FOCUS COMTRADE P.LTD, MUMBAI V. ITO 2(3)_2, MUMBAI

ITA 3307/MUM/2012

• Counselvise Citation: 330719914 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 07-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 11-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R C JAIN
• Section: 40A(3)

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI . .. . . . . . ! ! ! !, ,, , ' #$ ' #$ ' #$ ' #$ , , ,, , . .. . . . . . $ $ $ $ , % #$ % #$ % #$ % #$ & & & & BEFORE SHRI R.K.GUPTA JM AND SHRI R.S.SYAL, AM ITA NO. 3307 /MUM/2012 A.Y. 2007-08 FOCUS COMTRADE PVT. LTD. 67, RAJGIR CHAMBERS, SHASHI BHAGAT SINGH MARG, FORT, MUMBAI-400001 PAN-AADCS1570P ' ' ' ' / VS. INCOME-TAX OFFICER, WARD -2(3)(2), AAYKAR BHAVAN, MUMBAI-400020 ( )* / // / ASSESSEE) ( +,)* / RESPONDENT) )* - -- - . . . . / ASSESSEE BY : SHRI R.C.JAIN +,)* - . - . - . - . / REVENUE BY : SHRI ANURAG SHRIVASTAVA ' - /% / / / / DATE OF HEARING :07.08.2013 012 - /% / DATE OF PRONOUNCEMENT : 14.08.2013 #3 #3 #3 #3 / / / / O R D E R PER R.S.SYAL ( AM) : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE LD. CIT(A) ON 28.02.2012 IN THE RELATION TO THE A.Y . 2007-08. 2. THE FIRST GROUND IS AGAINST THE CONFIRMATION OF ADDITION OF RS.4,73,237/- ON ACCOUNT OF FOREIGN TRAVELING EXPEN SES. 3. BRIEFLY STATED THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE CLAIMED DEDUCTION OF RS.18.84 LAKHS ON ACCOUNT OF F OREIGN TRAVELING EXPENSES WHICH INCLUDED A SUM OF RS.4.73 LAKHS INCU RRED ON THE FOREIGN TRAVELING OF MR. SRINARAYNA BAHETI, CONSULT ANT AND ALSO FATHER ITA NO. 3307/MUM/2012 FOCUS COMTRADE PVT. LTD. . 2 OF ONE OF THE DIRECTORS. THE ASSESSING OFFICER OB SERVED THAT MR. SRINARAYNA BAHETI VISITED LONDON /ZURICH FOR WHICH THIS EXPENDITURE WAS CLAIMED TO HAVE BEEN INCURRED. ON VERIFICATION , IT WAS OBSERVED THAT THERE WAS NO CLIENT IN ZURICH. THE ASSESSEE C OULD NOT FURNISH ANY EVIDENCE TO PROVE THAT THE PLACES VISITED BY HIM HA D ANY CONNECTION WITH ITS BUSINESS. THIS AMOUNT WAS, THEREFORE, DIS ALLOWED. THE LD. CIT(A) UPHELD THE IMPUGNED ORDER ON THIS ISSUE. 4. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE DEDUCTI ON TOWARDS FOREIGN TRAVELING EXPENSES AMOUNTING TO RS.4.73 LAKHS WAS C LAIMED TOWARDS THE FOREIGN VISITS UNDERTAKEN BY MR. BAHETI, A CONS ULTANT TO THE ASSESSEE COMPANY WHO IS FATHER OF THE ONE OF THE DI RECTORS OF THE ASSESSEE COMPANY. NO MATERIAL WORTH THE NAME HAS B EEN PLACED ON RECORD TO DEMONSTRATE THAT SUCH VISITS TO LONDON/ZU RICH HAD ANY LINK WITH THE CARRYING ON OF THE ASSESSEES BUSINESS. W E THEREFORE, UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. THIS GROUND IS N OT ALLOWED. 5. THE ONLY OTHER GROUND IS AGAINST THE CONFIRMATIO N OF ADDITION OF RS.3,06,015/- U/S 40A(3) OF THE ACT. THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE CLAIMED DEDUCTION OF RS.3.06 LAKHS ON ACCOUNT OF PROCUREMENT EXPENSES IN CONNECTION WITH CERTAIN CON SIGNMENTS. THE AO MADE THE DISALLOWANCE U/S 40A(3) FOR THE SAME ON THE GROUND THAT THESE EXPENSES WERE PAID OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE DRAFT. THE ASSESSEE REMA INED UNSUCCESSFUL BEFORE THE LD. CIT(A) AS WELL. ITA NO. 3307/MUM/2012 FOCUS COMTRADE PVT. LTD. . 3 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS NOTICED THAT THE SE EXPENSES WERE INCURRED BY WAY OF BOOK ADJUSTMENT AGAINST MONEY TO BE RECOVERED. THIS FACT WAS DEMONSTRATED BEFORE THE LD. CIT(A) AS WELL, WHO NOTED A FAVORABLE JUDGMENT OF THE HONBLE PUNJAB AND HARY ANA HIGH COURT IN THE CASE OF CIT VS. KISHANCHAND MAHESHWARI DASS(1980) 121 ITR 232 (P&H) BUT REFUSED TO FOLLOW IT SIMPLY ON THE GROUND THAT IT WAS RENDERED BY NON-JURISDICTIONAL HIGH COURT. FROM TH E ABOVE JUDGMENT IT IS CLEAR THAT THE PROVISIONS OF SECTION 40A(3) A RE NOT ATTRACTED IN CASE OF PAYMENT BY WAY OF BOOK ADJUSTMENT. NO CONTR ARY JUDGMENT OF ANY OTHER HONBLE HIGH COURT HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. DR. RESPECTFULLY FOLLOWING THE PRECEDENT, W E HOLD THAT THE DISALLOWANCE HAS BEEN WRONGLY UPHELD. THE IMPUGNED ORDER IS REVERSED ON THIS SCORE. THIS GROUND IS ALLOWED. 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST 2013 #3 - 012 % 4 5#'6 14 TH AUGUST .2013 1 - SD/- SD/- (R.K.GUPTA) (R.S.SYAL) ' #$ ' #$ ' #$ ' #$ / JUDICIAL MEMBER % #$ % #$ % #$ % #$ / ACCOUNTANT MEMBER / MUMBAI ; 5#' / DATED : 14 TH AUGUST , 2013 . SHEKHAR. P.S. ITA NO. 3307/MUM/2012 FOCUS COMTRADE PVT. LTD. . 4 #3 - +'/78 982/ #3 - +'/78 982/ #3 - +'/78 982/ #3 - +'/78 982// COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. +,)* / THE RESPONDENT. 3. : ( ) / THE CIT , MUMBAI. 4. : / CIT(A)- , MUMBAI 5. 8= +'/'' , , / DR, ITAT, MUMBAI 6. > / GUARD FILE. #3' #3' #3' #3' / BY ORDER, ,8/ +'/ //TRUE COPY// ? ?? ?/ // /@ A @ A @ A @ A ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI