M/s K.K.K Mills, Ludhiana V. ACIT, Ludhiana

ITA 28/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95734 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Proportionate interest; Commercial expediency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT ITA NO. 28/CHD/2014 ASSESSMENT YEAR: 2007-08 M/S K.K.K. MILLS, VS. THE ACIT, CIRCLE-1, LUDHIANA LUDHIANA PAN NO. AABFK2553R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHASH AGGARWAL RESPONDENT BY : MS. RAJINDER KAUR DATE OF HEARING : 06.11.2015 DATE OF PRONOUNCEMENT : 11.12.2015 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), LUDHIANA DATED 13.11.2013 RELATING TO ASSESSMENT Y EAR 2007-08. 2. GROUND NO.1 TO 5 OF THE APPEAL READ AS UNDER:- 1. THAT THE LD. CIT(A) -II HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST OF RS. 1,35,839/- ON ALLEG ED INTEREST FREE ADVANCE TO SHRI ASHOK KUMAR AND FURTHER ERRED IN CONFIRMING DISALLOWANCE OF INTEREST OF RS. 2,06,644 /- ON ACCOUNT OF AMOUNT OUTSTANDING IN THE ACCOUNT OF M/S R.K. WOOLEN MILLS. 2 2. THAT IT HAS BEEN IGNORED THAT NO DISALLOWANCE WA S MADE IN THE EARLIER YEARS AND THE CIT(A) HAS MERELY CONFIRMED THE DISALLOWANCE ON THE GROUND THAT RES J UDICATA IT NOT APPLICABLE IN INCOME TAX PROCEEDINGS. 3. THAT THE LD. CIT(A) HAS ERRED NOT APPRECIATING T HAT THERE WAS FIMILY DISPUTE AMONGST THE BROTHERS IN AS MUCH AS NO INTEREST HAD BEEN PAID TO THE FAMILY MEMBERS OF SHRI RAMESH KUMAR (R.K. WOOLLEN MILLS) WHO HAD HUGE DEPO SITS WITH THE FIRM AND ALSO NO INTEREST WAS PAID ON THE CAPITAL OF RAMESH KUMAR (HUF) WHO WAS A PARTNER IN THE FIRM WH ILE INTEREST WAS PAID TO THE OTHER PARTNERS. 4. THAT IN ANY CASE ON THE FACTS AND PAST HISTORY O F THE CASE THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF INTEREST. 5. THAT THE LD. CIT(A) HAS ERRED CONFIRMING THE DISALLOWANCE OF RS. 60,000/- OF FOREIGN TRAVELLING EXPENSES IGNORING THE FACTS THAT THE VISIT TO THE FOREIGN CO UNTRIES WAS FOR BUSINESS PURPOSES AND ALSO THAT FBT HAD BEEN PA ID, THUS THERE WAS NO JUSTIFICATION FOR CONFIRMING THE SAID DISALLOWANCE. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSING OFFICER NOTED THAT ASSESSEE HAD GIVEN ADVANCE OF RS. 15,48,654/- TO SHRI ASHOK KUMAR, WHO IS BROTHER OF THE THREE PARTNERS. ACCORDING TO ASSESSI NG OFFICER, NO INTEREST HAD BEEN CHARGED ON THESE ADVANCES. THE ASSESSING OFFIC ER FURTHER OPINED THAT THE ASSESSEE HAD FAILED TO SHOW ANY COMMERCIAL EXPEDIEN CY WITH REGARD TO THESE ADVANCE TO SHRI ASHOK KUMAR. THE ASSESSING OFFICER ACCORDINGLY DISALLOWED PROPORTIONATE INTEREST ON THESE ADVANCE @ 12%. THE DISALLOWANCE COMES TO RS. 1,35,839/- AND THE SAME WAS ADDED TO THE ASSESSEES INCOME.. 4. THE ASSESSING OFFICER ALSO NOTED THAT AS PER THE BALANCE SHEET THERE WAS A BALANCE OF RS. 17,22,032/- IN THE ACCOUNT OF R.K. W OOLEN MILLS, A SISTER CONCERN 3 OF THE ASSESSEE. THE ASSESSEE CLAIMED THAT THIS ADV ANCE WAS ON ACCOUNT OF BUSINESS TRANSACTIONS WITH AFORESAID PARTY. THE ASS ESSEE FURTHER CLAIMED THAT THE PAYMENT WAS NOT RECEIVED DUE TO NON SETTLEMENT OF F AMILY DISPUTE AMONGST THE PARTNERS. THE ASSESSING OFFICER MENTIONED THAT IN T HE ACCOUNT OF M/S R.K. WOOLEN MILLS, IN ADDITION OF THE ABOVE BILLS RAISE D BY THE ASSESSEE, THERE WAS CHEQUE PAYMENTS MADE TO THE SAID PARTY. THE ASSESS ING OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAD SOLD ITEMS TO M/S R.K. WOOLEN MILLS AND HAD ALSO ADVANCED CHEQUES AMOUNTING TO RS. 20 LAKHS TO M/S R .K. WOOLEN MILLS ON 30.6.1997, 6,10,1997 AND 5.12.1997. ACCORDING TO AS SESSING OFFICER, THE ASSESSEE WAS SELLING GOODS TO THE SISTER CONCERN AN D THE SISTER CONCERN WAS NOT SELLING ANY GOODS TO THE ASSESSEE, THEREFORE, THERE WAS NO JUSTIFICATION FOR PAYMENTS THROUGH CHEQUES WORTH RS. 20 LAKHS TO THE SISTER CONCERN. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED PROPO RTIONATE INTEREST ON THESE ADVANCES @ 12% AMOUNTING TO RS. 2,06,444/- 5. ON APPEAL, THE CIT(A) CONFIRMED BOTH THE DISALLO WANCES AND, HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. I HAVE HEARD SHRI SUBHASH AGGARWAL, LD. COUNSEL FOR THE ASSESSEE AND MS. RAJINDER KAUR, LD. DR AT LENGTH. THE FACTS NOTE D BY THE ASSESSING OFFICER REGARDING ISSUES INVOLVED IN GROUND NOS. 1 TO 4 OF THE APPEAL ARE RELEVANT AND FOR THE SAKE OF CONVENIENCE, THE SAME ARE REPRODUCE D HEREIN BELOW:- (A) ON PERUSAL OF THE REPLY OF THE ASSESSEE, IT IS SEEN THAT THE ASSESSEE HAS GIVEN AN ADVANCE OF RS, 15,48,654/ - TO MR. ASHOK KUMAR, WHO IS THE BROTHER OF THE THREE PARTNE RS. THE ASSESSEE WAS ASKED VIDE ORDER SHEET ENTRY DATED 5.1 1.09 TO FURNISH THE PROOF OF COMMERCIAL EXPEDIENCY OF THE I NTEREST FREE ADVANCE TO MR.ASHOK KUMAR, ELSE WHY PROPORTION ATE 4 INTEREST BE NOT DISALLOWED. THE ASSESSEE HAS VIDE H IS REPLY DATED 16.11.09 STATED THAT: 'MR. ASHOK KUMAR IS THE BROTHER OF THREE PARTNERS O F THE ASSESSEE FIRM M/S KK.K MILLS, DURING THE YEAR 1996 THE DISPUTE HAD ARISEN AMONGST THE PARTNERS AN D A SUM OF RS. 20 LACS OUT OF PARTNER'S CAPITAL WAS G IVEN TO SH. ASHOK KUMAR TO MEET THE LIABILITIES OF THE F IRM AT THAT TIME IN ORDER TO SAFEGUARD THE GOODWILL OF THE FIRM. CERTAIN LIABILITIES OF THE FIRM WERE PAID DIR ECTLY BY SH. ASHOK KUMAR OUT OF THIS AMOUNT AND THE BALANCE SUM OF RS. 15,48,654/~ IS STILL LYING WITH HIM WHICH WILL BE REFUNDED BACK WHEN THE DISPUTE BETWEEN THE PARTNERS WILL BE FINALLY SETTLED. ' THE REPLY OF THE ASSESSEE SHOWS THAT THE HUGE AMOUN T OF RS.15,48.654/- STILL LYING WITH MR ASHOK KUNIAR IS ACTUALLY IN THE NATURE OF AN INTEREST FREE ADVANCE FOR NON-B USINESS PURPOSES. THE ASSESSEE HAS GIVEN NO EVIDENCE OF ANY EFFORTS MADE FOR THE RECOVERY OF THE AMOUNT AND THEREFORE, NO PROOF OF COMMERCIAL EXPEDIENCY HAS BEEN FURNISHED . (B) FROM THE SCHEDULE OF SUNDRY DEBTORS OF THE ASSESSEE. IT IS SEEN THAT THE ASSESSEE HAS SHOWN A DEBIT BALA NCE OF RS.17,22,032/- IN THE ACCOUNT OF M/S R. K. WOOLLEN MILLS A SISTER CONCERN. THIS IS A LONG STANDING DEBIT BALAN CE. THE ASSESSEE WAS ASKED VIDE ORDER SHEET ENTRY DATED 16. 11.09 REGARDING THE ADVANCE TO M/S R.K. WOOLLEN MILLS AND THE PROOF OF BUSINESS PURPOSE. THE ASSESSEE VIDE HIS R EPLY DATED 24.11.09 HAS STATED THAT: 'COPY OF ACCOUNT OF M/S. R.K. WOOLLEN MILLS IN THE BOOKS OF M/S K.K.K. MILLS IN THE YEAR 1997-98 IS ENCLOSED. FROM THIS ACCOUNTS IT IS CLEAR THAT BALAN CE DUE FROM M/.S R.K. WOOLLEN MILLS IS ON ACCOUNT OF BUSINESS TRANSACTIONS. THE PAYMENT IS NOT BEING 5 RECEIVED DUE TO NON SETTLEMENT OF FAMILY DISPUTE AMONGST THE PARTNERS. ' PERUSAL OF THIS ACCOUNT AS FURNISHED BY THE ASSESSE E SHOWS THAT THERE ARE REGULAR TRANSACTIONS BETWEEN THE ASS ESSEE AND M/S R.K. WOOLLEN MILLS OF CHEQUES ALONE ALONG W ITH BILLS. WHILE THE ASSESSEE HAS SOLD ITEMS TO M/S R.K , WOOLLEN MILLS IT HAS ALSO ADVANCED CHEQUES AMOUNTING TO RS.20,00,000/- TO M/S R.K. WOOLLEN MILLS ON 30.6.19 97, 6,10.1997 AND 5.12.1997. IF THE ASSESSEE IS SELLING GOODS TO SISTER CONCERN WHILE THE SISTER CONCERN IS NOT SEND ING ANY GOODS TO THE ASSESSEE, THE ASSESSEE HAS NO NEED TO GIVE CHEQUES WORTH RS.20 LACS TO THE SISTER CONCERN. THE REFORE, ASSESSEE'S CONTENTION THAT THE DEBIT BALANCE IS ON ACCOUNT OF PURE BUSINESS TRANSACTIONS IS REBUTTED. THEREFOR E, THE ADVANCE GIVEN BY THE ASSESSEE IS HELD TO BE IN THE NATURE OF AN INTEREST FREE ADVANCE AND PROPORTIONATE INTEREST @ 12% AMOUNTING TO RS.2,06,644/- NEEDS TO BE DISALLOWED. 7. FROM THE ABOVE OBSERVATIONS OF THE ASSESSING OFF ICER, IT IS CRYSTAL CLEAR THAT THE AMOUNT OF RS. 15,48,654/- IS AN OLD BALANC E LYING WITH SHRI ASHOK KUMAR. SIMILARLY, A DEBIT BALANCE OF RS. 17,22,032 /- IN THE ACCOUNT OF M/S R.K. WOOLEN MILLS, A SISTER CONCERN OF ASSESSEE, IS ALSO A LONG STANDING DEBIT BALANCE. SHRI SUBHASH AGGRWAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AMOUNT IN DISPUTE WAS ADVANCED TO SHRI ASHOK KUMAR OUT OF OWN FUNDS. ACCORDING TO HIM, THERE IS NO OVER DRAFT LIMIT FROM THE BANK. FU RTHER, ACCORDING TO HIM, THIS DEBIT BALANCE OF RS. 15,48,654/- IS AN OLD BALANCE SINCE 1.4.2004. IT IS EVIDENT FROM THE RECORDS THAT NO DISALLOWANCE HAS BEEN MADE IN THE PAST I.E. ASSESSMENT YEARS 2005-06 AND 2006-07. THE ASSESSMENT FOR THE A SSESSMENT YEAR 2005-06 WAS MADE U/S 143(3) OF THE ACT, WHERE NO DISALLOWA NCE OF INTEREST U/S 36(1)(III) OF THE ACT WAS MADE. IT IS ALSO OBSERVED THAT ASSE SSING OFFICER DISALLOWED 6 INTEREST OF RS. 2,06,644/- ON ALLEGED INTEREST FREE ADVANCE OF RS. 17,22,032/- IN THE NAME OF M/S R.K. WOOLEN MILLS. SHRI SUBHASH AGG ARWAL, LD. COUNSEL FOR THE ASSESSEE STATED AT THE BAR THAT THERE WAS AN OP ENING BALANCE OF RS. 17,22,032/- SINCE 1.4.2003. THERE WERE A PETTY TRA NSACTION IN THE SUBSEQUENT YEAR AND THE PAYMENT OF WHICH WAS DULY RECEIVED AND THE OLD BALANCE OF RS. 17,22,032/- STILL CONTINUED OUTSTANDING. SHRI SUBHA SH AGGRWAL, LD. COUNSEL FOR THE ASSESSEE ALSO POINTED OUT THAT THE OLD BALANCE OUTSTANDING IN THE NAME OF THE SAID PARTY WAS OUT OF OWN FUNDS. THE LD. COUNSEL FO R THE ASSESSEE POINTED OUT THAT NO DISALLOWANCE HAS BEEN MADE IN THE PAST. TH ERE IS NO MATERIAL ON RECORD TO CONTROVERT THE ABOVE SUBMISSIONS OF THE LD. COUN SEL FOR THE ASSESSEE. THUS, IT IS CLEAR THAT IN EARLIER YEARS, NO DISALLOWANCE U/S 36(I)(III) OF THE ACT, WERE MADE IN RESPECT TO THE AMOUNT OF RS. 15,48,654./- O UTSTANDING IN THE NAME OF SHRI ASHOK KUMAR AND RS. 17,22,032/- BEING DEBIT BA LANCE STANDING IN THE NAME OF M/S R.K. WOOLEN MILLS. NO FRESH ADVANCES WERE MA DE TO THE ABOVE PARTIES DURING THIS YEAR. THE AMOUNTS DUE FROM THE ABOVE P ARTIES ON THE FIRST DAY OF ACCOUNTING YEAR WERE THE AMOUNTS THAT STOOD OUTSTAN DING ON THE LAST DAY OF THE PREVIOUS ACCOUNTING YEAR. THE STATUS AND NATURE OF THE AMOUNTS REMAINED THE SAME I.E. CLOSING BALANCE OF PREVIOUS YEAR AND OPEN ING BALANCE OF THE YEAR UNDER CONSIDERATION QUA THE DISPUTED ADVANCES IN THE NAME S OF ABOVE PARTIES. IN MY OPINION, THE OPENING BALANCE CANNOT BE CONSIDERED I N THIS YEAR AND THERE WAS NO INCREASE IN THIS YEAR. AT THIS STAGE, IT WILL WORT HWHILE TO REFER TO THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V SRIDEV ENTERPRISES (1991) 192 ITR 165 (KAR.), WHEREIN THE HON'BLE HIGH COURT OBSERVED (HEAD NOTE) AS UNDER:- CONSISTENCY AND DEFINITENESS OF APPROACH BY THE RE VENUE IS NECESSARY IN THE MATTER OF RECOGNIZING THE NATURE O F AN ACCOUNT MAINTAINED BY THE ASSESSEE SO THAT THE BASI S OF A CONCLUDED ASSESSMENT WOULD NOT BE IGNORED WITHOUT A CTUALLY REOPENING OF THE ASSESSMENT. THE HON'BLE HIGH COURT FURTHER OBSERVED (HEAD NOTE ) AS UNDER:- 7 THAT THE AMOUNT DUE FROM N ON THE FIRST DAY OF THE ACCOUNTING YEAR WAS THE AMOUNT THAT STOOD OUTSTANDI NG ON THE LAST DAY OF THE PREVIOUS ACCOUNTING YEAR AND, T HEREFORE, ITS NATURE AND STATUS COULD NOT BE DIFFERENT FROM I TS NATURE AND STATUS AS ON THE LAST DAY OF THE PREVIOUS YEAR. REGARDING PAST YEARS, THE ASSESSEE'S CLAIMS FOR DED UCTION WERE ALLOWED IN RESPECT OF THE SUMS ADVANCED DURING THOSE YEARS. THIS COULD BE ONLY ON THE ASSUMPTION THAT TH OSE ADVANCES WERE NOT OUT OF BORROWED FUNDS OF THE ASSE SSEE. THIS FINDING DURING THE PREVIOUS YEARS WAS THE VERY BASIS OF THE DEDUCTIONS PERMITTED DURING THE PAST YEARS. IT WOULD NOT BE EQUITABLE TO PERMIT THE REVENUE TO TAKE A DIFFER ENT STAND NOW IN RESPECT OF THE AMOUNTS WHICH WERE THE SUBJEC T- MATTER OF PREVIOUS YEARS' ASSESSMENTS. IN MY OPINION, THE DECISION OF THE HON'BLE KARNATA KA HIGH COURT REFERRED TO ABOVE, IS SQUARELY APPLICABLE TO THE FACTS OF THE P RESENT CASE AND, THEREFORE, NO DISALLOWANCE U/S 36(1)(IIII) IS CALLED FOR. 8. THE ASSESSEE HAS ALSO SUBMITTED STATEMENT OF INT EREST FREE FUNDS AVAILABLE AND INTEREST FREE LOANS GIVEN (PAGE 29 OF THE PAPER BOOK ) WHICH IS REPRODUCED HEREIN BELOW:- INTEREST FREE FUNDS AVAILABLE NAME OPENING BALANCE AS ON 1.4.2006 CLOSING BALANCE AS ON 31.3.2007 RAMESH KUMAR (HUF) CAPITAL ACCOUNT RS. 27,07,966/- RS. 22,86,951/- RAMESH KUMAR (IND) RS. 1,73,915/- RS. 1,73,915/- NITIN GUPTA S/O RAMESH KUMAR RS. 2,33,690/- RS. 2,33,690/- SASHI GUPTA W/O RAMESH GUPTA RS. 4,41,500/- RS. 4,41,500/- TOTA RS. 35,57,071/- RS. 31,36,056/- 8 INTEREST FREE LOANS NAME OPENING BALANCE AS ON 1.4.2006 CLOSING BALANCE AS ON 31.3.2007 ASHOK KUMAR RS. 15,48,654/- RS. 15,48,654/- R.K. WOOLEN MILLS RS. 17,22,032/- RS. 17,22,032/- TOTAL RS. 32,70,686/- RS. 32,70,686/- DECLARED INCOME RS. 6,63,686/- NOTE: ALL ADVANCES ARE OLD. NO ADVANCES MADE DURING THE YEAR. SD/- SUBHASH AGARWAL, ADVOCATE 9. FROM THE ABOVE IT IS CRYSTAL CLEAR THAT THE OPEN ING BALANCE OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE AS ON 1.4.2006 WA S RS. 35,57,071/- AND THE CLOSING BALANCE AS ON 31.3.2007 WAS RS. 31,36,056/- . FURTHER THE OPENING BALANCE OF INTEREST FREE LOANS GIVEN WAS RS. 32,70, 686/- AND CLOSING BALANCE OF INTEREST FREE LOANS WAS RS. 32,70,686/-. THUS, IT I S CLEAR THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE H AS NOT ADVANCED INTEREST FREE LOANS TO ANY PERSON AND, THEREFORE, NO DISALLOWANCE U/S 361(1)(III) OF THE ACT IS CALLED FOR. IT IS ALSO NOT THE CASE OF THE ASSESSIN G OFFICER THAT BORROWED FUNDS WERE DIVERTED TO SHRI ASHOK KUMAR AND M/S R.K. WOOL EN MILLS DURING THE YEAR UNDER CONSIDERATION. IN FACT, NO ADVANCE WAS MADE TO THESE PARTIES DURING THE YEAR UNDER CONSIDERATION. AS I HAVE ALREADY OBSERVE D HEREIN ABOVE THAT IN THE PAST NO DISALLOWANCES WERE MADE BY THE REVENUE U/S 36(1)(III) OF THE ACT ON INTEREST FREE FUNDS ADVANCED TO ABOVE PARTIES. ACCO RDINGLY, I HOLD THAT ON THIS SCORE ALSO, NO DISALLOWANCE IS CALLED FOR. 9 10. VIEWED FROM ANY ANGLE, NO DISALLOWANCE IS CALLE D FOR AND ACCORDINGLY I DELETE THE ADDITIONS OF RS. 1,35,839/- AND RS. 2,04 ,644/-. THUS, GROUND NOS. 1 TO 4 ARE ALLOWED. 11. VIDE GROUND NO.5 OF THE APPEAL, THE ASSESSEE HA S CHALLENGED THE ACTION OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS. 60 ,000/- OUT OF FOREIGN TRAVELLING EXPENSES AND ASSESSING OFFICER HAS DISCU SSED THIS ISSUE IN PARA 7 OF THE ASSESSMENT ORDER. THE ASSESSEE HAD CLAIMED EXPE NSES ON FOREIGN TRAVEL AT RS. 1,70,083/-. THE ASSESSING OFFICER REQUIRED THE ASSE SSEE TO JUSTIFY THE ABOVE CLAIM. IN RESPONSE TO THE SAID QUERY, THE ASSESSEE CONTENDED THAT EXPENDITURE ON FOREIGN TRAVEL WAS INCURRED TO INCREASE THE SCOPE O F BUSINESS BY MEETING DIFFERENT CLIENTS. FURTHER, IT WAS ALSO STATED BY THE ASSESSEE THAT DUE TO DEATH OF A NEAR RELATIVE, THE TRIP WAS CANCELLED AND NO DEAL COULD BE MATURED. THE ASSESSING OFFICER HAS ADMITTED THAT ASSESSEE HAD GO NE ON A FOREIGN TRIP AND THE PURPOSE OF WHICH HAS ALSO BEEN PROVED. AT THE SAME TIME, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS FAILED TO FURNISH TH E VOUCHERS IN SUPPORT OF THE EXPENDITURE. CONSEQUENTLY, THE ASSESSING OFFICER DI SALLOWED A SUM OF RS. 60,000/-. 12. ON APPEAL, THE CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER AND, HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 13. I HAVE HEARD THE RIVAL SUBMISSIONS. SHRI SUBHAS H AGGARWAL, LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT DISALLOWANCE OF R S. 60,000/- OUT OF RS. 1,78,083/- IS NOT JUSTIFIED. ACCORDING TO HIM, THE NECESSARY EVIDENCE AND DETAILS WERE FILED WITH REGARD TO THE EXPENDITURE INCURRED ON FOREIGN TRAVEL. THE ASSESSING OFFICER HAS DISALLOWED A SUM OF RS. 60,00 0/- ON ADHOC BASIS. HE 10 FURTHER POINTED OUT THAT THE ASSESSEE PAID FBT ON T HESE EXPENSES. HE FURTHER SUBMITTED THAT WHERE FBT HAS BEEN PAID, NO FURTHER DISALLOWANCE IS PERMISSIBLE AND RELIED ON THE DECISION OF ITAT, CHANDIGARH IN T HE CASE OF DCIT V RICO AUTO INDUSTRIES LTD IN ITA NO.689/CHD/2003 DATED 26.9.2 013. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER:- 12 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THIS ISSUE HAS BEEN ADJUDICATED BY THE LD. CIT (A) VIDE PARA 9 WHICH READS AS UNDER: 9. I HAVE CONSIDERED THE BASIS OF ADDITION MADE BY THE ASSESSING OFFICER AND THE ARGUMENTS OF THE AR O N THE ISSUE. IT IS A MATTER OF FACT THAT THE ASSESSEE HAS FILED RETURN UNDER FRINGE BENEFIT TAX AND ANY ELEME NT OF PERSONAL NATURE GETS DULY COVERED ON ACCOUNT OF SAID PAYMENT. THIS IS TO MEAN THAT NO SEPARATE DISALLOWANCE ON ACCOUNT OF ESTIMATED EXPENDITURE OF PERSONAL NATURE NEEDS TO BE MADE ONCE FBT AT STIPULATED RATES IS PAID. THEREFORE, DISALLOWANCE M ADE BY THE ASSESSING OFFICER IS DIRECTED TO BE DELETED. WE FURTHER FIND THAT DESPITE ALL THE DETAILS, THE ASSESSING OFFICER HAS MADE ADDITION ON ADHOC BASIS WHICH IS NOT PERMISSIBLE UNDER THE LAW AND THEREFOR E, WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF TH E LD. CIT(A). 14. IN MY OPINION, THE ISSUE IS SQUARELY COVERED BY THE ABOVE DECISION OF THE TRIBUNAL. THEREFORE, THE ADHOC DISALLOWANCE OF RS. 60,000/- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) IS NO T SUSTAINABLE. EVEN OTHERWISE ALSO, THE DISALLOWANCE OF RS. 60,000/- OU T OF RS. 1,78,083/- IS BAD IN LAW, PARTICULARLY WHEN THE ASSESSING OFFICER HIMSEL F HAS ADMITTED THAT THE ASSESSEE HAS PROVED THE PURPOSE OF FOREIGN TRIP. TH E EXPENSES ON FOREIGN TRAVEL WERE INCURRED TO INCREASE THE SCOPE OF BUSINESS OF ASSESSEE BY MEETING DIFFERENT 11 CLIENTS AND WHEN THE PURPOSE OF TRIP WAS ON ACCOUNT OF BUSINESS PURPOSES, THEREFORE, NO ADHOC DISALLOWANCE IS CALLED FOR. THE ASSESSING OFFICER HAS NOT GIVEN ANY BASIS FOR MAKING ADHOC DISALLOWANCE OF RS . 60,000/-. WHEN THE ASSESSEE HAD GONE ON A FOREIGN TRIP, THE PURPOSE OF WHICH WAS BUSINESS DEALS AND THEREFORE, IT CAN BE SAFELY HELD THAT THE ENTIRE EX PENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND HEN CE NO ADHOC DISALLOWANCE IS CALLED FOR. ACCORDINGLY, THE ADDITION OF RS. 60,000 /- MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) IS HEREBY DELET ED. GROUND NO.5 OF THE APPEAL STANDS ALLOWED. 15. NO OTHER POINT WAS RAISED OR ARGUED BEFORE HIM 16. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.12.2015 SD/- (H.L.KARWA) VICE PRESIDENT DATED : 11 TH DECEMBER, 2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR