N.R JASANI, MUMBAI V. ADDL CIT RG 24(1), MUMBAI

ITA 3715/MUM/2010

• Counselvise Citation: 371519914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 10-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PARTHA SARATHI NAIK
• Assessee Lawyers: K GOPAL
• Keywords: Commercial expediency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI PRAMOD KUMAR (AM) AND SMT. ASHA VIJAYARAG HAVAN (JM) ITA NO. 3715/MUM/2010 ASSESSMENT YEAR-2006-07 M/S. N.R. JASANI, AGARWAL INDUSTRIAL ESTATE, 139-G, S.V. ROAD, JOGESHWARI (W), MUMBAI-400 102 VS. THE ITO, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI K. GOPAL RESPONDENT BY: SHRI PARTHA SARATHI NAIK O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 17.2.2010 PASSED BY THE LD. CIT(A)-24 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OFFICE FURNITURE AND HAS SHOWROOM AT VARIOUS PLACES. THE ASSESSEE F ILED RETURN OF INCOME ON 20.10.2006 DECLARING AN INCOME OF RS. 1,12,45,48 5/-. THE ASSESSMENT WAS COMPLETED U/S. 143(3) AND WHILE COMP LETING THE ASSESSMENT, THE ASSESSING OFFICER MADE DISALLOWANCE S OF CERTAIN EXPENSES. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A). THE LD. AR OF THE ASSESSEE EXPLAINED BEFORE THE LOWER A UTHORITIES AS UNDER: ITA NO. 3715/M/2010 2 MRS. JYOTI JASANI IS THE DIRECTOR IN THE PARTNER C OMPANY OF M/S. N. R. JASANI CALLED M/S. JANSANI FURNITURE MFG . PVT. LTD. MR. N.R. JASANI IS SUFFERING FROM HYPERTENSION AND , THEREFORE, THE DOCTOR HAS ADVISED HIM NOT TO TRAVEL ALONE, AND HE DOES NOT TRAVEL WITHOUT HER. MR. N.R. JASANIS MEMORY IS NOT SHARP AS IT WAS A ND THEREFORE, ANY IMPORTANT MEETINGS ABROAD, SHE ACCO MPANIES HIM AND HELPS HIM TOO IN HIS HOME WORK FOR THE NEXT MEE TINGS. DURING THE TRAVELS, SHE TAKES CARE OF ALL THE FORMA LITIES OF DEPARTURES AND ARRIVALS AT THE AIRPORTS, ORGANIZES TRANSPORT, HOTELS ETC. WHICH IS A GREAT HELP TO HIM AT THE AGE OF 68 YEAR 4. THE LD. CIT(A) HELD THAT THE EXPLANATION GIVEN B Y THE ASSESSEE IS GENERAL IN NATURE. FURTHER, THE LD. CIT(A) HELD TH AT MS. JYOTI JASANI IS NOT THE PARTNER IN THIS FIRM AND THE ASSESSEE HAS FAILED TO PROVE AS TO HOW HER FOREIGN VISIT WAS A BUSINESS TRIP FOR THE ASSESSEE FIRM. THEREFORE, THE LD. CIT(A) CONFIRMED THE ORDER OF TH E AO ON THIS ISSUE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE U S. THERE IS NOTHING ON RECORD TO SHOW THAT THE VISIT OF THE WIF E OF THE PARTNER WAS FOR BUSINESS PURPOSES OR COMMERCIAL EXPEDIENCY. HER ACC OMPANYING HER HUSBAND, EVEN IF IT IS TO TEND TO HIM CANNOT BE CON SIDERED AS FOR BUSINESS PURPOSES BUT CAN BE CONSIDERED AS ONLY FOR PERSONAL EXPENSES. THE MADRAS HIGH COURT IN THE CASE OF CIT VS T.S.HAAJI M OOSA AND CO 153 ITR 422 (MAD) HAS OBSERVED AT PAGE 426 AS UNDER: WHILE WE AGREE THAT A BUSINESSMAN IN INDIFFERENT HEALTH OUGHT NOT TO BE DISCOURAGED FROM UNDERTAKING A FOREIGN TOUR A CCOMPANIED BY EITHER HIS WIFE OR A NURSE OR OTHER ATTENDANT, WE C ANNOT AT THE SAME TIME HOLD THAT THE EXPENSES INCURRED EITHER AVAILIN G HIMSELF OF THE COMPANY OF HIS WIFE OR THE SERVICE OF A NURSE OR A ATTENDANT ARE ANY THE LESS PERSONAL, HOWEVER MUCH THE EXPENSES ARE EI THER NECESSARY OR EVEN PRODUCTIVE OF GOOD HEALTH OR OTHER ENJOYABL E RESULTS FROM THE POINT OF VIEW OF THE PERSONAL NEED AND REQUIREMENT OF SUCH A BUSINESSMAN ITA NO. 3715/M/2010 3 SIMILAR VIEW HAS BEEN EXPRESSED IN THE CASES OF D.B . MADAN VS CIT 261 ITR 193 (MAD), BOMBAY MINERAL SUPPLY CO PVT LTD V S CIT 153 ITR 437 (GUJ) AND RAM BAHADUR THAKUR LTD VS CIT 257 ITR 2 89 (KER). RESPECTFULLY FOLLOWING THE RATIO OF THE ABOVE DECIS IONS, WE DISALLOW THE CLAIM OF EXPENDITURE OF RS. 2,83,730/- CLAIMED AS TRAVEL EXPENSES OF THE WIFE OF MD ACCOMPANYING HIM IN HIS FOREIGN TRAVEL. THEREFORE THIS GROUND RAISED BY THE ASSESSEE IS DISMISSED. 7. THE NEXT ISSUE RELATES TO ADHOC DISALLOWANCE OF 10% OUT OF VARIOUS EXPENSES. 8. DETAILS OF ALL BRANCHES WERE FILED AND SEVERAL A DMINISTRATIVE AND SELLING EXPENSES WERE INCURRED IN CASH. SOME NON-BU SINESS EXPENSES ARE ALSO DEBITED IN PROFIT AND LOSS ACCOUNT. THE AO NOT ICED THAT MR. & MRS. JASANI HAS TAKEN AIR TRIPS TO POPULAR HOLIDAY DESTI NATION, LIKE GOA, AHMADABAD & KERALA, WHERE THE ASSESSEE HAS NO BRANC HES. THE AO FURTHER OBSERVED THAT OFFICE EXPENSES, TRAVELING EX PENSES, CONVEYANCE, COMPUTER STATIONARY AND MANY OTHER EXPENDITURES ARE INCURRED IN CASH. CASH PAYMENTS ARE NOT VERIFIABLE. THEREFORE, THE AO DISALLOWED 10% EXPENSES OUT OF EACH HEADS TOTALING TO RS.4,94,393/ -. 9. BEFORE THE LD. CIT(A) THE AUTHORISED REPRESENTAT IVE OF THE ASSESSEE HAS OBJECTED THIS DISALLOWANCE AND ARGUED THAT THE BOOKS OF ACCOUNTS ARE AUDITED AND ALL EXPENSES ARE VERIFIABLE, HENCE, DIS ALLOWANCE SHOULD BE DELETED. 10. THE LD. CIT(A) HELD AS FOLLOWS: I HAVE CAREFULLY OBSERVED THE SUBMISSIONS OF THE A PPELLANT AND FINDINGS OF THE ASSESSING OFFICER. THOUGH THE A SSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY SPECIFIC EXAMPLES OF DISALLOWED EXPENDITURE ON RECORD BUT THE FACT OF SOME CASH EXP ENDITURE CANNOT BE DENDIED WHICH IS NOT CROSS VERIFIABLE. FURTHER, THE PARTNER AND HIS ITA NO. 3715/M/2010 4 WIFE HAS TRAVELED TO PICNIC SPOTS WHERE APPELLANT H AS NOT BUSINESS. SO KEEPING IN VIEW TOTAL FACTS, IT WOULD BE FAIR AN D REASONABLE TO CONFIRM 50% DISALLOWANCE OUT OF ALL HEADS MADE BY T HE ASSESSING OFFICER. THUS THIS GROUND OF APPEAL IS PARTLY ALLOW ED. 11. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CI T(A) AS THE ASSESSEE HAS NOT DENIED THAT HE HAS INCURRED SOME CASH EXPEN DITURE. FURTHER THE EXPENSES TOWARDS TRAVEL TO PLACES WHICH THE ASSESSE E HAS NO BUSINESS CANNOT BE ALLOWED AS THE SAME ARE NOT FOR THE PURPO SE OF BUSINESS BUT ARE PLEASURE TRIPS. HENCE, WE FIND THAT THE CONFI RMATION OF 50% OF THE DISALLOWANCE OUT OF ALL HEADS MADE BY THE AO AND CO NFIRMED BY THE LD. CIT(A) IS REASONABLE AND THEREFORE WE CONFIRM THE S AME. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ] ORDER PRONOUNCED ON THIS 30 TH DAY OF JUNE, 2011 SD/- SD/- (PRAMOD KUMAR) ( ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30 TH JUNE, 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 3715/M/2010 5 DATE INITIALS 1 DRAFT DICTATED ON: 21 . 0 6 . 201 1 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 22 .0 6 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10 . DATE OF DISPATCH OF ORDER: _________ ______