M/s. Polybond India Pvt. Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 2174/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2683 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 19-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO , AM AND SHRI VIKAS AWASTHY, JM . / I TA NO. 2174 /PUN/20 16 / ASSESSMENT YEAR : 2012 - 13 M/S. POLYBOND INDIA PVT. LTD. GAIA APEX, S. NO.33/1/1/2, PLOT - D, FIRST FLOOR, VIMAN NAGAR, NAGAR ROAD, PUNE - 411 014. PAN : AABCP1261E ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 4, PUNE. / RESPONDENT A SSESSEE BY : SHRI KISHORE PHADKE REVENUE BY : DR. VIVEK AGGARWAL & SHRI SUDHENDU DAS / DATE OF HEARING : 01.11.2018 / DATE OF PRONOUNCEMENT : 02 .11.2018 / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 3, PUNE DATED 08.07.2016 FOR THE ASSESSMENT YEAR 2012 - 13. 2 ITA NO. 2174 /PUN/20 16 A.Y. 2012 - 13 2. SHRI KISHORE PHADKE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IS ENGAGED IN MANUFACTURING AND TRADING OF RUBBER MOULDED PARTS, METAL BOUNDED RUBBER PARTS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER INTER - ALIA MADE AD - HOC DISALLOWANCE OF 5% ON ENTIRE TRAVELING EXP ENSES. THE LD. AR POINTED THAT IN THE PAST AND IN THE SUBSEQUENT YEAR S, AD - HOC DISALLOWANCE OF TRAVELLING EXPENDITURE WAS MADE ONLY IN RESPECT OF DIRECTORS. HOWEVER, IN THE ASSESSMENT YEAR UNDER APPEAL, ASSESSING OFFICER MADE AD - HOC DISALLOWANCE ON ENTIRE TRAVELLING EXPENDITURE INCLUDING THAT OF THE EMPLOYEES OF THE COMPANY ON THE PRESUMPTION THAT TRAVELING EXPENDITURE HAS BEEN INCURRED BY EMPLOYEES FOR NON BUSINESS PURPOSE . THE LD. AR SUBMITTED THAT TRAVELING EXPENDITURE HAS BEEN INCURRED BY EMPLOYEES AS WELL AS DIRECTORS ONLY AND EXCLUSIVELY FOR THE PURPOSE O F BUSINESS. THE ASSESSEE IS ENGAGED IN EXPORT OF ITS PRODUCTS TO EUROPEAN COUNTRIE S. THE DIRECTORS FOREIGN TRAVEL EXPENDITURE IS IN CONNECTION WITH THE EXPORT. THE LD. AR SUBMITTED THAT IN THE PAST NO SUCH AD - HOC DISALLOWANCE WAS MADE IN RESPECT OF EMPLOYEES OF THE COMPANY. THE LD. A.R. SUB MITTED THAT I F ANY DISALLOWANCE HAS TO BE MADE, IT SHOULD BE RESTRICTED TO TRAVEL EXPENDITURE OF DIRECTORS ONLY. 3. ON THE OTHER HAND, SHRI SUDHENDU DAS REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. THE LD. DR CONTENDED THAT BEFORE AUTHORITIES BELOW, THE ASSESSEE HAS FAILED TO FURNISH ALL INVOICES OR BILL S RELATING TO TRAVELING EXPENSES OF ITS MANAGING DIRECTOR AND OTHER EMPLOYEES. 3 ITA NO. 2174 /PUN/20 16 A.Y. 2012 - 13 4. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVE OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE SOLITARY ISSUE RAISED BY THE ASSESSEE IN APPEAL IS AGAINST AD - HOC DISALLOWANCE OF TRAVELING EXPENDITURE AMOUNTING TO RS.7,92,350/ - . THE ASSESSEE CLAIMED TRAVELING EXPENDITURE TO THE TUNE OF RS.1.58 CRORE. THE TRAVELING EXPENDITURE INCLUDES VARIOUS TOURS OF THE DIRECTORS TO USA, EUROPE ETC. THE ASSESSING O FFICER MADE AD - HOC DISALLOWANCE OF 5% ON THE ENTIRE TRAVELING EXPENDITURE INCLUDING THOSE OF THE EMPLOYEES AND DIRECTORS AS THE ASSESSEE FAILED TO FURNISH SOME BILLS/INVOICES TO SUPPORT THE CLAIM . IN FIRST APPELLATE PROCEEDINGS, THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION. THE LD. AR POINTED THAT IN THE PAST AND THE SUBSEQUENT ASSESSMENT YEAR, AD - HOC DISALLOWANCE HAS BEEN MADE IN RESPECT OF TRAVELING EXPENDITURE OF THE DIRECTORS ONLY . TAKING INTO CONSIDERATION ENTIRETY OF FACTS, WE ARE O F CONSIDERED VIEW THAT IN LINE WITH DISALLOWANCE MADE IN THE PRECEDING AND SUBSEQUENT ASSESSMENT YEAR S, DISALLOWANCE BE RESTRICTED ONLY TO TRAVEL EXPENDITURE OF DIRECTORS. WE HOLD AND DIRECT ACCORDINGLY. THUS, GROUNDS RAISED BY THE ASSESSEE IN APPEAL ARE P ARTLY ALLOWED IN THE TERMS AFORESAID. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRO NOUNCED ON FRIDAY, THE 02 ND DAY OF NOVEMBER , 2018 . SD/ - SD/ - ( . / D. KARUNAKARA RAO ) ( / VIKAS AWASTHY ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 02 ND NOVEMBER , 2018 SB 4 ITA NO. 2174 /PUN/20 16 A.Y. 2012 - 13 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 3, PUNE. 4. THE PR. CIT - 2, PUNE. 5 . , , , / DR, ITAT, B BENCH, PUNE. 6 . / GUARD FILE. //TRUE COPY// / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE .