ACIT, Ludhiana V. M/s Satyam Auto Components Ltd., Ludhiana

ITA 183/CHANDI/2012

• Counselvise Citation: 18321514 RSA 2012
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 14-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILESH GUPTA
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.183/CHD/2012 (ASSESSMENT YEAR : 2008-09) THE A.C.I.T., VS. M/S SATYAM AUTO COMPONENT LTD ., CIRCLE V, G.T.ROAD, HERO NAGAR, LUDHIANA. LUDHIANA. PAN: AACCS2689E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA, DR RESPONDENT BY : NONE DATE OF HEARING : 28.08.2012 DATE OF PRONOUNCEMENT : 30.08.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, LUDHIANA DA TED 13.12.2011 RELATING TO ASSESSMENT YEAR 2008-09 AGAINST THE ORD ER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHOR T THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER: 1. (A) THE LD. CIT(A)-II, LUDHIANA, ON FACTS AS WELL AS IN LAW, HAS ERRED IN DELETING THE DISALLOWANCE OF RS.13,80,681/- MADE BY THE A.O. ON A/C OF EXPENSES ON FOREIGN TOUR OF THE WIFE OF DIRECTOR. (B) THE LD. CIT(A)-II, LUDHIANA HAS FAILED TO APPRECIATE THAT THE ASSESSEE COULD NOT ESTABLISH THAT THE TOUR OF WIFE OF THE DIRECTOR HAD ANY CONNECTION WITH THE BUSINESS OF THE ASSESSEE. 2 4. THE LEARNED A.R. FOR THE ASSESSEE HAS MOVED AN A PPLICATION FOR ADJOURNMENT WHICH HAS BEEN REFUSED AS THE ISSUE STA NDS COVERED BY THE ORDERS OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN T HE CASE OF SISTER CONCERNS OF THE ASSESSEE. 5. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 6. ON THE PERUSAL OF THE RECORD WE FIND THAT THE ON LY ISSUE RAISED IN THE PRESENT APPEAL FILED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F EXPENSES ON FOREIGN TOUR OF THE WIFE OF THE DIRECTOR. 7. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT D URING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD CLAIMED TOTAL EXPEND ITURE OF RS.43,08,734/- UNDER THE HEAD FOREIGN TRAVELING. THE DIRECTOR OF THE ASSESSEE COMPANY MR.SAMEER MUNJAL HAD MADE FOUR TRI PS DURING THE YEAR TO DIFFERENT COUNTRIES AND THE EXPENDITURE OF TRAVE LING WAS PARTLY ALLOWED BY THE ASSESSING OFFICER AND THE EXPENDITUR E RELATABLE TO THE WIFE OF THE DIRECTOR WAS DISALLOWED BY THE ASSESSIN G OFFICER. THE BASIS FOR DISALLOWANCE WAS THAT THE SPOUSE OF THE DIRECTO R WAS NOT AN EMPLOYEE OF THE ASSESSEE COMPANY AND THE EXPENDITUR E INCURRED ON THE FAMILY MEMBERS WAS IN THE NATURE OF PERSONAL EXPEND ITURE. THE BREAK-UP OF THE DETAILS FURNISHED BEFORE THE CIT (APPEALS) R EFLECT THAT THE WIFE OF THE DIRECTOR HAD ACCOMPANIED HIM ONLY ON TWO TOURS AS AGAINST FOUR TOURS. THE CONTENTION OF THE ASSESSEE BEFORE THE C IT (APPEALS) WAS THAT EVEN LODGING EXPENDITURE WAS NOT ALLOWED BY THE ASS ESSING OFFICER. FURTHER RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE CHANDIGARH BENCH OF THE TRIBUNAL IN DCIT VS. HERO CYCLES LTD. IN ITA NO.227/CHD/2003 RELATING TO ASSESSMENT YEAR 1998-99 AND IN ACIT VS. 3 HIGHWAY CYCLES PVT. LTD. IN ITA NO.176/CHD/2008 REL ATING TO ASSESSMENT YEAR 1999-2000, ORDER DATED 11.7.2008. THE CIT (APPEALS) UNDER PARA 5.1 AT PAGE 8 HAD TABULATED THE TOTAL EX PENDITURE INCURRED UNDER THE HEAD TRAVELING EXPENSES AND HAD OBSERVED THAT THE TOTAL EXPENDITURE OF MR.SAMEER MUNJAL, DIRECTOR WAS RS.24 ,69,341/- AND OUT OF THE BALANCE OF RS.21,63,822/-, RS.8,30,998/- WER E THE EXPENSES OF MR.SAMEER MUNJAL AND THE BALANCE AMOUNT FOR BOARDIN G AND LODGING AT RS.13,32,824/- WAS TREATED AS FOR THE SPOUSE. THE CIT (APPEALS) NOTED THAT IN VIEW OF THE FACTS OF THE CASE WHERE THE SPO USE OF THE DIRECTOR WAS AN MBA AND ALSO FOLLOWING THE DECISION OF CHANDIGAR H BENCH OF THE TRIBUNAL IN DCIT VS. M/S HERO CYCLES LTD. AND ACIT VS. M/S HIGHWAY CYCLES PVT. LTD. (SUPRA), THE SISTER CONCERNS OF TH E ASSESSEE COMPANY, THE DISALLOWANCES MADE BY THE ASSESSING OFFICER WER E DIRECTED TO BE DELETED. 8. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRC UMSTANCES THE WIFE OF THE DIRECTOR, WHO IS QUALIFIED MBA, HAD ACCOMPAN IED HER SPOUSE, WHO IS THE DIRECTOR OF ASSESSEE COMPANY ON FOREIGN TOUR S, WHICH IN TURN WERE SANCTIONED BY THE ASSESSEE COMPANY BY PASSING NECES SARY RESOLUTION IN THIS REGARD. FROM THE DETAILS FILED BY THE ASSESSE E BEFORE THE CIT (APPEALS) IT IS APPARENT THAT THE WIFE OF THE DIREC TOR HAD NOT TRAVELED ON EACH FOREIGN VISIT BUT HAD ONLY TRAVELED ON TWO OF THE FOREIGN VISITS, WHICH WAS CLAIMED TO BE FOR ASSISTING HER SPOUSE DU RING THE FOREIGN VISIT. THE SAID EXPENDITURE IS ALLOWABLE AS BUSINE SS EXPENDITURE IN THE HANDS OF THE ASSESSEE COMPANY. THE ASSESSEE HAS EV EN PAID FBT ON THE SAID EXPENDITURE IMPLYING THEREBY THAT THE SAID EXP ENDITURE IS THE BUSINESS EXPENDITURE IN THE HANDS OF THE ASSESSEE. FURTHER THE ISSUE STANDS COVERED BY THE RATIO LAID DOWN BY CHANDIGARH BENCH OF THE TRIBUNAL IN DCIT VS. M/S HERO CYCLES LTD. AND ACIT VS. M/S HIGHWAY 4 CYCLES PVT. LTD. (SUPRA). THE RELEVANT FINDINGS OF THE TRIBUNAL ARE REPRODUCED BY THE CIT (APPEALS) AT PAGES 5 AND 6 OF THE APPELLATE ORDER AND THE SAME ARE NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. IN VIEW THEREOF, WE DISMISS GROUNDS OF APPEAL RAISED BY THE REVENUE. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF AUGUST, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH AUGUST, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH