Albert Rose Chemicals Pvt.Ltd., Ahmedabad V. THE Income tax Officer,Ward-1(1), Ahmedabad

ITA 263/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9095 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-03-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 31-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Business expenditure; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI KUL BHARAT, JUDICIAL MEMBER) ITA. NO: 263/AHD/2012 (ASSESSMENT YEAR: 2005-06) ALBERT ROSE CHEMICALS PVT. LTD. 44, GIDC, NARODA PHASE-3, AHMEDABAD- 382330 V/S INCOME TAX OFFICER, WARD- 1 (1), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABCA 2792B APPELLANT BY : SHRI SANJAY R. SHAH, AR RESPONDENT BY : SHRI DINESH SINGH, SR. D.R. ( )/ ORDER DATE OF HEARING : 11 -03-201 6 DATE OF PRONOUNCEMENT : 28 -03-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-VI, AHMEDABAD DATED 2.12.2011 PERTAINING TO A.Y. 2005-06. ITA NO 263/A HD/2012 . A.Y. 2005-06 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE ASSES SEE RELATES TO THE CONFIRMATION OF PART DISALLOWANCE OUT OF THE AMOUNT DISALLOWED BY THE A.O ON ACCOUNT OF FOREIGN TRAVEL EXPENDITURE INCURR ED BY THE ASSESSEE. 3. IN THE FIRST ROUND OF LITIGATION, THIS DISALLOWANCE TRAVELLED UP TO THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DATED 26.06.20 09 IN ITA NO. 1166/AHD/2009 HAS RESTORED THE MATTER TO THE FILES OF THE A.O WITH THE DIRECTION TO CONSIDER THE ADDITIONAL EVIDENCES ALON G WITH THE EVIDENCES ALREADY ON RECORD AND DECIDE THE ISSUE AFRESH IN AC CORDANCE WITH LAW. 4. THE ISSUE WAS ONCE AGAIN TAKEN FOR CONSIDERATION BY THE A.O. THE ASSESSEE FILED CERTAIN EVIDENCES IN SUPPORT OF THE CLAIM OF FOREIGN TRAVELLED EXPENDITURE AFTER CONSIDERING THE ADDITIO NAL EVIDENCES WITH THE EVIDENCES ALREADY ON RECORD. THE A.O WAS OF TH E OPINION THAT THE DIRECTOR HAS VISITED THE FOREIGN COUNTRIES WITH HIS WIFE AND THERE IS A LOT OF AMBIGUITY IN THE PURPOSE OF VISIT. THE A.O W AS OF THE FIRM BELIEF THAT THE ASSESSEE COULD NOT POINT OUT A CONCRETE PU RPOSE WHICH WOULD SHOW THAT THE VISIT WAS INEVITABLE FOR THE PURPOSES OF BUSINESS. THE A.O ALSO FOUND THAT THE ASSESSEE HAS VISITED PLACES LIKE SWITZERLAND, ZURICH AND FRANCE FOR WHICH THE ASSESSEE COULD NOT ESTABLISH ANY BUSINESS CONNECTION. THE A.O CONCLUDED BY DISALLOWI NG RS. 8,43,775/- AS BUSINESS EXPENDITURE. ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) AND ONCE AGAIN RELIED UPON THE DOCUMENTARY E VIDENCES WHICH WERE EXAMINED BY THE A.O . AFTER CONSIDERING THE FA CTS AND THE SUBMISSIONS, THE LD. CIT(A) OBSERVED THAT OUT OF TH E TOTAL EXPENSES CLAIM, RS. 6,26,082/- IS ON ACCOUNT OF PURCHASE OF FOREIGN CURRENCY. THE LD. CIT(A) FURTHER OBSERVED THAT NO EVIDENCES W HATSOEVER FOR UTILIZATION OF THIS FOREIGN CURRENCY INDICATING BUS INESS PURPOSES OF THE SAME IS FILED BY THE ASSESSEE. THE LD. CIT(A) WAS O F THE FIRM BELIEF THAT ITA NO 263/A HD/2012 . A.Y. 2005-06 3 THE CLAIM OF EXPENDITURE OF RS. 6,26,082/- IS WITHO UT ANY BASIS DISALLOWANCE TO THIS EXTENT WAS CONFIRMED BY THE LD . CIT(A). 5. THE LD. CIT(A) FURTHER OBSERVED THAT THERE IS NO DI SPUTE ABOUT THE WIFE TRAVELLING WITH THE ASSESSEE, THEREFORE, THE ENTIRE EXPENDITURE CANNOT BE CONSIDERED TO BE FOR THE PURPOSES OF BUSINESS. T HE LD. CIT(A) WAS OF THE OPINION THAT ONLY ALLOWABLE FOREIGN TRAVEL EXPE NSES ARE 50% OF THE AIR TICKETS OF 1,57,935/- AND 50% OF THE HOTEL BILL S OF RS. 51,532/- AND ACCORDINGLY DIRECTED THE A.O TO MAKE THE DISALL OWANCES. 6. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. THE L D. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. THE LD. COUNSEL DREW OUR ATTENTION TO THE CERTIFICA TE OF THE COMPANY WHICH STATES THAT THE DIRECTOR VISITED FOREIGN COUN TRIES AS THE BUSINESS HANDLED BY THE FOREIGN PARTNER FROM THE SINGAPORE O FFICE. THE LD. COUNSEL DREW OUR ATTENTION TO THE BILLS SUBMITTED C AMARRO TRAVELS AND POINTED OUT THAT THE BILL IS ONLY FOR THE DIRECTOR ASSESSEE AND NOT FOR HIS WIFE. IT IS THE SAY OF THE LD. COUNSEL THAT THE ASSESSEE HAS DISCHARGED THE ONUS TO ESTABLISH THAT THE PURPOSE O F VISITS WAS SOLELY FOR BUSINESS AND, THEREFORE, THE EXPENDITURES SHOUL D BE ALLOWED. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FINDING S OF THE LOWER AUTHORITIES. WE HAVE CAREFULLY CONSIDERED THE ORDER S OF THE AUTHORITIES BELOW AND THE DOCUMENTARY EVIDENCES REFERRED TO BY THE LD. COUNSEL. AT THE VERY OUTSET, WE HAVE TO SAY THAT THE TRAVEL AGENTS BILL REFERRED TO BY THE LD. COUNSEL IS FOR THE JOURNEY BETWEEN BO MBAY-FRANCE- ZURICH-FRANCE-BOMBAY. HOWEVER, NO BUSINESS PURPOSE HAS BEEN ESTABLISHED BY THE ASSESSEE FOR VISITING FRANCE AND ZURICH. THERE IS ALSO NO DENIAL THAT THE WIFE OF THE ASSESSEE ACCOMP ANIED HIM DURING HIS FOREIGN VISITS. THE BUSINESS VISITS FOR SINGAPO RE AND OTHER ASIAN ITA NO 263/A HD/2012 . A.Y. 2005-06 4 COUNTRIES MAY HAVE BEEN ESTABLISHED BY THE ASSESSEE BUT WE FIND THAT THE LD. CIT(A) HAS ALREADY ALLOWED 50% OF THE AIR T ICKETS AND HOTEL BILLS. 7. IN OUR CONSIDERED OPINION, 50% OF THE TRAVEL EXPENS ES SHOULD ALSO BE ALLOWED IF THE LOGIC OF THE LD. CIT(A) IS ACCEPTED. WE DO NOT FIND ANY REASON FOR NOT ALLOWING THE SAME. PARTIALLY, MODIFY ING THE FINDINGS OF THE LD. CIT(A), WE DIRECT THE A.O. TO ALSO ALLOW 50 % OF RS. 6,26,082/- AS BUSINESS EXPENDITURE ALONG WITH 50% OF AIR TICKE TS AND HOTEL BILLS AS DIRECTED BY THE FIRST APPELLATE AUTHORITY. THE ASSESSEE WILL GET A FURTHER RELIEF OF RS. 3,13,041/-. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28 - 03 - 2016 SD/- SD/- (KUL BHARAT) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMED ABAD