DCIT, New Delhi V. M/s Spirotech Heat Exchangers Pvt. Ltd., New Delhi

ITA 3255/DEL/2011

• Counselvise Citation: 325520114 RSA 2011
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 22-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 16-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURJANI MOHANTY SENIOR
• Assessee Lawyers: BALDEV RAJ CAS; VIDUR PURI
• Keywords: Business expenditure; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMEBR AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.3255/DEL./2011 (ASSESSMENT YEAR : 2008-09) DCIT, CIRCLE 9 (1), VS. M/S. SPIROTECH HEAT EXCHAN GERS PVT. LTD., NEW DELHI. B 13, IIND FLOOR, KAILASH COLONY, NEW DELHI 110 048. (PAN : AABCS3931J) CO NO.234/DEL/2011 (IN ITA NO.3255/DEL./2011) (ASSESSMENT YEAR : 2008-09) M/S. SPIROTECH HEAT EXCHANGERS PVT. LTD., VS. DCIT , CIRCLE 9 (1), B 13, IIND FLOOR, KAILASH COLONY, NEW DELHI. NEW DELHI 110 048. (PAN : AABCS3931J) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI VIDUR PURI & BALDEV RAJ, CAS REVENUE BY : SMT. SURJANI MOHANTY, SENIOR DR ORDER PER T.S. KAPOOR, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT (APPEALS)-XII, NEW DELHI DATED 01.03.2011. THE GRO UNDS OF APPEAL TAKEN BY REVENUE READ AS UNDER :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) ERRED IN LAW AND MERIT OF THE CASE IN DELET ING THE ITA NO.3255/DEL/2011 CO NO.234/DEL/2011 2 ADDITION OF ` 48,16,429/- MADE BY AO U/S 36(1)(II) ON COMMISSION PAID TO DIRECTORS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT (A) ERRED IN LAW AND MERIT OF THE CASE IN DELET ING THE ADDITION OF ` 15,77,102/- MADE BY AO ON ACCOUNT OF BAD DEBTS WRITTEN OFF. 3. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, AD D OR FORGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. THE ASSESSEE HAS FILED CROSS OBJECTIONS TO THE APPE AL FILED BY THE REVENUE AND THE GROUNDS TAKEN BY THE ASSESSEE IN CROSS OBJE CTIONS ARE AS UNDER :- 1. THE LEARNED CIT (A) ERRED IN UPHOLDING DISALLOWANCE OF RS.1,40,685/- BEING 20% OF FOREIGN TRAVEL EXPENSES OF RS.7,03,425/- BY TREATING IT AS PERSONAL. 2. THE LEARNED CIT (A) ERRED IN FACTS IN STATING TH AT MOST OF THE VISITS THE MANAGING DIRECTORS AND THE DIRECTORS ARE ACCOMPANIED BY THEIR SPOUSE AND HAVE TRAVELED TO LOCATIONS WITH WHICH THEY HAVE NO BUSIN ESS DEALING. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A PRIVATE LIMITED COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTU RING OF FIN AND TUBE TYPE COOLING & CONDENSING COIL FOR ALL TYPES O F AIR-CONDITIONERS AND REFRIGERATORS. THE ASSESSEE FILED ITS RETURN O F INCOME FOR THE ASSESSMENT YEAR 2008-09 AT RS.5,12,70,270/-. THE C ASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLE TED AFTER MAKING THE FOLLOWING ADDITIONS :- ITA NO.3255/DEL/2011 CO NO.234/DEL/2011 3 (I) COMMISSION TO MANAGING DIRECTOR/ DIRECTOR (OPERATIONS) RS.48,16,429/- (II) DISALLOWANCE OF BAD DEBTS WRITTEN OFF RS.15,77,102 /- (III) OUT OF FOREIGN TRAVEL EXPENSES RS. 1,40,685/- AS REGARDS FIRST ADDITION OF COMMISSION TO DIRECTOR S, THE ASSESSEE HAD SUBMITTED BEFORE AO THAT PAYMENT OF COMMISSION TO M ANAGING DIRECTOR AND WHOLE TIME DIRECTORS WAS A BONAFIDE EXPENSE TO REWARD THE EFFORTS MADE BY THEM AND THE SAME WAS TAX NEUTRAL AS THE DI RECTORS WERE IN THE HIGHEST TAX BRACKET OF 30% WHICH WAS SIMILAR TAX RA TE FOR COMPANIES AND IT WAS ALSO SUBMITTED THAT THEY WERE THE WORKING DI RECTORS AND THEIR REMUNERATION WAS FIXED BY THE BOARD OF DIRECTORS AN D MOREOVER BOTH DIRECTORS WERE HIGHLY QUALIFIED AND HAVING GOOD EXP ERIENCE AND THEIR REMUNERATION WAS LESS THAN THE REMUNERATION OF MANA GING DIRECTORS GETTING IN THE SAME INDUSTRY. THE AO DID NOT ACCEP T THE CONTENTION OF ASSESSEE AS HE HELD THAT THERE WERE ONLY 12 SHAREHO LDERS AND SECTION 36(1)(II) WAS SPECIFICALLY INSERTED TO ENSURE THAT COMPANIES DO NOT AVOID TAX BY DISTRIBUTING THEIR PROFITS TO THEIR SPECIFIC MEMBERS OR SHAREHOLDERS FUNDS THROUGH COMMISSION INSTEAD OF DIVIDEND. THE REFORE, HE HELD THAT THE AMOUNT OF COMMISSION PAID TO DIRECTORS WOULD HA VE ATTRACTED INCOME-TAX, HAD THIS BEEN PAID AS DIVIDEND TO DIREC TORS. REGARDING SECOND DISALLOWANCE OF BAD DEBTS WRITTEN OFF, THE A SSESSEE HAD SUBMITTED THAT THE DEBTS WRITTEN OFF CONSISTED OFF OUTSTANDIN GS FROM THE PARTIES FOR ITA NO.3255/DEL/2011 CO NO.234/DEL/2011 4 SALES, ADVANCES TO THE SUPPLIERS WHICH WERE UNRECOV ERABLE AND WERE INCURRED DURING THE COURSE OF REGULAR BUSINESS OF T HE COMPANY AND WERE WHOLLY AND EXCLUSIVELY INCURRED FOR THE BUSINESS OF THE COMPANY. HOWEVER, THE AO DID NOT ACCEPT THE CONTENTION MADE BY ASSESSEE AND HELD THAT NO EVIDENCE WAS FURNISHED TO SUPPORT THE FACT THAT ASSESSEE HAD MADE ANY EFFORTS TO RECOVER THE SAID DEBT. 3. WITH RESPECT TO DISALLOWANCE OF FOREIGN TRAVELIN G EXPENSES, THE AO HAD DISALLOWED A SUM EQUIVALENT TO 20% OF FOREIGN T RAVEL EXPENSES CONSIDERING THAT THERE MIGHT BE AN ELEMENT OF PERSO NAL EXPENSES. 4. DISSATISFIED WITH THE ORDER OF AO, THE ASSESSEE FILED APPEAL BEFORE THE CIT (A) AND SUBMITTED THAT THE AO WAS NOT JUSTI FIED IN TREATING THE COMMISSION AS NOT BEING PART OF SALARY. RELIANCE W AS PLACED IN THE CASE OF GESTETNER DUPLICATORS (P) LTD VS. CIT REPORTED IN 117 ITR 1 WHEREIN IT WAS HELD THAT COMMISSION PAID AS A FIXED PERCENT AGE OF TURNOVER WAS NOTHING BUT ASSESSABLE AS SALARY. FURTHER THE DEFI NITION OF SALARY AS GIVEN IN SECTION 17 OF THE INCOME TAX ACT WAS EXPLAINED T O HIGHLIGHT THAT SALARY INCLUDED COMMISSION, PERQUISITES OR PROFITS IN LIEU OF OR IN ADDITION TO SALARY. THE LD. AR FURTHER SUBMITTED BEFORE CIT (A ) THAT IN THE CASE OF ACIT VS. BONY POLYMERS (P) LTD. REPORTED IN 36 SOT 456 (DELHI), IT WAS HELD THAT WHERE THERE WERE NO MATERIAL ON RECORD IN DICATING THAT AO COULD PRESUME THAT HAD THE COMMISSION NOT BEEN PAID. IT WOULD HAVE NECESSARILY BEEN PAID AS DIVIDEND TO SHAREHOLDERS T HE PROVISIONS OF ITA NO.3255/DEL/2011 CO NO.234/DEL/2011 5 SECTION 36(1)(II) UNDER SIMILAR CIRCUMSTANCES WERE NOT HELD TO BE ATTRACTED. THE PAYMENT TO MANAGING DIRECTOR WAS PA ID AS A PRUDENT BUSINESS DECISION. 5. THE LD. CIT (A) AFTER GOING THROUGH THE SUBMISSI ONS MADE BY THE ASSESSEE DELETED THE ADDITION MADE BY THE AO. WITH RESPECT TO SECOND ADDITION OF DISALLOWANCE OF BAD DEBTS WRITTEN OFF, THE LD. AR SUBMITTED BEFORE THE LD. CIT (A) THAT BAD DEBTS UNDER SECTION 36(1)(VII) WERE ALLOWABLE ON THE CONDITION THAT BAD DEBTS HAD BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT AND AFTER AMENDMENT IN SECTION W.E .F. 01.04.1989, THERE WERE NO REQUIREMENT TO FURNISH EVIDENCE THAT SUFFIC IENT EFFORTS WERE MADE FOR RECOVERY OF DEBTS. RELIANCE WAS PLACED ON THE JUDGMENTS IN THE FOLLOWING CASES :- (I) TRF LIMITED VS. CIT 190 TAXMAN 391 (SC); AND (II) CIT VS. SMT. NOLIFER I. SINGH 176 TAXMAN 252 (DEL ) LD. CIT (A) AFTER GOING THROUGH THE SUBMISSIONS DEL ETED THE DISALLOWANCE MADE BY THE AO. 6. AS REGARDS TO THIRD DISALLOWANCE OUT OF FOREIGN TRAVEL EXPENSES, THE LD. CIT (A) OBSERVED THAT IN THE PREVIOUS YEAR ALSO , THE ASSESSEE HAD INCURRED FOREIGN TRAVEL EXPENSES AND DISALLOWANCE D UE TO PERSONAL ELEMENT IN THE EXPENSES WAS MADE IN THE EARLIER YEA R ALSO AND ASSESSEE HAD NOT OBJECTED TO THAT. THEREFORE, IN VIEW OF TH E FACT THAT MANAGING ITA NO.3255/DEL/2011 CO NO.234/DEL/2011 6 DIRECTOR AND DIRECTORS WERE ACCOMPANIED BY THEIR SP OUSES, HE UPHELD THE DISALLOWANCE MADE BY AO. 7. AGGRIEVED WITH THE ORDER OF CIT (A), THE REVENUE HAS FILED APPEAL FOR DELETION OF FIRST TWO DISALLOWANCES AND ASSESSE E HAS FILED CROSS OBJECTION WITH REGARD TO UPHOLDING OF THIRD DISALLO WANCE OF FOREIGN TRAVEL EXPENSES. 8. AT THE OUTSET, THE LD. DR ARGUED THAT NO EXCEPTI ONAL WORK WAS DONE BY DIRECTORS AND THESE DIRECTORS WERE SHAREHOLDERS ALSO. THEREFORE, THE COMMISSION PAID TO DIRECTORS WAS NOT JUSTIFIED. RE LIANCE WAS PLACED ON THE JUDGMENT OF BOMBAY SPECIAL BENCH IN THE CASE OF DALAL BROACHA STOCK BROKING (P) LTD. REPORTED IN 131 ITD 36 WHERE IN IT WAS HELD THAT PAYMENT TO DIRECTORS AS COMMISSION WAS NOTHING BUT A DISTRIBUTION OF PROFITS AND HENCE WERE HIT BY THE PROVISIONS OF SEC TION 36(1)(II) OF THE ACT. AS REGARDS SECOND AND THIRD DISALLOWANCE MADE BY AO, THE LD. DR STRONGLY RELIED UPON THE ORDER OF AO AND ARGUED THA T NO EVIDENCE WAS FURNISHED TO SUPPORT THE FACT THAT ASSESSEE MADE SO ME EFFORTS TO RECOVER THE BAD DEBTS WRITTEN OFF. 9. ON THE OTHER HAND, THE LD. AR STRONGLY SUPPORTED THE ORDER OF LD. CIT (A) AND ARGUED THAT THERE WERE OTHER SHAREHOLDE RS ALSO AND BOTH THE DIRECTORS WERE HIGHLY QUALIFIED AND HAD A GREAT EXP ERIENCE WHICH WAS UTILIZED TO THE ACHIEVEMENT OF HIGHER TURNOVER AND HIGHER PROFITS OF THE COMPANY. IN THIS RESPECT, OUR ATTENTION WAS INVITE D TO PAGES 1 TO 4 OF ITA NO.3255/DEL/2011 CO NO.234/DEL/2011 7 PAPER BOOK WHEREIN THE DETAILS OF TURNOVER AND PROF ITS DURING THE YEAR ENDING 31.03.2004 TO 31.03.2008 WERE PLACED. THE L D. AR ARGUED THAT DUE TO EFFORTS OF THESE TWO DIRECTORS, THE TURNOVER AND NET PROFITS OF THE COMPANY CONTINUED TO RISE FROM YEAR TO YEAR. AT PA GE 3 OF PAPER BOOK, THE QUALIFICATIONS AND EXPERIENCE OF THE TWO DIRECT ORS WERE ALSO PLACED. IN VIEW OF THE ABOVE, THE LD. AR ARGUED THAT THE CO MMISSION WAS PAID AS A SOUND AND PRUDENT BUSINESS DECISION AND WAS A NEC ESSARY BUSINESS EXPENDITURE. LD. AR ALSO TOOK US TO PAGES 8 & 9 OF PAPER BOOK WHEREIN COPY OF RESOLUTION PASSED BY BOARD OF DIRECTORS AUT HORIZING THE PAYMENT OF COMMISSION OF DIRECTORS ARE PLACED. OUR ATTENTI ON WAS ALSO INVITED TO THE PROVISIONS OF COMPANIES ACT AND IT WAS ARGUED T HAT THE PAYMENT WAS MADE IN ACCORDANCE WITH THE PROVISIONS OF COMPANIES ACT AND WAS DULY AUTHORIZED BY BOARD OF DIRECTORS. HE FURTHER ARGUE D THAT SHAREHOLDING OF BOTH THE DIRECTORS TAKEN TOGETHER WAS LESS THAN 50% . WITH RESPECT TO CASE LAW RELIED UPON BY DR, THE LD. AR SUBMITTED THAT FA CTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE NOT SIMILAR TO THE FACTS AN D CIRCUMSTANCES OF THAT CASE AS IN THAT CASE, THERE WERE ONLY THREE DIRECTO RS AND THREE WERE THE ONLY SHAREHOLDERS WHEREAS IN THE PRESENT CASE THERE ARE FIVE DIRECTORS AND 12 SHAREHOLDERS. RELIANCE WAS PLACED ON THE JUDGME NT OF AMD METPLAST (P) LTD. VS. DCIT 341 ITR 563 AND CIT VS. CAREER LAUNCHER (INDIA) LTD. - 250 CTR 240 (DEL.). ITA NO.3255/DEL/2011 CO NO.234/DEL/2011 8 10. AS REGARDS THE DISALLOWANCE OF BAD DEBTS WRITTE N OFF, THE LD. AR SUBMITTED THAT AO HAD RELIED ON THE PROVISIONS OF I NCOME TAX ACT WHICH WERE PREVALENT BEFORE 01.04.1989 WHEREIN THE ASSESS EE WAS REQUIRED TO SHOW THAT SOME EFFORTS HAD BEEN MADE TO RECOVER THE DEBTS. HE ARGUED THAT FROM 01.04.1989, IT WAS SUFFICIENT IF BAD DEBT S ARE WRITTEN OFF IN THE PROFIT AND LOSS ACCOUNT. OUR ATTENTION WAS INVITED TO PAGE 124 OF PAPER BOOK WHEREIN A COPY OF PROFIT AND LOSS ACCOUNT SHOW ING BAD DEBTS WRITTEN OFF CHARGED TO PROFIT AND LOSS ACCOUNT WAS PLACED. 11. WITH RESPECT TO CROSS APPEAL FILED BY THE ASSES SEE, LD. AR SUBMITTED THAT ASSESSEE HAD CUSTOMERS ALL OVER THE WORLD AND DURING THE COURSE OF JOURNEY FROM INDIA TO FOREIGN COUNTRIES, THE DIRECT ORS HAD NO TIME TO SPENT ON THEIR OWN AND THE WHOLE TIME WAS SPENT IN THE IN TEREST OF BUSINESS. OUR ATTENTION WAS INVITED TO PAGES 54, 62, 66 TO 11 0 WHEREIN THE COMPLETE DETAILS OF MEETINGS HELD BY DIRECTORS ALONG WITH TH EIR TIMINGS WERE PLACED. IN VIEW OF THE ABOVE, THE LD. AR SUBMITTED THAT THE RE WAS NO ELEMENT OF PERSONAL NATURE AND THE DISALLOWANCE MADE BY AO WAS NOT JUSTIFIED. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS O F ASSESSING OFFICER. 12. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE HAVE NOTED THAT MANAGING DIRE CTOR AND WHOLE TIME DIRECTOR (OPERATIONS) WHO WERE PAID COMMISSION ON T HE BASIS OF DULY PASSED BOARD RESOLUTION AND WAS IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT. THE PAYMENT OF COMMISSION IS NE CESSARILY A PART OF ITA NO.3255/DEL/2011 CO NO.234/DEL/2011 9 SALARY AS DEFINED IN SECTION 17 OF THE INCOME-TAX A CT, 1961. THE CASE LAW RELIED UPON BY LD. DR HAD ITS SPECIFIC FACTS AND CI RCUMSTANCES WHEREIN THERE WERE ONLY THREE SHAREHOLDERS AND ALL THREE WE RE DIRECTORS AND WERE RELATED TO EACH OTHER. MOREOVER, IN THAT CASE, NO EVIDENCE OF PUTTING ANY EXTRA SERVICES WAS PLACED AND THE TURNOVER AND PROF ITS OF THAT COMPANY HAD INCREASED DUE TO GENERAL IMPROVEMENT IN STOCK M ARKET. IN THE CASE LAW RELIED UPON BY AR OF AMD METPLAST (P) LTD., THE FACTS AND CIRCUMSTANCES OF WHICH ARE SIMILAR TO THE FACTS OF THE PRESENT CASE. HONBLE DELHI HIGH COURT HAS HELD AS UNDER :- WE FAIL TO UNDERSTAND HOW THE AFORESAID OBSERVATIO NS ASSIST AND HELP THE REVENUE IN THE FACTUAL MATRIX O F THE PRESENT CASE. ASHOK GUPTA IS THE MANAGING DIRECTOR AND IN TERMS OF THE BOARD RESOLUTION IS ENTITLED TO REC EIVE COMMISSION FOR SERVICES RENDERED TO THE COMPANY. I T IS A TERM OF EMPLOYMENT ON THE BASIS OF WHICH HE HAD RENDERED SERVICE. ACCORDINGLY, HE WAS ENTITLED TO THE SAID AMOUNT. COMMISSION WAS TREATED AS A PART AND PARCEL OF SALARY AND TS HAS BEEN DEDUCTED. ASHOK G UPTA WAS LIABLE TO PAY TAX ON BOTH THE SALARY COMPONENT AND THE COMMISSION. PAYMENT OF DIVIDEND IS MADE IN TER MS OF THE COMPANIES ACT, 1956. DIVIDEND HAS TO BE PAI D TO ALL SHAREHOLDERS EQUALLY. THIS POSITION CANNOT BE DISPUTED BY THE REVENUE. DIVIDEND IS A RETURN ON INVESTMENT AND NOT SALARY OR PART THEREOF. HEREIN THE CONSIDERATION IN THE FORM OF COMMISSION WHICH WAS P AID TO ASHOK GUPTA WAS FOR SERVICES RENDERED BY HIM AS PER TERMS OF APPOINTMENT AS A MANAGING DIRECTOR. IN THE PRESENT CASE ALSO, THE PAYMENT OF COMMISSION WAS PAID TO MANAGING DIRECTOR AND DIRECTOR (OPERATIONS) AS PER THEIR TERMS OF APPOINTMENT AS IS APPARENT FROM BOARD RESOLUTION PL ACED AT PAGE 8 & 9 ITA NO.3255/DEL/2011 CO NO.234/DEL/2011 10 OF THE PAPER BOOK. THEREFORE, IN VIEW OF THE ABOV E, WE HOLD THAT THE PAYMENT OF COMMISSION WAS A GENUINE BUSINESS EXPEND ITURE AND WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT (A). IN VIEW OF THE ABOVE, THE FIRST GROUND OF THE REVENUE IS DISMISSED . 13. AS REGARDS SECOND GROUND OF APPEAL REGARDING DE LETION OF ADDITION OF RS.15,77,102/- ON ACCOUNT OF BAD DEBTS WRITTEN O FF, WE HAVE OBSERVED FROM PAGE 30 THAT BAD DEBTS MOSTLY RELATED TO AMOUN TS RECEIVABLE FROM CUSTOMERS. THE RELEVANT COPIES OF INVOICES AGAINST WHICH PAYMENT COULD NOT BE COLLECTED BY ASSESSEE ARE PLACED AT PAGES 31 TO 50 OF THE PAPER BOOK. AS PER THE DETAIL OF PAGE 30, THERE WERE TOT AL WRITTEN OFF BAD DEBTS AMOUNTING TO RS.22,35,826/- OUT OF WHICH THE ASSESS EE HAD ADJUSTED AN AMOUNT OF RS.6,50,724/- WHICH WAS CREDIT BALANCES L AYING UNCLAIMED AND, THEREFORE, A NET AMOUNT OF RS.15,77,102/- WAS DEBIT ED TO THE PROFIT AND LOSS ACCOUNT AS PLACED IN THE PAPER BOOK AT PAGE 12 4. THE AO HAD MADE THIS DISALLOWANCE ON THE BASIS THAT ASSESSEE HAD NO T TAKEN ANY EFFORT TO RECOVER THE AMOUNT WHICH POSITION WAS THERE UP TO 3 1.03.2009 AND FROM 01.04.1989 AS PER AMENDMENT IN SECTION 36, THERE IS NO REQUIREMENT TO SHOW THAT EFFORTS HAD BEEN MADE TO RECOVER THE AMOU NTS FROM DEBTORS. SECTION 36(1)(VII) AS AMENDED FROM 1.4.1989 READS A S UNDER :- 36 (1) THE DEDUCTIONS PROVIDED FOR IN THE FOLLOWING CL AUSES SHALL BE ALLOWED IN RESPECT OF THE MATTERS DEALT WI TH THEREIN. (I) . (II) . ITA NO.3255/DEL/2011 CO NO.234/DEL/2011 11 (VII) SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), THE AMOUNT OF BAD DEBT OR PART THEREOF WHICH IS WRITTEN OFF AS IR RECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE FOR THE PREVIOUS YEAR THE ASSESSEE ALSO FULFILLS THE CONDITIONS AS ENUMER ATED IN SUB-SECTION (2). THEREFORE, WE ARE OF THE VIEW THAT LD. CIT (A) HAD RIGHTLY DELETED THE DISALLOWANCE. THE SECOND GROUND OF APPEAL IS ALSO DISMISSED. 14. AS REGARDS CROSS OBJECTION FILED BY THE ASSESSE E, WE ARE OF THE OPINION THAT SINCE SPOUSES HAD ALSO ACCOMPANIED WIT H THE DIRECTORS OF THE COMPANY THERE MUST HAVE BEEN SOME ELEMENT OF PERSON AL NATURE IN THE EXPENSES AND ASSESSING OFFICER, THEREFORE, HAD RIGH TLY MADE DISALLOWANCE OUT OF FOREIGN TRAVEL EXPENSES. THEREFORE, WE DO N OT SEE ANY REASON TO INTERFERE IN THE ORDER OF CIT (A). THE CROSS OBJEC TION FILED BY THE ASSESSEE IS DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE REVENUE AND TH E CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF OCTOBER, 2012. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 19 TH DAY OF OCTOBER, 2012/TS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XII, NEW DELHI 5. CIT(ITAT), NEW DELHI. AR/ITAT NEW DELHI