GODAVARI CORPORATION P.LTD, MUMBAI V. ITO 1(1)(4), MUMBAI

ITA 4547/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101043 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 14-07-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 02-06-2010
• Court: TRIBUNAL
• Department Lawyers: S T BIDARI SR
• Assessee Lawyers: M K PATEL; R S CHOKSHI
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO. 4547/M/2010 (AY: 2003 - 2004 ) I.T.A. NO. 4548/M/2010 (AY: 2003 - 2004 ) M/S. GODAVARI CORPORATION PVT LTD., INDUSTRY HOUSE, 159, CHURCHGATE RECLAMATION, MUMBAI - 400 020. / VS. INCOME TAX OFFICER - 1(1)(4), AAYAKAR BHAVAN, MUMBAI - 20. ./ PAN : AAACG1850D ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI R.S.CHOKSHI AND SMT. M.K. PATEL / RESPONDENT BY : SHRI S.T. BIDARI, SR. AR / DATE OF HEARING : 14.07.2015 / DATE OF PRONOUNCEMENT : 11 .09.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION INVOLVING COMMON ISSUE RELATING TO THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES. CIT (A) CONFIRMED THE ADDITIONS IN BOTH THE YEARS THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE FOR THE AY 2003 - 04 ARE THAT THE ASSESSEE INCURRED A SUM OF RS.2,62,422/ - ON FOREIGN TRAVEL OF SHRI D.K. AGARWAL TO SINGAPORE. IN THIS REGARD, IT IS THE SUBMISSION OF THE ASSESSEE THAT SHRI D.K. AGARWAL, A SENIOR E XECUTIVE OF THE COMPANY, REPRESENTED THE ASSESSEE IN SHAREHOLDERS MEET CONDUCTED BY M/S. P.T. SOUTH SPECIFIC 2 VISCOSE, INDONESIA. THIS IS A SHAREHOLDERS MEET AND THE ASSESSEE SENT SHRI AGARWAL FOR THE SAID MEET O F THE JOINT VENTURE. THE EXPENSES INCURRED BY THE ASSESEE IN RESPECT SHRI AGARWALS AFORESAID FOREIGN TRAVEL WERE DISALLOWED B Y THE AO REJECTING THE ASSESSEES CONTENTION QUESTIONING THE BUSINESS PURPOSES. WHILE, THESE ARE THE FACTS FOR THE AY 2003 - 04, T HE FACTS FOR THE AY 2005 - 06 ARE ALSO MORE OR LESS THE SAME EXCEPT THE TRAVEL WAS UNDERTAKEN BY SOME FOREIGNERS AND THAT EXPENDI TURE DISALLOWED IN THAT YEAR IS RS . 3,28,433/ - . MATTER TRAVELLED T O THE FIRST APPELLATE AUTHORITY F O R B O T H A Y S . 3. DURING THE FIRST APPELLATE AUT HORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) HELD THAT THE EXPENDITURE INCURRED IN CONNECTION WITH THE INVESTMENT IN SHARES OF THE JOINT VENTURE CANNOT BE DEEMED AS AN ALLOWABLE EXPENDITURE U/S 37 OF THE ACT. AGAIN AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. 4. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRAVEL WAS UNDERTAKEN BY THE EMPLOYEES O F THE COMPANY AND NOT BY THE MANAGEMENT OR BY THEIR SPOUSES. IN SUCH CIRCUMSTANCES, HE ASSESSEE HAS R I G H T L Y BOOK E D THE SAID EXPENSES A S THE BUSINESS PURPOSES O F T H E A S S E S S E E . ON THE CIT (A)S OBJECTIONS, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE MANAGEME NT COULD NOT UNDERTAKE THE TRAVEL AND IN THEIR PLACE, EMPLOYEES WERE DEPUTED. ON THE ISSUE OF UNDERTAKEN TRAVEL TO SINGAPORE, WHEN THE MEET ACTUALLY HELD IN JAKARTA, THERE IS NO SATISFACTORY EXPLANATION. 3 5. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES, WE FIND THERE IS NO DISPUTE ON THE GENUINENESS OF THE EXPENDITURE IN BOTH THE YEARS. THE DISPUTE IS ONLY WITH REGARD TO THE EMPLOYEES TRAVELLING TO SHAREHOLDERS MEET WHERE THE EMPLOYEES ARE NOT T H E SHAREHOLDERS. THE BU SINESS PURPOSES OF THE ASSESSE ARE NOT SUFFICIENTLY AND ADEQUATELY DEMONSTRATED BEFORE US. THEREFORE, WE ARE OF THE OPINION, BOTH THE APPEALS SHOULD BE REMANDED FOR ONE MORE ROUND TO THE FILE OF THE AO FOR ADJUDICATING THE ISSUE AFRESH. ASSESSEE SHALL DEM ONSTRATE WHERE EXACTLY THE MEET TOOK PLACE, WHY SHRI AGARWAL TRAVELLED TO SINGAPORE, HOW SHRI AGARWAL IS CONNECTED TO THE SHAREHOLDERS MEET WHEN THE ASSESSEE IS A SHAREHOLDER IN THE JOINT VENTURE COMPANY. FURTHER, ASSESSEE SHALL ALSO DEMONSTRATE AS TO WHA T IS FACT O N THE DISALLOWANCE MADE BY THE AO IN THE EARLIER YEAR ON ACCOUNT OF FOREIGN TRAVEL. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE IN BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 1 T H SEPTEMBER, 2015. S D / - S D / - (AMIT SHUKLA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 1 .9 .2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 4 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI