Smt. Sheenam Goel, Ludhiana V. ITO, Ludhiana

ITA 526/CHANDI/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5358 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 13-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Business expenditure; Commercial expediency

Judgement Text

SMT. SHEENAM GOEL V. ITO, WARD VI(3), LUDHIANA ITA NO. 526/CHANDI/2011 IN THE INCOME TAX APPELLATE TRIBUNAL: A BENCH: CH ANDIGARH BEFORE SHRI D K SRIVASTAVA, AM AND MS. SUSHMA CHOWL A, JM ITA NO. 526/CHANDI/2011 ASSESSMENT YEAR: 2007-08 SMT. SHEENAM GOEL V. I.T.O. WARD VI(3), LUDHIAN A PROP. M/S MAYUR OVERSEAS 2974, GURDEV NAGAR, LUDHIANA PAN: AJVPG 0179 H (APPELLANT-ASSESSEE) (RESPONDENT) APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: SHRI N.K. SAINI ORDER D K SRIVASTAVA : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE LD. CIT(A) ON 9.3.2011, ON THE FOLLO WING GROUNDS: 1 THAT THE LD. CIT(A) LUDHIANA HAS ERRED IN UPHOLD ING THE ADDITION OF RS. 4,58,260/- ON ACCOUNT OF DISALLOWANCE MADE OUT OF T RAVELING EXPENSES BY THE AO. 2 THAT THE ADDITION OF RS. 4,58,260/- ON ACCOUNT O F DISALLOWANCE MADE OUT OF TRAVELING EXPENSES HAS BEEN WITHHELD BY THE LD. CIT(A)-II AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3 THAT WHILE UPHOLDING ADDITION OF TOUR EXPENSES O F RS. 4,50,260/- AS PER PARA NO. 3 ABOVE, THE LD. CIT(A) HAS NOT LOOKED TO THE TOTALITY OF THE FACTS AND CIRCUMSTANCES IN DETAIL AND HAS ERRED IN GIVING FI NDING THAT APPELLANTS HUSBAND AND FATHER-IN-LAW NOT BEING EMPLOYEE IN THE APPELLANTS COMPANY, CANNOT WORK ON HER BEHALF. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS PROPRIETOR OF M/S MAYUR OVERSEAS AND IS ENGAGED IN THE BUSINESS OF EX PORT. DURING THE YEAR UNDER APPEAL, THE ASSESSEE (A LADY) WAS NOT MEDICALLY FI T AS SHE WAS ON HER FAMILY WAY THEREFORE CERTAIN FOREIGN TOURS WERE UNDERTAKEN BY HER FATHER-IN-LAW AND HER HUSBAND ON HER BEHALF IN RESPECT OF WHICH THE EXPENDITURE OF RS. 4,58,260/- WAS INCURRED. THE AO CONSIDERED THE CLAIM OF THE ASSESSEE. HE HO WEVER DISALLOWED THE IMPUGNED EXPENDITURE ON THE GROUND THAT FOREIGN TRAVELS WERE UNDER TAKEN BY HER HUSBAND AND HER FATHER-IN-LAW. 3. ON APPEAL, THE LD. CIT(A) CONFIRMED THE IMPUGNED DISALLOWANCE WITH THE FOLLOWING OBSERVATIONS: I HAVE GONE THROUGH THE CONTENTION OF THE APPELLAN TS COUNSEL AND ALSO PERUSED THE RELEVANT ASSESSMENT ORDER UNDER APPEAL AS WELL AS RIVAL SUBMISSIONS FILED IN THIS REGARD. THE AO HAS DISAL LOWED THESE EXPENSES ON THE GROUND THAT THE SAME WAS NOT INCURRED FOR THE BUSIN ESS PURPOSE. THOUGH THE APPELLANTS COUNSEL HAS CONTENDED THAT THE VISITS A RE MADE BY APPELLANTS HUSBAND AND FATHER-IN-LAW ON BEHALF OF THE APPELLAN T AS SHE WAS NOT FIT AND ADVISED BY THE DOCTOR TO NOT TO TRAVEL. CONSIDERIN G THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM ALSO OF THE VIEW THAT THESE EXPENSES CANNOT BE TREATED AS BUSINESS EXPENDITURE AS NEITHE R HER HUSBAND NOR FATHER-IN-LAW IS AN EMPLOYEE IN THE APPELLANTS COMPANY. THEREFORE, THE APPELLANTS SUBMISSIONS IN THIS REGA RD CANNOT BE ACCEPTABLE AND IS HEREBY REJECTED. THUS THE ADDITION MADE BY THE AO IN THIS REGARD IS CONFIRMED AND APPELLANTS GROUND OF APPEAL IS HEREB Y DISMISSED. 4. AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT APPEAL, THE LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HERSELF USED TO GO ON FOREIGN TOU RS IN CONNECTION WITH HER BUSINESS IN THE PAST BUT COULD NOT DO SO IN THE YEAR UNDER A PPEAL AS SHE WAS ON HER FAMILY WAY AND THEREFORE HAD TO DISPUTE HER FATHER-IN-LAW AND HER HUSBAND TO ATTEND TO HER BUSINESS ON HER BEHALF. HE SUBMITTED THAT THE MERE FACT THAT HER HUSBAND AND FATHER- IN-LAW UNDERTOOK THE FOREIGN TRAVEL TO LOOK AFTER T HE BUSINESS OF THE ASSESSEE COULD NOT BE A GROUND FOR MAKING THE IMPUGNED DISALLOWANC E AS THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OF THE ASSESSEE. 5. IN REPLY THE DR SUPPORTED THE ORDER PASSED BY T HE AO AND THE LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. THE IMPUGNED DISALLOWANCE HAS BEEN CONFIRMED BY THE LD. CIT(A) ON THE SOLE GROUND THAT FOREIGN TRAVEL WERE NOT UNDERTAKEN BY THE ASSE SSEE HERSELF OR HER EMPLOYEES BUT BY HER HUSBAND AND FATHER-IN-LAW. THE MERE FACT TH AT FOREIGN TRAVEL HAS BEEN UNDERTAKEN BY HER HUSBAND OR FATHER-IN-LAW CANNOT B E ITSELF THE GROUND FOR DISALLOWANCE SO LONG AS THE EXPENDITURE INCURRED BY THE ASSESSEE IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ASSES SEE HAS FILED A CHART INDICATING THE DETAIL OF FOREIGN TRAVEL UNDERTAKEN BY SHRI HARISH KUMAR AND SHRI MUNISH GOYAL TOGETHER WITH DETAILS OF BILLS AND VOUCHERS TO ESTA BLISH THAT THE FOREIGN TRAVELS WERE UNDERTAKEN BY THEM OUT OF COMMERCIAL EXPEDIENCY. T HE DEPARTMENT HAS NOT BEEN ABLE TO REBUT THE AFORESAID MATERIAL. WE HOWEVER F IND THAT SHRI HARISH KUMAR REMAINED ON FOREIGN TOUR AT A STRETCH FOR ABOUT TW O MONTHS COMMENCING ON 13.10.2006 AND ENDING ON 26.12.2006. THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE BUSINESS EXPEDIENCY FOR STAYING ABROAD SO LONG. THE ELEMENT OFPERSONAL EXPENDITURE CANNOT THEREFORE BE RULED OUT. TAKING INTO ACCOUNT THE TOTALITY OF ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DISALLOWAN CE OF RS. 50,000/- IS CONFIRMED. APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 29 JUNE 2011 SD/- SD/- (SUSHMA CHOWLA) (D K SRIVA STAVA) JUDICIAL MEMBER ACCOUNTANT MEM BER CHANDIGARH: THE 29 JUNE 2011 SURESH COPY TO: 1. THE APPELLANT, SMT. SHEENAM GOEL, LUDHIANA 2. THE RESPONDENT, ITO, WARD VI(3), LUDHIANA 3. THE CIT(A), LUDHIANA 4. THE LD. CIT, LUDHIANA 5. THE D.R, INCOME-TAX DEPARTMENT, CHANDIGARH BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH