A.T.E ENTERPRISES P. LTD ( FORMERLY KNWON AS A.T.E. MARKETING P. LTD), MUMBAI V. ACIT RG 8(1), MUMBAI

ITA 6507/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55496 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 21-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P K B MENON

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER I.T.A NO.6507/ MUM/2009 ASSESSMENT YEAR: 2006-07 A.T.E. ENTERPRISES PVT LTD. .. APPELLANT (FORMERLY KNOWN AS ATE MARKETING P. LTD.) A/19, CTS NO.689, VEERA DESAI ROAD, ANDHERI(W), MUMBAI PA NO.AADCA 6166 D VS ACIT, RANGE 8(1) .. RESPONDEN T AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. APPEARANCES: MITESH JOSHI, FOR THE APPELLANT P.K.B. MENON , FOR THE RESPONDENT DATE OF HEARING : 10.8.2011 DATE OF PRONOUNCEMENT : 12 -10-2011 O R D E R PER PRAMOD KUMAR: 1. THIS APPEAL IS DIRECTED AGAINST CIT(A)S ORDER DATED 3 RD NOVEMBER, 2009 FOR THE ASSESSMENT YEAR 2006-07. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: I.T.A NO.6507/ MUM/2009 ASSESSMENT YEAR: 2006-07 2 LD CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE O F FOREIGN TRAVEL EXPENSES OF RS.27,98,393 ON THE GROUND THAT THE EXPENSE S ARE NOT INCURRED FOR THE PURPOSE OF THE BUSINESS. 3. BRIEFLY STATED, THE MATERIAL FACTS ARE AS FOLLOWS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING, TRADING AND EXPORT OF PHARMACEUTICAL PRODUCTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICE R NOTICED THAT THE ASSESSEE HAS INCURRED FOREIGN TRAVEL EXPENSES AMOUNTING TO RS.80,42,160 AND REQUIRED THE ASSESSEE TO FURNISH COMPLETE DETAILS AND PUR POSES OF RELATED FOREIGN TRIPS. HOWEVER, THE ASSESSEE DID NOT FURNISH THE REQUISIT IONED PARTICULARS BEYOND FILING MONTHWISE SUMMARY OF EXPENSES. IT WAS IN THIS BAC KGROUND, AND HAVING NOTED THAT IN IMMEDIATELY PRECEDING YEARS, ASSESSEES FOREIGN T RAVEL EXPENSES WAS ONLY RS.52,34,767, THE ASSESSING OFFICER DISALLOWED THE INCREM ENTAL EXPENSES ON FOREIGN TRAVEL VIS--VIS EXPENSES INCURRED LAST YEAR. AGGRIEVE D, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A) CONFIRMED THE DISALLOWANCE BY OBSERVING AS FOLLOWS: I HAVE CONSIDERED THE ABOVE SUBMISSION OF THE APPEL LANT, ORDER OF THE ASSESSING OFFICER CAREFULLY. BEFORE ME, THE COUNSEL FOR THE A PPELLANT HAS FILED STATEMENT SHOWING DETAILS OF FOREIGN TRAVEL EXPENSES. IN THIS STATEMENT, NO SPECIFIC PURPOSE OF VISIT HAS BEEN MENTIONED. THE PURPOSE OF VISIT H AS BEEN MENTIONED EITHER MEETING OR EXHIBITION ETC. WHICH IS GENERAL IN NATU RE. THE ASSESSING OFFICER HAS GIVEN THE APPELLANT AMPLE OPPORTUNITY TO EXPLAIN PU RPOSE OF VISIT TO FOREIGN COUNTRIES BUT NO EXPLANATION WAS OFFERED BEFORE THE ASSESSING OFFICER OR BEFORE ME. IT IS HELD BY VARIOUS COURTS THAT TO CLAIM ANY EXPENDITURE, THE ONUS IS ALWAYS LYING ON THE ASSESSEE TO PROVE WITH EVIDENCES BEFOR E THE ASSESSING OFFICER TO HIS SATISFACTION. RELIANCE IS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF C.I.T. VS. CALCUTTA AGENCY LTD. 19 ITR 19 W HEREIN IT IS HELD THAT THE ONUS LIES ON THE ASSESSEE TO PROVE THE VERACITY OF THE T RANSACTIONS CLAIMED BY IT. IF THERE IS ABSENCE OF SUFFICIENT EVIDENCE, IT WAS HELD THAT THE ONUS OF PROVING NECESSARY FACTS IN ORDER TO AVAIL ANY CLAIM IS ON THE ASSESSE E AND IF IT FAILED TO ESTABLISH THE FACTS NECESSARY TO SUPPORT HIS CLAIM FOR DEDUCTION, THE CLAIM FOR DEDUCTION OF EXPENDITURE IS NOT ADMISSIBLE. SIMILARLY, THE RATIO OF HE DECISION IN CASE OF C.I.T. VS. TRANSPORT CORPORATION OF INDIA LTD. -256 ITR 70 1 (AP) AND C.I.T. VS. IMPERIAL CHEMICAL INDS. (I) P. LTD. 74 ITR 17 IS ALSO APPLIC ABLE. BUT IN THIS CASE, THE APPELLANT HAS FAILED TO PROVE THAT THIS EXPENDITURE ON FOREIGN TRAVEL WAS WHOLLY AND EXCLUSIVELY INCURRED FOR THE BUSINESS PURPOSE. EVEN BEFORE ME, NO SPECIFIC WAS FILED TO SUBSTANTIATE ITS CLAIM. THUS, THE PURP OSE OF THE FOREIGN TRAVEL HAS NOT PROVED THE BUSINESS EXPEDIENCY. THE HONBLE BOMBAY HIGH COURT CASE OF GOODLAS NEROLAC VS CIT 137 ITR 58 (BORN) HAS HELD T HAT BURDEN IS ALWAYS ON THE ASSESSEE TO PROVE THAT THE EXPENDITURE IS INCURRED / AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS. BUT IN THIS CASE, THE APPE LLANT HAS FAILED TO PROVE THAT THE EXPENSES ON FOREIGN TRAVEL WERE INCURRED FOR THE BU SINESS PURPOSE. RELIANCE IS ALSO PLACED ON THE DECISION OF HONBLE DELHI TRIBUN AL IN THE CASE OF GOODYEAR I.T.A NO.6507/ MUM/2009 ASSESSMENT YEAR: 2006-07 3 INDIA LTD VS. ITO (66 TTJ 164) WHERE IT IS HELD THA T FULL DETAILS OF EXPENDITURE AND ALL EVIDENCE ARE NOT AVAILABLE-NO ADVERSE REMAR K BY AUDITORS-NO DISALLOWANCE IN THE PAST-STILL DISALLOWANCE CAN BE MADE. 4. THE ASSESSEE IS NOT SATISFIED AND IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE AS ALSO THE A PPLICABLE LEGAL POSITION. 6. WE HAVE NOTED THE ASSESSEES SUBMISSION TO THE EFFECT T HAT RECORDS WERE DAMAGED IN RAINS ON 26 TH JULY, 2005, AND THAT, IT IS FOR THIS REASON THAT THE ASSESSEE IS NOT ABLE TO FILE REQUISITIONED DETAILS AND EVIDENCES I N SUPPORT OF FOREIGN TRAVELING EXPENSES. HOWEVER, AS ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE CLAIM OF FOREIGN TRAVEL EXPENSES BY FURNISHING BASIC DETAILS AND THUS ASSESSEE IS NOT ABLE TO DISCHARGE HIS ONUS, IT IS NOT POSSIBLE FOR US TO CONSIDER GIVING ANY FURTHER RELIEF IN THE MATTER. THE ASSESSING OFFICER HAS ANY WAY MADE ONLY A PARTIAL DI SALLOWANCE. WE SEE NO INFIRMITY IN CIT(A)S UPHOLDING THE IMPUGNED DISALLOW ANCE. ACCORDINGLY, WE CONFIRM WELL REASONED ORDER OF THE CIT(A) AND DECLIN E TO INTERFERE IN THE MATTER. 7. GROUND NO.1 IS THUS DISMISSED. 8. IN GROUND NO.2, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: LD CIT(A) HAS ERRED IN DIRECTING THE AO TO LEVY INT EREST U/S.234 ON INCOME DETERMINED AFTER GIVING EFFECT TO THE ORDER OF THE CIT(A). AS PER THE PROVISION OF SECTION 234C OF THE ACT, THE INT EREST UNDER SAID SECTION IS TO BE COMPUTED ON THE BASIS OF TAX ON RETURN ED INCOME. ON FACT AND CIRCUMSTANCES AND IN LAW, THE LEVY OF EXCESS I NTEREST OF RS.4,45,420 U/S.234C OUGHT TO BE DELETED. 9. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY DECISION OF A COORDINATE BENCH IN THE CASE O F BOMBAY GYMKHANA LTD VS ITO (115 TTJ 63). RESPECTFULLY FOLLOWING THE SAID D ECISION, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO LEVY IN TEREST U/S.234C ON THE I.T.A NO.6507/ MUM/2009 ASSESSMENT YEAR: 2006-07 4 BASIS OF RTURNED INCOME AND NOT ASSESSED INCOME. THE ASSESSE E GETS THE RELIEF ACCORDINGLY. 10. GROUND NO.2 IS THUS ALLOWED. 11. IN THE RESULT, APPEAL IS PARTLY ALLOWED IN THE TE RMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON 12 TH OCTOBER, 2011 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 12 TH OCTOBER, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),16 MUMBAI 4. COMMISSIONER OF INCOME TAX, 8 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH A MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI