M. W. INFRA DEVELOPERS LTD., MUMBAI V. ITO - 4(3)(3), MUMBAI

ITA 4772/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0221 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 05-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 15-07-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Keywords: Earning of tax free income; Capital expenditure
• Section: 143(3); 37; 10; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL J , BENCH, MUMBAI , , , BEFORE SHRI RAJENDRA, AM AND SHRI RAM LAL NEGI, JM ./ ITA NO. 4772 / MUM/ 201 6 ( / ASSESSMENT YEAR: 2010 - 11 ) M/S M.W. INFRA DEVELOPERS LTD., 99 NIRANJAN, GROUND FLOOR, MARINE DRIVE, MUMBAI - 400002 VS. THE INCOME TAX OFFICER - 4(3)(3), AAYAKAR BHAVAN, MUMBAI - 400002 ./ ./ P AN/GIR NO. : AAECS 3701 M ( / APPELLANT ) .. ( / RESPONDENT ) & ./ ITA NO. 4773 / MUM/ 201 6 ( / ASSESSMENT YEAR: 2011 - 12 ) M/ S M.W. CORP PVT. LTD., 99 NIRANJAN, GROUND FLOOR, MARINE DRIVE, MUMBAI - 400002 VS. THE DEPUTY COMMISSIONER OF INCOME TAX 4(3), AAYAKAR BHAVAN, MUMBAI - 400002 ./ ./ PAN/GIR NO. : AAFCM 1365 G ( / APPELLANT ) .. ( / RESPONDENT ) / ASSESSEE BY : NONE /REVENUE BY : MS. ARJU GARODIA / DATE OF HEARING : 05 /04 /2017 / DATE OF PRONOUNCEMENT: 04 /07 /2017 / O R D E R PER RAM LAL NEGI, JM THESE APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST TWO ORDER S DATED 30/03/2016 PASSED BY THE LD. CIT (A) - 9 , MUMBAI PERTAI NING TO THE ASSESSM ENT YEARS 2010 - 11 & 2011 - 12 RESPECTIVELY, WHEREBY THE LD. CIT (A) HAS 2 ITA NO S . 4772 & 4773/MUM/2016 ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 DISMISSED THE APPEAL S FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDERS PASSED BY THE AO UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961(FOR SHORT THE ACT.) SINCE, BOTH THE APPEALS PERTA IN TO THE SAME ASSESSEE AND SOME OF THE ISSUES ARE COMMON, BOTH THE APPEALS WERE CLUBBED, HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 4772 / MUM/2016 ( ASSESSMENT YEAR: 2010 - 11 ) 2. BRIEF FACTS OF THE CA SE ARE THAT THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS AS BUILDER, DEVELOPER AND CONTRACTOR ETC. , FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR, DECLARING THE TOTAL INCOME OF RS. 7 , 0 8 , 798 / - . SINCE, IT WAS SEEN FROM THE NOTES TO ACCOUNTS THA T THE ASSESSEE HAD TWO PROJECTS AT HAND AND IT HAD ADDED BACK WIP OF RS. 78.84 LAKHS AND 3.21 CRORES RESPECTIVELY TO THE SAID PROJECTS, THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE EXPENSES HAVE BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT DESPITE THE FACT THAT NO BUSINESS ACTIVITIES WERE CARRIED OUT DURING THE RELEVANT YEAR. IN RESPONSE THEREOF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE MADE A WRITTEN SUBMISSIONS STATING THAT THE ASSESSEE COMPANY HAS CARRIED ON THE BUSINESS DURING THE YEAR UNDER CO NSIDERATION. SINCE, THE PROJECTS ARE STILL IN PROGRESS, ALL THE EXPENSES INCURRED ON THE PROJECT HAVE BEEN CAPITALIZED IN THE CAPITAL WORK IN PROGRESS. IT WAS FURTHER STATED THAT OUT OF THE TOTAL EXPENSES OF RS. 12,98,670/ - DEBITED, THE ASSESSEE COMPANY HA S ITSELF DISALLOWED EXPENSES TO THE EXTENT OF RS. 7,62,015/ - IN THE COMPUTATION OF INCOME. OUT OF THE REMAINING EXPENSES SHARE TRANSFER EXPENSES OF RS. 1,19,670/ - AND AUDIT FEES OF RS. 32,500/ - WERE INADVERTENTLY REMAINED TO BE DISALLOWED WHILE FILING THE RETURN OF INCOME. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND DISALLOWED THE ENTIRE EXPENSES OF RS. 12,98,670/ - AND ADDED THE SAME TO THE INCOME OF ASSESSEE HOLDING THAT THE ASSESSEE COMPANY DID NOT CARR Y OUT ANY BUSINESS DURING THE YEAR UNDER CONSIDERATION AND SINCE THE ASSESSEE HAS 3 ITA NO S . 4772 & 4773/MUM/2016 ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 ENTERED INTO CONSTRUCTION CONTRACT , THE ENTIRE EXPENDITURE IS RELATABLE TO THE WORK IN PROGRESS . 3. FEELING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE CHALLENGED THE SAME BEFORE THE FIRST APPELLATE AUTHORITY. THE FIRST APPELLATE AUTHORITY AFTER HEARING THE ASSESSEE UPHELD THE FINDINGS OF THE AO AND DISMISSED THE ASSESSEES APPEAL. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A): - 1. A. THE COMMISSIONER OF INCOME TAX APPEAL - 9 (HEREINAFTER REFERRED AS CIT) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF REVENUE EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT OF THE APPELLAN T TO THE TUNE OF RS. 5,36,246/ - (TOTAL DISALLOWANCE OF EXPENSES OF RS. 12,98,261/ - OUT OF WHICH THE EXPENSES TO THE EXTENT OF RS. 7,62,015/ - HAS ALREADY BEEN DISALLOWED BY THE APPELLANT IN THE COMPUTATION WHILE FILING THE RETURN OF INCOME AND RS. 1,52,170/ - WERE ADMITTED TO HAVE BEEN REMAINED TO BE DISALLOWED IN COMPUTATION OF INCOME). B. FURTHER, THE CIT HAS FAILED TO APPRECIATE THE SUBMISSIONS AND EXPLANATIONS OFFERED BY THE APPELLANT. FURTHER, THE CIT HAS ERRED IN WRONGLY ACCEPTING THE DECISION TAKEN B Y LEARNED ASSESSING OFFICER THAT THERE WAS NO BUSINESS ACTIVITIES CARRIED ON BY THE APPELLANT COMPANY DURING THE YEAR UNDER CONSIDERATION. BREAK - UP OF EXPENSES DISALLOWED ARE AS UNDER: PROFESSIONAL FESS RS. 79,996/ - TRAVELLING & LODGING EXPENSES RS. 1,21,991/ - TAXES AND DUTIES RS. 7,105/ - BANK CHARGES RS. 1,139/ - GENERAL EXPENSES RS. 22,831/ - MOTOR CAR EXPENSES RS. 1,51,014/ - TOTAL RS. 3,84,076/ - 4 ITA NO S . 4772 & 4773/MUM/2016 ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 IT CAN THEREFORE BE SEEN THAT ALL THE ABOVE EXPENSES ARE INCURRED IN RELATION TO CONTINUED BUSINESS AND THEREFORE, IT IS PRAYED THAT SUCH EXPENSES SHOULD BE ALLOWED IN FULL. 2. IT IS SUBMITTED THAT LEARNED ASSESSING OFFICER HAS ERRED IN MAKING ADDITION OF EXEMPT INCOME EARNED ON ACCOUNT OF SHARE OF PROFIT FROM A PARTNERSHIP F IRM OF RS. 34,331/ - DURING THE YEAR UNDER CONSIDERATION. IT IS SUBMITTED THAT WHILE CALCULATING THE ASSESSED INCOME OF THE APPELLANT, THE LEARNED ASSESSING OFFICER HAS FAILED TO TAKE INTO CONSIDERATION THE EXEMPT INCOME EARNED U/S 10 OF THE INCOME TAX ACT, 1961 AND THEREBY MADE THE ADDITION TO THE TOTAL INCOME WITHOUT UNDERSTANDING THE NATURE OF INCOME FOR THE YEAR UNDER CONSIDERATION. IT IS THEREFORE PRAYED THAT SUCH EXEMPT INCOME SHOULD BE REDUCED FROM THE TOTAL INCOME AND TREAT IT AS TAX FREE INCOME FOR THE YEAR UNDER CONSIDERATION. 5. THIS CASE WAS FIXED FOR HEARING ON 04.01.2017, HOWEVER, THE HEARING WAS ADJOURNED TO 14.02.2017 AT THE REQUEST OF THE ASSESSEE. ON 14.02.2017 THE ASSESSEE AGAIN SHORT ADJOURNMENT . A CCORDINGLY , THE CASE WAS FIXED FOR 21.02 .2017. ON 21.02.2017 NONE APPEARED ON BEHALF OF THE ASSESSEE. THE CASE WAS ADJOURNED TO 23.02.2017. ON 23.02.2017 AGAIN THE ASSESSEE DID NOT APPEAR. FRESH NOTICE TO THE ASSESSEE WAS ISSUED FOR 05.04.2017. ON 05.04.2017 AGAIN NEITHER THE REPRESENTATIVE OF A SSESSEE APPEARED NOR ANY APPLICATION FOR ADJOURNMENT WAS RECEIVED ON BEHALF OF THE ASSESSEE. WE NOTICED THAT THE ASSESSEE HAS BEEN GIVEN SUFFICIENT OPPORTUNITY TO PURSUE ITS CASE AND DESPITE THAT THE ASSESSEE FAILED TO APPEAR ON THREE SUCCESSIVE DATES. WE ARE SATISFIED THAT THE ASSESSEE IS NOT INTERESTED IN PURSUING ITS APPEAL. A CCORDINGLY , WE DECIDED TO PROCEED WITH THE CASE AND DISPOSE OF THE APPEAL ON THE BASIS OF MATERIAL ON RECORD AFTER HEARING THE DEPARTMENTAL R EPRESENTATIVE (DR) . 6. BEFORE US, THE LD. DR RELYING ON THE ORDER PASSED BY THE LD. CIT (A) SUBMITTED THAT SINCE THE ASSESSEE HAS FAILED TO ESTABLISH THAT IT HAD CARRIED OUT 5 ITA NO S . 4772 & 4773/MUM/2016 ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 THE BUSINESS ACTIVITIES DURING THE YEAR UNDER CONSIDERATION, THE AO HAS RIGHTLY DISALLOWED THE EXPENSES CLAIMED BY THE A SSESSEE AND THE LD. CIT ( A) HAS RIGHTLY AFFIRMED THE ACTION OF THE AO. HENCE, THERE IS NO MERIT IN THE APPEAL OF THE ASSESSEE AND THE SAME IS LIABLE TO BE SET ASIDE. 7. WE HAVE GONE THROUGH THE ENTIRE RECORD PERTAINING TO THIS APPEAL INCLUDING THE ORDERS PASSED BY THE AUTHORITIES BELOW. WE DO NOT FIND ANY EVIDENCE ON RECORD WHICH ESTABLISHES THE ASSESSEE HAD CARRIED OUT THE BUSINESS ACTIVITIES RELATING TO THE PROJECTS HINDON RIVER MILLS PROJECT AND HYDRO PROJECT, DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION . THE AO HAS SPECIFICALLY MENTIONED THAT FROM THE NOTES TO ACCOUNTS AND THE WIP EXPENDITURE BREAK UP IT IS AMPLY CLEAR THE EXPENSES INCURRED ON THE PROJECTS ARE NOT ON ACCOUNT OF ANY FACTUAL CONSTRUCTIONS RELATED ACTIVITI ES AND THE SAME INDICATES THAT THE PROJECT IS IN THE PRELIMINARY STAGE AND SINCE THE ASSESSEE HAS ENTERED INTO A CONSTRUCTION CONTRACT THE ENTIRE EXPENDITURE IS RELATABLE TO THE WORK IN PROGRESS. THE LD. CIT (A) HAS CONFIRMED THE DISALLOWANCE MADE BY THE A O AFTER CONSIDERING THE ENTIRE FACTUAL MATRIX OF THE CASE. THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE EVEN DURING THE APPELLATE PROCEEDINGS TO ESTABLISH THAT BUSINESS ACTIVITIES HAD COMMENCED DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER C ONSIDERATION. THE LD. CIT (A) HAS BASED H IS FINDINGS ON THE JUDGMENTS OF HONBLE SUPREME COURT PASSED IN TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD. VS. CIT 227 ITR 172 (SC) AND BENGAL AND ASSAM INVESTORS LTD. 59 ITR 547 (SC) . SINCE, NO MATERIAL FACT W AS BROUGHT TO OUR NOTICE IN ORDER TO CREATE ANY DOUBT IN THE FINDINGS OF THE AUTHORITIES BELOW, WE ARE INCLINED TO AGREE WITH THE LD. CIT (A). WE ACCORDINGLY UPHOLD THE FINDINGS ON THE LD. CIT (A) AND DISMISSED THE APPEAL OF THE ASSESSEE. 6 ITA NO S . 4772 & 4773/MUM/2016 ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 ITA NO. 4773 /MUM/2016 (ASSESSMENT YEAR: 2011 - 12 ) BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF INVESTMENT AND FINANCING , FILED ITS RETURN OF THE INCOME FOR THE ASSESSMENT YEAR 2011 - 12 DECLARING THE TOTAL INCOME OF RS. 30,87,552/ - . ON THE BASIS OF INFORMATION RECEIVED FROM ADIT (INV.) (AIU), NEW DELHI TO THE EFFECT THAT ENQUIRY WAS CONDUCTED IN RESPECT OF CHARTERED FLIGHTS GIVEN ON RENT BY M/S SPAN AIR PVT. LTD. TO THE ASSESSEE COMPANY AND IT CAME TO THE NOTICE THAT ASSESSEE COMPAN Y HAD AVAILED SERVICES OF NON SCHEDULED FLIGHTS DURING THE YEAR UNDER CONSIDERATION AND THE ASSESSEE COMPANY HAD USED THESE CHARTERED FLIGHTS FOR THE PERSONAL PURPOSES. HENCE, IN ORDER TO VERIFY THE BUSINESS EXPEDIENCY OF USING NON SCHEDULED FLIGHTS, THE A SSESSEE WAS ASKED TO FILE THE DETAILS OF TRANSACTIONS ENTERED WITH M/S SPAN AIR PVT. LTD. IN RESPONSE THEREOF THE ASSESSEE COMPANY MADE WRITTEN SUBMISSIONS. THE ASSESSEE IN SUPPORT OF ITS CLAIM FILED COPY OF LEDGER ACCOUNT, CHARTERED INVOICE AND LEDGER CO PY OF TRAVELLING EXPENSES. NOTICE U/S 143 (6) WAS ISSUED TO M/S SPAN AIR INDIA LTD. CALLING FOR DETAILS SUCH AS NATURE AND QUANTUM OF SERVICES PROVIDED, MODE OF PAYMENT THROUGH WHICH PAYMENT HAS BEEN PROCEEDS, COPY OF AGREEMENT ENTERED WITH THE ASSESSEE CO MPANY AND COPY OF RETURN OF INCOME ALONG WITH SCHEDULES. IN RESPONSE THEREOF M/S SPAN AIR PVT. LTD. FILED COPY OF LEDGER AND BANK STATEMENTS ON PERUSAL OF THE DETAILS IT WAS OBSERVED THAT THE ASSESSEE INCURRED RS. 53,60,400/ - TOWARDS CHARGES RELATED TO CH ARTERED FLIGHTS AND THE SAME HAS BEEN CAPITALIZED IN HYDRO PROJECT. THE ASSESSEE WAS ASKED TO EXPLAIN THE BUSINESS EXPEDIENCY OF THE EXP ENDITURE INCURRED TOWARD CHARTERED FLIGHTS BUT THE ASSESSEE SUBMITTED THAT IT HAS CARRIED OUT TRANSACTIONS WITH M/S SPAN AIR PVT. LTD. ONLY AND FAILED TO ESTABLISH THE EXPEDIENCY ACCORDINGLY THE AO DISALLOWED 15% OF THE TOTAL EXPENSES OF RS. 66,47,036/ - AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 7 ITA NO S . 4772 & 4773/MUM/2016 ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 2. FEELING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE CARRIED TH E MATTER BEFORE THE LD. CIT (A). THE LD. CIT (A) AFTER HEARING THE ASSESSEE CONFIRMED THE FINDINGS OF THE AO AND DISMISSED THE APPEAL OF THE ASSESSEE. THE ASSESSE E IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A). 3. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A): - 1. THE COMMISSIONER OF INCOME TAX APPEAL - 9 (HEREINAFTER REFERRED AS CIT) HAS ERRED IN CONFIRMING THE CONTENTION OF THE LEARNED ASSESSI NG OFFICER IN REDUCING THE COST OF WORK IN PROGRESS IN RESPECT OF HYDRO PROJECT BY AN AMOUNT OF RS. 53,60,400/ - WHICH HAS BEEN INCURRED ON CHARTERED FLIGHTS THROUGH M/S SPAN AIR LTD. BY CONSIDERING THE SAME AS PERSONAL EXPENSES AND NOT INCURRED FOR THE WHO LLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IT IS SUBMITTED THAT SUCH DISALLOWANCE IS MADE BASED ON ASSUMPTIONS AND PRESUMPTIONS AND WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE THAT SUCH EXPENSES ARE INCURRED FOR THE PURPOSE OF BUSINES S. IT IS THEREFORE PRAYED THAT NECESSARY DIRECTION SHOULD BE GIVEN IN THIS REGARD. 2. THE CIT ERRED IN CONFIRMING DISALLOWANCE OF RS. 9,97,055/ - MADE BY THE LEARNED ASSESSING OFFICER BEING 15% OF THE TOTAL TRAVELLING EXPENSES INCURRED OF RS. 66,47,036/ - ON T HE PRETEXT THAT PERSONAL ELEMENT IN SUCH EXPENSES CANNOT BE RULED OUT. IT IS SUBMITTED THAT SUCH DISALLOWANCE WAS MADE ON AD - HOC BASIS ON THE ASSUMPTIONS AND PRESUMPTIONS WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS THEREFORE PRAYED T HAT SUCH EXPENSES SHOULD BE ALLOWED IN FULL. 4. BEFORE US, THE LD. DR SUBMITTED THAT SINCE THE ASSESSEE HAS FAILED TO ESTABLISH THE EXPENSES OF RS. 53,60,400/ - WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, THE AO HAS RIGHTLY DISALLO WED THE SAID AMOUNT 8 ITA NO S . 4772 & 4773/MUM/2016 ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 AND REVISED VALUE OF HYDRO PROJECT . AS REGARDS, SECOND ISSUE THE LD. DR SUBMITTED THAT SINCE THE ASSESSEE HAS FAILED TO FURNISH SUBSTANTIAL EVIDENCE THAT THE TRAVELLING EXPENSES HAD BEEN INCURRED EXCLUSIVELY FOR BUSINESS AND FURTHER ITS DIRECT NEXUS WITH THE DEVELOPMENT OF PROJECTS OR NATURE OF TECHNOLOGICAL ASSISTANCE PROVIDED TO COMPANIES ABROAD, THE AO HAS RIGHTLY DISALLOWED 15% OF THE TOTAL EXPENSES OF RS. 66,47,036/ - AND ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE HAS FAILED T O FURNISH ANY EVIDENCE IN THIS REGARD EVEN DURING THE APPELLATE PROCEEDINGS. HENCE, THE ORDER PASSED BY THE LD. CIT (A) DOES NOT WARRANT ANY INTERFERENCE. 5. WE HAVE PERUSED THE MATERIAL PLACED ON RECORD INCLUDING THE ORDERS PASSED BY THE AUTHORITIES BEL OW. WE NOTICED THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO FILE THE DETAILS OF TRANSACTIONS DONE WITH M/S SPAN AIR PVT. LTD. THE ASSESSEE MADE WRITTEN SUBMISSIONS . THE RELEVANT PORTION OF THE REPLY READS AS UNDER: - ASSESSEE COMPA NY HAS MADE PAYMENTS TO THE SAID CONCERN AGAINST ITS BILLS FOR HIRING OF CHARTER PLANES DURING THE YEAR. IN THIS REGARD, WE ARE ENCLOSING HEREWITH THE COPY OF THE LEDGER ACCOUNT OF THE SAID CONCERN AS APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMP ANY FOR THE YEAR UNDER CONSIDERATION ALONGWITH THE COPIES OF BILLS/INVOICES. IT IS SUBMITTED THAT THE SAID EXPENSES HAVE NOT BEEN DEBITED TO THE P&L A/C BUT HAVE BEEN CAPITALIZED IN THE PROJECT - IN - PROGRESS (HYDRA PROJECT) BY THE ASSESSEE COMPANY 6. FROM THE REPLY AFORESAID IT CAN BE INFERRED THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE EXPENSES OF RS. 53,60,400/ - HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE AND AS PER THE PROVISIONS OF SECTION 37 (1) OF THE ACT WHICH CONTEMPL ATES THAT A NY EXPENDITURE NOT BE ING EXPENDITURE OF THE NATURE DESCRIBED IN SECTION S 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL 9 ITA NO S . 4772 & 4773/MUM/2016 ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 EXPENDITURE OR PERSONAL EXPENSES OF THE ASSESSEE OR EXPANDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE S OF THE BUSINESS OR PROF ESSION SHALL BE ALLOWED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND G AINS OF THE BUSINESS OF PROFESSION. THE LD. CIT (A) HAS CONFIRMED THE ACTION OF THE ASSESSEE HOLDING AS UNDER: DURING THE APPELLATE PROCEEDING ALSO THE APPELLANT WAS REQUIRED TO EXPLAIN AND SUBSTANTIATE THE GENUINENESS OF TRAVELLING EXPENSE WITH REGARD TO THE BUSINESS PURPOSE. IT IS SEEN THAT THE APPELLANT HAS INCURRED RS. 53,63,400/ - TOWARDS THE CHARGES RELATED TO THE CHARTERED FLIGHTS AND WHICH HAS BEEN CAPITALIZED B Y THE APPELLANT IN HYDRO PROJECT. HOWEVER, THIS ACTION OF THE APPELLANT TO CAPITALIZE THE AMOUNT OF RS. 53,63,400/ - CANNOT BE ACCEPTED BECAUSE THE APPELLANT HAS NOT BEEN ABLE TO PROVE THAT THE AMOUNT TO SPENT OUT OF THE COMPANIES FUND WAS MEANT FOR THE BUS INESS OF THE COMPANY, IRRESPECTIVE WHETHER IT WAS REGULAR EXPENDITURE OR CAPITAL EXPENDITURE. EVEN FOR CAPITAL EXPENDITURE THE APPELLANT HAS TO PROVE THE GENUINENESS OF BUSINESS PURPOSE FOR TRAVELLING ABROAD IN A CHARTERED FLIGHT BY DEMONSTRATING THE NATUR E OF BUSINESS ACTIVITIES INVOLVED AND THE BENEFITS ACCRUING TO THE COMPANY. ACCORDINGLY, THE ACTION OF THE AO IN REDUCING RS. 53,63,400/ - OUT OF THE CAPITALIZED VALUE OF HYDRO PROJECT AND REVISING THE NET VALUE OF HYDRO PROJECT OF RS. 6,59,88,938/ - IS UPHE LD AS JUSTIFIED. ACCORDINGLY, THE APPELLANTS GROUND OF APPEAL ON THIS ISSUE IS DISMISSED. 7. SINCE, THE ASSESSEE HAS FAILED TO JUSTIFY THAT THE TRAVELLING EXPENSES WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE S BEFORE THE AUTHORITIES BEL OW AND SINCE NO MATERIAL WAS BROUGHT BEFORE US TO SUBSTANTIATE ITS CLAIM. WE DO NOT FIND MERIT IN THE APPEAL OF THE ASSESSEE. WE THEREFORE, UPHOLD THE FINDINGS OF THE LD. CIT (A) AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 8. SO FAR AS THE SECON D GROUND IS CONCERNED , W E NOTICED THAT DURING THE ASSESSMENT PROCEEDINGS AS WELL AS THE APPELLATE PROCEEDINGS, THE ASSESSEE COULD NOT SATISFY THE AUTHORITIES THAT THE DIRECTORS VISITED ABROAD FOR THE 10 ITA NO S . 4772 & 4773/MUM/2016 ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 PURPOSE OF EXPLORING THE NEW TECHNOLOGY AND TECHNOLOGICA L ASSISTANCE FOR THEIR ONGOING POWER PLANT SET UP . THE LD. CIT (A) HAS CONFIRMED THE ACTION OF THE AO HOLDING AS UNDER: - 6.3 I HAVE CONSIDERED THE STAND OF THE AO AS WELL AS SUBMISSION FILED BY THE APPELLANT. IT IS SEEN THAT THE AO HAS DEBITED RS. 66, 47,036 UNDER THE HEADING CONVEYANCE, TOUR AND TRAVEL. INCIDENTALLY, ON VERIFICATION IT IS FOUND THAT THIS EXPENSE OF RS. 66,47,036/ - IS IN ADDITION TO THE AMOUNT OF RS. 53,60,400/ - WHICH HAS BEEN CAPITALIZED BY THE APPELLANT. IT MEANS THAT THE DIRECTORS AN D EMPLOYEE OF THE APPELLANT COMPANY HAVE SPENT RS. 1,20,436/ - HAS BEEN SPENT OUT OF COMPANIES FUND. FOR WHICH THE MANAGEMENT OF THE APPELLANT COMPANY HAS TO JUSTIFY THE GENUINENESS OF SUCH EXPENSES AS WELL AS TO DEMONSTRATE THAT RS. 66,47,036/ - WAS WHOLLY AND EXCLUSIVELY UTILIZED FOR THE PURPOSE OF BUSINESS AND WAS FULLY ALLOWABLE U/S 37(1). DURING THE APPELLATE PROCEEDING ALSO THE APPELLANT HAS NOT BEEN ABLE TO DEMONSTRATE ON FACTS THAT HOW THESE WERE WHOLLY AND EXCLUSIVELY USED FOR BUSINESS PURPOSE EVEN WHEN THE HYDRO PROJECT WAS IN PROGRESS. IN VIEW, OF THIS I FIND THAT THE HOLISTIC APPROACH TAKEN BY THE AO IN THE PRESENT FACTS OF THE CASE BY MAKING DISALLOWANCE AS REFLECTED IN PARA 4 &5 OF THE ASSESSMENT ORDER IS JUSTIFIABLE AND THEREFORE, THE SAME IS U PHELD. 9. SINCE, NO MATERI AL WAS BROUGHT TO OUR NOTICE, ON THE BASIS OF WHICH CONCLUSION CAN BE DRAWN THAT THE FINDINGS OF THE AUTHORITIES BELOW ARE CONTRARY TO THE FACTS AND EVIDENCE ON THE RECORD , WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FIND INGS OF THE LD. CIT (A). WE, THEREFORE, UPHOLD THE FINDINGS OF THE LD. CIT (A) AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. IN THE RESULT, APPEAL S FILED BY THE ASSESSEE FOR ASSESSMENT YEAR S 2010 - 11 & 2011 - 12 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JULY , 2017 . SD/ - SD/ - ( RAJENDRA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER 11 ITA NO S . 4772 & 4773/MUM/2016 ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 MUMBAI ; DATED: 04/ 0 7 / 2017 ALINDRA, PS / 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 . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MU MBAI