLOWANCE OF GARDEN AND MESS EXPENSES OF RS.1,03,170/-. THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE IS THAT THE GARDEN IS MAINTAINED TO MAKE THE PREMISES AS ENVIRONMENTAL FR IENDLY. THE LEARNED CIT DR DID NOT OBJECT TO THE ASSERTION OF THE ASSESSEE. ON PERUSAL OF RECORD AND AFTER HEARING THE RIVAL S UBMISSIONS WE HAVE FOUND THAT THE ASSESSEE MADE PAYMENT OF RS.9,09,951/- TO M/S AKASH CATERINGS AND NURSERY FOR PROVIDING CATERING SERVICES IN THE CANT EEN OF THE ASSESSEE AND ALSO FOR MAINTAINING THE PARK IN THE PREMISES OF THE ASSESSE E. THERE IS A FURTHER FINDING IN THE IMPUGNED ORDER THAT THE AO MADE THE DISALLOWANCE IN A VERY CASUAL MANNER WITHOUT BRINGING ANY COGENT MATERIAL ON RECORD. SINCE THE P AYMENTS WERE MADE FOR BUSINESS EXIGENCY, CONSEQUENTLY, THERE IS NO INFIRMITY IN TH E STAND OF THE LEARNED CIT(A). THIS GROUND OF THE REVENUE IS DISMISSED. 14. GROUND NOS. 7 AND 8 PERTAIN TO DEDUCTION FOR DO NATION OF RS.1,50,000/- AND DIRECTION TO ALLOW CREDIT OF TAXES PAID U/S 115JA O F THE ACT. ON PERUSAL OF RECORD AND AFTER HEARING THE RIVAL S UBMISSIONS, IT IS SEEN THAT THE ASSESSEE HAS AGITATED THE AMOUNT OF RS. 1,50,00 0/- CLAIMED U/S 80G AND NON- CONSIDERATION OF CLAIM OF TAXES PAID U/S 115JB OF T HE ACT. THE LD. CIT(A) DIRECTED THE AO TO CALL FOR THE RELEVANT DETAILS AND AFTER VERIF ICATION TO ALLOW AS PER THE PROVISIONS 16 OF THE ACT. THEREFORE, BOTH THESE GROUNDS OF THE RE VENUE ARE INFRUCTUOUS IN THE ABSENCE OF ANY DECISION TAKEN BY THE LEARNED AO. B OTH THESE GROUNDS OF THE REVENUE ARE DISMISSED AS INFRUCTUOUS. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLO WED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.3.2010. (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15.3.2010 COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE