PERIWINKLE FASHIONS P. LTD, MUMBAI V. DCIT 8(2), MUMBAI

ITA 3621/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9127 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 12-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 07-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V KRISHNA MURTHY
• Assessee Lawyers: D B SHAH
• Keywords: Business expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . . , . . ! , ' #$ % BEFORE SHRI B.R. MITTAL, JM AND SHRI N.K. BILLA IYA, AM ./I.T.A. NO. 3621/MUM/2010 ( & & & & / ASSESSMENT YEAR : 2006-07 M/S. PERIWINKLE FASHIONS PVT. LTD., 401/B, ELEGANT BUSINESS PARK, MIDC CROSS ROAD, J.B. NAGAR, ANDHERI (E), MUMBAI-400 093 / VS. THE DCIT-8(2), MUMBAI $' ' ./ () ./PAN/GIR NO. : ( '* /APPELLANT ) .. ( +,'* / RESPONDENT ) '* - / APPELLANT BY: SHRI D.B. SHAH +,'* . - / RESPONDENT BY : SHRI V. KRISHNAMURTHY . /0' / DATE OF HEARING : 12.12.2012 12& . /0' / DATE OF PRONOUNCEMENT : 14.12.2012 #3 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-17, MUMBAI DT.12.1.2010 PERTAINING TO A.Y. 2006-07. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) ERRED IN UPHOLDING THE DECISION OF THE AO DISALLOWING FOREIG N TRAVELLING EXPENDITURE AGGREGATING TO RS. 2,88,900/- AND LOCAL TRAVEL EXPENDITURE AGGREGATING TO RS. 7,789/-. ITA NO. 3621/M/2010 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT FO R THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED E-RETURN ON 27.10 .2006 DECLARING TOTAL INCOME AT RS. 32,32,740/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES WERE I SSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF THE ASSESS MENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS DEBITED ITS PROFI T & LOSS ACCOUNT BY CONVEYANCE AND TRAVELLING EXPENSES OF RS. 4,06,545/ -. THE AO SOUGHT EXPLANATION FROM THE ASSESSEE TO JUSTIFY THE CLAIM OF TRAVELLING EXPENDITURE. THE ASSESSEE FILED DETAILS AS EXHIBIT ED AT PAGE-3 OF THE ASSESSMENT ORDER. 3.1. AFTER CONSIDERING THE DETAILS, THE AO OBSERVED THAT OUT OF THE TOTAL TRAVELLING EXPENSES OF RS. 4,06,545/-, AN AMOUNT OF RS. 3,97,256/- PERTAIN TO FOREIGN TRAVELLING EXPENSES OF MRS. SHOBHA TAINW ALA AND MS. ANUSHREE TAINWALA. THE AO FURTHER NOTED THAT OUT O F THE TOTAL FOREIGN TRAVEL EXPENSES OF RS. 3,97,256/-, AN AMOUNT OF RS. 2,88,900/- REPRESENTS FOREIGN CURRENCY PURCHASED, HOWEVER, THE ASSESSEE COULD NOT EXPLAIN THE UTILIZATION OF THE FOREIGN CURRENCY SO PURCHASED VI S--VIS BUSINESS NECESSITIES. SIMILARLY, THE ASSESSEE COULD NOT EXP LAIN THE TRAVELLING EXPENSES TO AHMEDABAD AT RS. 7,789/-. THE ASSESSEE EXPLAINED THAT MRS. SHOBHA TAINWALA AND MS. ANUSHREE TAINWALA VISITED E UROPEAN UNION AND USA FOR THE PURPOSE OF BUSINESS. HOWEVER, THE AO WAS OF THE OPINION THAT THE ASSESSEE COULD NOT SUBSTANTIATE IT S CLAIM WITH DOCUMENTARY EVIDENCE. CONSIDERING THE NATURE OF EX PENSES, THE AO WAS OF THE OPINION THAT THESE ARE NOTHING BUT PERSONAL EXPENDITURE WHICH THE ASSESSEE IS TRYING TO CLAIM AS BUSINESS EXPENDITURE . ACCORDINGLY, THE AO DISALLOWED THE ENTIRE TRAVELLING EXPENSES AT RS. 4, 06,545/- WHICH INCLUDED TRAVELLING EXPENSES TO AHMEDABAD AT RS. 7,789/- AND CONVEYANCE EXPENSES AT RS. 1,500/-. ITA NO. 3621/M/2010 3 4. THE ASSESSEE STRONGLY AGITATED THIS MATTER BEFOR E THE LD. CIT(A). BEFORE THE CIT(A) THE ASSESSEE FILED DETAILS OF TRI P IN WHICH IT EXPLAINED THAT MRS. SHOBHA TAINWALA AND MS. ANUSHREE TAINWALA VISITED LONDON AND DUBAI. THE PERIOD OF TRIP WAS FOR 71 DAYS. TH E ASSESSEE FURTHER SUBMITTED DOCUMENTS RELATING TO PURCHASE OF FOREIGN CURRENCY. THE LD. CIT(A) THOUGH WAS CONVINCED THAT THE DIRECTORS OF T HE ASSESSEE DID VISIT FOREIGN COUNTRIES BUT AT THE SAME TIME THE ASSESSE E COULD NOT ADDUCE ANY EVIDENCE TO SHOW THAT FOREIGN CURRENCY PURCHASED HA D BEEN SPENT IN CONNECTION WITH THESE VISITS AND RESTRICTED THE AD DITION TO RS. 2,96,689/-. 5. AGGRIEVED WITH THIS FINDING OF THE LD. CIT(A), A SSESSEE IS IN APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE REITERATED HIS SUBMISSIONS AS MADE BEFORE THE LOWER AUTHORITIES. 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER A ND THE APPELLATE ORDER. WE FIND THAT BEFORE THE AO, THE ASSESSEE EX PLAINED THAT THE DIRECTORS HAVE VISITED EUROPEAN UNION AND USA WHERE AS THE EXPLANATION BEFORE THE LD. CIT(A) WAS THAT THE DIRECTORS HAVE V ISITED U.K. AND DUBAI. THE LD. COUNSEL COULD NOT EXPLAIN THE DIFFE RENT STAND TAKEN BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES. BEFORE US ALSO, THE LD. COUNSEL COULD NOT ADDUCE ANY EVIDENCE TO EXPLAIN THE USAGE OF FOREIGN CURRENCY SO PURCHASED. IN THE ABSENCE OF ANY MATERIAL BROUGHT ON RECORD AND ALSO IN THE ABSENCE OF ANY PLAUSIBLE EXPLANATION, WE DO NOT FIND ANY MERIT IN THE SUBMISSION OF THE ASSESSEE. HOWEVER, THE UNDISPUTE D FACT IS THAT DIRECTORS DID VISIT FOREIGN COUNTRIES AND THE TRIP WAS FOR MORE THAN 71 DAYS. CONSIDERING ALL THESE FACTS IN TOTALITY, IN THE INTEREST OF JUSTICE AND ITA NO. 3621/M/2010 4 FAIRNESS, MODIFYING THE ORDER OF THE LD. CIT(A), WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO 2/3 RD OF THE EXPENSES CLAIMED. THE ASSESSEE WILL GET A RELIEF OF 1/3 RD OF THE TRAVELLING EXPENSES. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 4 /5 4/ . 6 3 $7/ . (/ 8 ORDER PRONOUNCED IN THE OPEN COURT ON 14.12.2012 . #3 . 2& ' 6 9#5 14.12.2012 2 . : SD/- SD/- (B.R.MITTAL) (N.K. BILLAIYA) #$ /JUDICIAL MEMBER ' #$ / ACCOUNTANT MEMBER MUMBAI; 9# DATED 14.12.2012 . . ./ RJ , SR. PS #3 #3 #3 #3 . .. . +/ +/ +/ +/ ;&/ ;&/ ;&/ ;&/ / COPY OF THE ORDER FORWARDED TO : 1. '* / THE APPELLANT 2. +,'* / THE RESPONDENT. 3. < ( ) / THE CIT(A)- 4. < / CIT 5. =: +/ , , / DR, ITAT, MUMBAI 6. :> ? / GUARD FILE. #3 #3 #3 #3 / BY ORDER, ,/ +/ //TRUE COPY// @ @@ @ / 8 8 8 8 ( ( ( ( (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI