DCIT, New Delhi V. M/s. SSIPL Retail Ltd., New Delhi

ITA 4611/DEL/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0125 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Department
• Bench Allotted: G
• Next Hearing Date: 22-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-10-2011
• Court: TRIBUNAL
• Keywords: Capital asset; Question of law; Capital expenditure
• Section: 143(3)

Judgement Text

DELHI BENCH G : NEW DELHI BEFORESHRI S. V. MEHROTRA ACCOU ANT ANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 4611 /DEL/20 11 ASST. YEAR 200 8 - 200 9 ITA NO. 2366/DEL/2013 ASST. YEAR 2009 - 2010 DCIT CIRCLE - 9(1), NEW DELHI VS. M/S. SSIPL RETAIL LTD, B - 1, F - 4, MOHAN CO - OPERATIVE INDUSTRIAL AREA, MAIN MATHURA ROAD, BADARPUR DELHI PAN NO. AAACM2005L (APPELLANT) (RESPONDENT) DATE OF HEARING 22.05 .2015 DATE OF PRONOUNCEMENT 30 / 06 / 2015 O R D E R PER A. T. VARKEY, JUDICIAL MEMBER DEPARTMENT HAS FILED THESE APPEALS AGAINST THE SEPARATE ORDERS PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - XII, NEW DELHI PERTAINING TO ASSESSMENT YEARS 2008 - 09 & 2009 - 10. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON AND IDENTICAL, WE ARE THEREFORE, PROCEEDING TO DISPOSE OF THESE APPEALS BY PASSING THIS CONSOLIDATED ORDER, BY DEALING WITH THE ITA NO. 4611/DEL/2011 (A.Y. 2008 - 09) FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED IN THE ITA NO. 4611/DEL/2011 (AY 2008 - 09) READ S AS UND ER: 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE DISALLOWANCE OF RS. 2,44,39,358/ - MADE BY THE AO ON ACCOUNT OF ROYALTY. APPELLANT BY : P DUM KANUNJHA , DR RESPONDENT BY : B.K. ANAND, CA ITA NOS. 4611/DEL/2011 & 2366/DEL/2013 DCIT VS. M/S SSIPL RETAIL LTD. 2. THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 4,64,757/ - MADE BY THE AO U/S. 40A(2)(B) BEING INTEREST ON LOAN. 3. THE LD. CIT(A) ERRED IN LAW ON THE FACTS OF THE CASE IN DELETING THE DISALLOWANCE OF RS. 9,13,720/ - MADE BY AO OUT OF ADVERTISEMENT AND PROMOTION EXPENSES. 4. THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE DISALLOWANCE OF RS. 1,33,686/ - BEING 10% OF RS. 13,36,866/ - MADE BY THE AO ON ACCOUNT OF FOREIGN TRAVEL EXPENSES. 5. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, ADD OR FORGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. THE GROUNDS RAISED IN THE ITA NO. 2366/DEL/2013 (AY 2009 - 10) READ S AS UNDER: - 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS ON ACCOUNT OF DISALLOWANCE OF ROYALTY AMOUNTING TO RS. 1,37,28,045/ - . 2. THE LD. CIT(A) HAS ERRED I N LAW AND ON FACTS OF THE CASE ON ACCOUNT OF ADVERTISEMENT AND PROMOTION EXPENSES AMOUNTING TO RS. 13,31,882/ - . 3. THE LD. CIT(A) HAS ERRED IN LAW ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 29,033/ - BEING INTEREST PAYMENT. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 19,11,530/ - MADE BY THE AO ON ACCOUNT OF FOREIGN TRAVEL EXPENSES. 5. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, ADD OR FORGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DUR ING THE HEARING OF THIS APPEAL. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME DECLA RING NIL INCOME ON 30.9.2008. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND STATUTORY NOTICE S WERE SENT WITH IN THE PRESCRIBED TIME . AFTER PERUSAL OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE, THE AO OBSERVED THAT THE ASSESSEE DURING THE RELEVANT YEAR DERIVED INCOME FROM IMPORT, SALE, DISTRIBUTION, MANUFACTURE OF SPORTS FOOTWEAR. DURING THE COURSE OF HEARING, THE LD A R OF THE ASSESSEE HA S PRODUCED THE DETAILS CALLED FOR , WHICH HAVE BEEN TEST CHECKED AND BEING NOT SATISFIED WITH THE REPLY OF THE ASSESSEES COUNSEL, THE AO MADE VARIOUS ADDITIONS AND COMPLETED THE ASSESSMENT U/ S. 143(3) OF THE I.T. ACT, 1961(HER E IN AFTER THE ACT ). ITA NOS. 4611/DEL/2011 & 2366/DEL/2013 DCIT VS. M/S SSIPL RETAIL LTD. 5. AGAI NST THE AFORESAID ORDER OF THE ASSESSING OFFICER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 27.6.2011 HAS ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE ADDITIONS IN DISPUTE. 6 . AGGRIEVED BY THE AFORE SAID ORDER OF THE LD. CIT(A), NOW THE REVENUE IS IN APPEAL BEFORE US. 7 . LD. DR HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL AND REQUESTED THE ORDER OF THE LD. CIT(A) MAY BE REVERSED AND THE ORDER OF THE ASSESSING OFFICER MAY BE AFFIRMED . 8 . ON THE CONTRARY, T HE LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT THE ORDER OF THE LD. CIT(A) IS WELL REASONED ORDER AND THE SAME MAY BE UPHELD. 9 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS AVAILABLE ON RECORD. 10. APROPOS TO GROUND NO. 1 RELATES TO DISALLOWANCE OF RS. 2,44,39,358/ - IN ASSESSMENT YEAR 2008 - 09 & RS. 1,37,28,045/ - IN ASSESSMENT YEAR 2009 - 10, MADE B Y THE AO ON ACCOUNT OF ROYALTY , PAID BY THE ASSESSEE TO NIKE TO USE THE BRAND NAME. AS PER THE AO , THE SAID EXPENDITURE IS OF A CAPITAL NATURE AND SO IT WAS DISALLOWED. IT HAS BEEN POINTED OUT TO US THAT T HE AO HAS MADE THE DISALLOWANCE IN COMPLETE DIS R EGARD TO THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN ASSESSEE'S OWN CASE THAT THE PAYMENT OF ROYALTY UNDER THE SAID TRANSFERABLE LICENSE IS NOT A CAPITAL EXPENDITURE. ASSESSEE HAD FILED A COPY OF THE SAID JUDGMENT OF THE HONBLE DELHI HIGH COURT , BEFOR E THE LD. CIT(A) WHICH WAS DELIVERED IN THE MATTER OF CIT - XIII , NEW DELHI VS SIERRA INDUSTRIAL ENTERPRISES, I.E, ASSESSEE'S PREDECESSOR IN BUSINESS FROM WHOM SU C H LICENSE WAS ACQUIRED UPON THE MERGER OF THE COMPANY WITH THE ITA NOS. 4611/DEL/2011 & 2366/DEL/2013 DCIT VS. M/S SSIPL RETAIL LTD. ASSESSEE. WE FIND THAT THE LD. CI T(A) HAS RIGHTLY OBSERVED THAT I T IS SETTLED LAW THAT IF EXPENDITURE BRINGS INTO EXISTENCE A CAPITAL ASSET OR GIVES ANY ADVANTAGE OF ENDURING NATURE TO AN ASSESSEE, IT CAN BE TREATED AS CAPITAL EXPENDITURE. LD. CIT(A) HAS REFERRED THE RELEVANT PORTION OF THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SIERR A INDUSTRIAL ENTERPRISES P VT. LTD W HEREIN THE HONBLE HIGH COURT VIDE ITS JUDGMENT DATED 14.7.2010 VIDE PARA NOS . 6 & 7 HAS DISMISSED THE REVENUE S APPEAL ON THE ISSUE I NVOLVED, WHICH READS AS UNDER: - 6. IT IS A SETTLED LAW THAT IF EXPENDITURE BRINGS INTO EXISTENCE A CAPITAL ASSET OR GIVES ANY ADVANTAGE OF ENDURING NATURE TO AN ASSESSEE, IT CAN BE TREATED AS CAPITAL EXPENDITURE. IN THE PRESENT CASE, BOTH THE C I T(A) AND ITAT HAVE CONCLUDED THAT ROYALTY PAYABLE WAS IN LIEU OF USE OF TECHNICAL INFORMATION PROVIDED BY NIKE COMPANY FOR MANUFACTURE OF PRODUCTS AND FOR USE OF TRADEMARK NIKE. ACCORDING TO CIT(A), ROYALTY PAYABLE WAS RELATED TO THE SALES MADE DURING A PA RTICULAR YEAR AND ACCORDINGLY THE EXPENDITURE WAS OF REVENUE NATURE. 7. BOTH THE CIT(A) AND ITAT HAVE GIVEN COGENT REASONS FOR ARRIVING AT THE CONCLUSION THAT ROYALTY PAYMENT WAS A REVENUE EXPENSES. MOREOVER, IN OUR OPINION AS THE ASSESSEE CEASED TO HAVE ANY RIGHT TO USE TECHNICAL INFORMATION AND/OR TRADEMARK UPON TERMINATION OF AGREEMENT, THERE WAS NO ADVANTAGE OF ENDURING NATURE DERIVED BY THE ASSESSEE FROM THE SAID AGREEMENT. CONSEQUENTLY, IN OUR OPINION, ROYALTY FEE IS A REVENUE AND NOT A CAPITAL EXPEN DITURE. ACCORDINGLY, THE PRESENT APPEAL BEING BEREFT OF MERITS IS DISMISSED IN LIMINE BUT NO ORDER AS TO COSTS. 11. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT LD. CIT(A) HAS RIGHTLY DELETED THE ADD ITION OF RS. 2,44,39,356/ - BY FOLLOWING THE HIGH CO URTS ORDER IN ASSESSEES OWN CASE DATED 14.7.2010 AS AFORESAID AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DECIDE THE SAME AGAINST THE REVENUE. IN THE RESULT, THE GROUND NO. 1 ON ACCOUNT OF ROYALTY IN BOTH THE ASSESSMENT YEARS I.E. 2008 - 09 & 2009 - 10 ARE DISMISSED. ITA NOS. 4611/DEL/2011 & 2366/DEL/2013 DCIT VS. M/S SSIPL RETAIL LTD. 12 . WITH REGARD TO GROUND NO. 3 IN ASSTT. YEAR 2008 - 09 AND GROUND NO. 2 IN ASSTT. YEAR 2009 - 10 RELATING TO DELETION OF A DDITION OF RS. 4,64,757/ - AND RS. 29,033/ - RESPECTIVELY MADE BY THE AO U/S. 40A(2)(B) BEING INTEREST ON LOAN IS CONCERNED, WE FIND THAT THE LD. CIT(A) TOOK IN TO CONSIDERATION THE FACT THAT SIMILAR DISALLOWANCE OF THE INTEREST WHICH THE ASSESSEE PAID @1 5% WHERE IN RESPECT OF THE VERY SAME PERSONS WERE ALSO MADE IN THE PRECEDING ASSESSMENT YEAR 2007 - 08 FOR THE SAME REASON THAT SUCH PERSONS ARE PAID INTEREST @ 15% WHEREAS IN THE OPINION OF THE AO INTEREST PAYMENT OUGHT TO HAVE BEEN @ 12%. LD. CIT(A) WH ILE DECIDING IN FAV OUR OF ASSESSEE TOOK NOTE OF THE FACT THAT THAT THE SAID PERSONS WERE NOT THE ONLY PA RTIES TO WHOM INTEREST @ 15% WERE PAID BY THE ASSESSEE AND THEREFORE IT CANNOT BE SAID THAT THE ASSESSEE IN ANY MANNER TRIED TO PASS ON BENEFIT TO A CLASS OF CLOSE ASSOCIATES AS ITS COST AND DELETED THE DISALLOWANCE VIDE ORDER DATED 28/02/2011 IN APPEAL NO. 114/09 - 10 . WE FIND THAT ASSESSEE FILED B EFORE THE LD. CIT(A) THE LIST OF LENDERS WHO ARE COVERED IN THE DISALLOWED AMOUNT OF RS 4,64,757/ - AND BROUGHT TO THE NOTICE OF THE LD CIT(A) THAT THE LENDERS WERE THE SAME VERY PERSONS REFERRED TO IN THE PRIOR YEAR'S ASSESSMENT . THE LD AR SUBMITTED THAT I N THE ABSENCE OF ANY OTHER REASON FOR DISALLOWANCE OF INTEREST PAID TO SUCH PARTIES, THE FACTS BEING THE SAM E, AS IN THE PREVIOUS YEAR, THE DISALLOWANCE OF INTEREST BE DELETED AS DONE BY THE PREDECESSOR CIT(A). LD. CIT(A) HAS OBSERVED THAT I N ORDER TO MAKE A DISALLOWANCE U / S 40A(2)(B) IT IS NECESSARY THAT THE ASSESSING OFFICER SHOULD ESTABLISH THAT THE BENEFITS GIVEN TO THE RELATED PARTIES ARE MORE THAN THE FAIR MAR KET VALUE AND I F THE A SSESSEE IS MAKING PAYMENTS TO OTHER PERSONS @ 15% THEN THERE IS NO SPECIAL FAVOUR WHICH IS BEI NG GIVEN TO THE RELATED PARTIES AND THEN DISALLOWANCE IS NOT WARRANTED. FURTHER, THE LD CIT(A) HAS TAKEN NOTE THAT THE ASSESSING OFFICER HAS NOT BEEN ABLE TO ESTABLISH AS TO WHAT WAS THE MARKET RATE OF INTEREST THUS, HE OPINES THAT THERE IS NO JUSTIFICATION IN MAKING A ITA NOS. 4611/DEL/2011 & 2366/DEL/2013 DCIT VS. M/S SSIPL RETAIL LTD. DISALLOWANCE OF RS 4,64,757/ - U / S 40 A(2)(B) AND ORDERED ITS DE LETION . FACTS AS ENUMERATED ABOVE COULD NOT BE CONTROVERT ED BY THE LD DR SO AS TO PERSUADE US TO TAKEN A DIFFERENT VIEW AND W E DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), HENCE, WE UPHOLD THE SAME AND ACCORDINGLY THE GROUND NO. 3 IN ASSTT. YEAR 2008 - 09 AND GROUND NO. 2 RAISED IN ASSTT. YEAR 2009 - 10 STAND S DISMISSED. 13 . WITH REGARD TO GROUND NO. 2 IN ASSTT. YEAR 2008 - 09 AND GROUND NO. 3 IN ASSTT. YEAR 2009 - 10 RELATING TO DELETION OF ADDITION OF RS. 9,13,720/ - AND RS. 13,31,882/ - RESPECTIVELY MADE BY THE AO ON ACCOUNT OF ADVERTISEMENT AND PROMOTION EXPENSES IS CONCERNED, WE FIND THAT THE AO OBSERVED THAT T HE TOTAL EXPENDITURE UNDER THIS HEAD WAS RS 92,46,745/ - . OUT OF THE TOTAL EXPENSES THE AO HAS SELECTED THREE ITEMS, NAMELY, BRAND DISPLAY CHARGES (RS 5,68,750/ - ), CONFERENCE AND BRAND PROMOTION MEETINGS (RS 5,28,007/ - ) AND DISPLAY CHARGES AND BRANDING (RS 25,58,166/ - ) AGGREGATING TO RS 36,54,923/ - AND DISALLOWED 2 5% OF THIS AMOUNT TREATING THAT THESE EXPENSES ARE OF AN 'ENDURING NATURE', AND THE ASS ESSEE DERIVES ENDURING BENEFIT THERE FROM. T HE ASSESSEES COUNSEL S CONTENTION IS THAT THE DISALLOWANCE MADE BY THE AO WAS ARBITRARY AND THE A O HAS DISREGARDED THE NATURE OF ASSESSEE'S BUSINESS WHICH IS MANUFACTURE AND SALE OF SHOES WHICH IS A C ON SUMER NON - DURABLE PRODUCT. ACCORDING TO HIM, THE ASSESSEE UNDERTAKES SALES ARE IN A COMPETITIVE BRAND MARKET WHERE HIGH PITCHED MARKETING IS REQUIRED BY WAY OF INNOVATIVE ADVERTISING AND ATTRACTIVE DISPLAY OF PRODUCTS. ACCORDING TO HIM, T ODAY A NIKE SHOE I S AVAILABLE IN SMALLER TOWN S TOO. IN SUCH CIRCUMSTANCES THERE CAN BE NO ENDURING BENEFIT BECAUSE OF DISPLAY BOARDS ETC BECAUSE THE RETAIL OUTLET MAY C HANGE IT KEEPING IN MIND THE COMPETITION IN THE MARKET OF THE PRODUCTS . ACCORDING TO THE LD AR, E VEN OTHER WISE THE AO HAS NOT PASSED A SPEAKING ORDER AS TO HOW SHE ARRIVED AT THE FIGURE OF 25 PER CENT OF EXPENDITURE IS NOT TO BE ALLOWED. ITA NOS. 4611/DEL/2011 & 2366/DEL/2013 DCIT VS. M/S SSIPL RETAIL LTD. 14. THE LD CIT(A) TOOK NOTE OF THE AFORE SAID SUBMISSION AND RELIED ON THE FOLLOWING CASE LAWS TO ADJUDICATE THE ISSUE IN FA VOUR OF THE ASSESSEE. C IT VS ADIDAS INDIA MARKETING PVT. LTD. 195 ITR TAXMAN 256 DEL 15. IN THIS CASE ALSO THE AO DISALLOWED THE ADVERTISEMENT EXPENSES BY HOLDING THAT BY ADVERTISING IS PROMOTING/BUILDING THE BRAND OF THE LICENSOR AND THUS IT IS NOT WHOLLY AND EXCLUSIVELY FOR THE BENEFIT OF THE ASSESSEE. THE TRIBUNAL DELETED THE DISALLOWANCE BY HOLDING THAT IT WAS A COMMERCIALLY ACCEPTED PRACTICE AND INCURRED ON GROUNDS OF COM MERCIAL EXPEDIENCY. CIT VS INDIAN ALUMILLIUM INDUSTRIES LTD 80 TAXMAN 243 KERIA 16. IN THIS CASE THE HON 'BLE HIGH COURT HAS AFTER DISCUSSING VARIOUS LANDMARK DECISIONS ON ADVERTISEMENT EXPENSES AND AS TO WHETHER THEY ARE CAPITAL OR REVENUE AND HAS ALSO HELD THAT THE COMPANIES INVITE VIPS AND CELEBRITIES ON VARIOUS LAUNCHES AND CAMPAIGNS FOR BETTER PUBLICITY AND THAT SUCH EXPENSES ARE REVENUE IN NATURE . CIT VS SALORA INTERNATIONAL LTD. 308 ITR 199 DEL 17. IN THIS CASE THE A O DISALLOWED ONE THIRD OF THE TOTAL ADVERTISEMENT EXPENSES OF RS 3.08 CRORES IN AY 2001 - 02 BY HOLDING TH AT THEY HAVE RESULTED IN ENDURING BENEFIT. THE CIT(A) DELETED IT AND THE ITA T UPHELD THE DECISION OF THE CIT(A). ON REFERENCE BY THE DEPARTMENT, THE JURISDICTIONAL HIGH COURT OF DELHI DISMISSED THE MATTER BY HOLDING THAT NO QUESTION OF LAW AROSE. 18. WE FIND THAT THE LD CIT(A) RIGHTLY RELIED ON THE DECISION IN THE CASE L;AW AS AFORE - STATED ESPECIALLY THE CASE OF ADIDAS (SUPRA) TO ARRIVE AT THE IMPUGNED DECISION, WHICH NEEDS NO INTERFERENCE, SO THE DECISION OF THE LD CIT(A) DELETING THE AD - HOC DISALLOWANC E IS UPHELD AND ACCORDINGLY THE ITA NOS. 4611/DEL/2011 & 2366/DEL/2013 DCIT VS. M/S SSIPL RETAIL LTD. GROUND NO. 2 IN ASSTT . YEAR 2008 - 09 AND GROUND NO. 3 RAISED IN ASSTT . YEAR 2009 - 10 STAND S DISMISSED. 19 . APROPOS GROUND NO. 4 WHICH RELATES TO DISALLOWANCE OF RS. 1,36,686 BEING 10% OF RS. 13,36,866/ - MADE BY THE AO ON ACCOUNT OF FOREIGN TRAVEL EXPENSES AND DISALLOWANCE FOR ASSTT . YEAR 2008 - 09 AND OF RS. 19,11,530/ - MADE BY THE AO ON ACCOUNT OF THE SAME IN ASSESSMENT YEAR 2009 - 10.W E FIND THAT THE AO HAS MA DE THE AD - HOC DISALLOWANCE OF 10% OUT OF THE FOREIGN TRAVEL EXPENSES OF RS. 13,86,866/ - BECAUSE SIMILAR 10% DISALLOWANCE WAS M ADE IN THE ASSTT . YEAR 2005 - 06. SO IT WAS ARGUED BY THE LD AR THAT IF AN EARLIER ORDER OF ASSESSMENT IN ASSESSEES CASE IS THE S OLE REASON FOR DISALLOWING EXPENSES IN A SUBSEQUENT YEAR, THEN THE ACCORDING TO HIM AO ERRED IN NOT FOLLOWING THE MORE RECENT ASSE SSMENT ORDER FOR AY 2007 - 08 WHERE NO DISALLOWANCE OUT OF FOREIGN TRAVEL EXPENSES OF RS.15,89,187/ - WAS MADE APPRECIATING THE FACTS OF THE CASE. LD. AR OF THE ASSESSEE ENCLOSED THE DETAILS OF EXPENDITURE ON FOREIGN TRAVEL INCURRED BY EMPLOYEES O F THE COMPANY AND THEREFORE ACCORDING TO HIM, EXPENSES INCURRED BY THEM QUA THE COMPANY CANNOT BE SAID TO BE OF PERSONAL NATURE. LD. AR OF THE ASSESSEE FURTHER SUBMITTED THAT THE AD - HOC DISALLOWANCE OF 10 % MADE BY AO IS ARBITRARY WITH OUT ANY BASIS AND IT IS IN COMPLETE DISREGARD TO THE PAST HISTORY OF THE CASE AND HENCE BE DELETED. LD. CIT(A) IN HER IMPUGNED ORDER HAD TAKEN IN TO CONSIDERATION THAT THE ASS ESSEE HAS SUBMITTED THE LIST OF ITS EMPLOYEES WHO HAD MADE FOREIGN TRAVELS AND THE PURPOSE IS ALSO MENTIONED HENCE, ACCORDING TO HER NO DISALLOWANCE CAN BE MADE ON ESTIMATE BASIS, THEREFORE, THE ADDITION OF RS. 1,36,686/ - WAS DE LETED. 20. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS , WE FIND THAT THE AO HAS MADE THE AD - HOC DISALLOWANCE SIMPLY BY STATING THAT THERE MAY BE PERSONAL ELEMENT IN VOLVED IN THE SAID EXPENDITURE WHICH IS PURELY A GUESS WORK, WHEN ITA NOS. 4611/DEL/2011 & 2366/DEL/2013 DCIT VS. M/S SSIPL RETAIL LTD. THE ASSESSEE HAS SUBMI TTED THE LIST OF EMPLOYEES AND THE PURPOSE OF VI SIT WAS CLEARLY MENTIONED IN IT. IN SUCH CIRCUMSTANCES THE A O COULD NOT HAVE MADE THE ADHOC DISALLOWANCE WITHOUT MAKING OUT A CASE TO DISPROVE THE CLAIM OF THE ASSESSEE THAT ITS EMPLOYEES HAD GONE TO FOREIGN COUNTRY FOR THE PU RPOSE OF BUSINESS. THER E FORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), HENCE, WE UPHOLD THE SAME AND ACCORDINGLY THE GROUND NO. 4 IN BOTH THE ASSTT. YEARS I.E. 2008 - 09 AND 2009 - 10 STAND S DISMISSED. 21 . IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 /06/2015. - SD/ - - SD/ - ( S. V. MEHROTRA ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 / 06 / 2015 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTR AR ITAT, NEW DELHI