S. KUMARS LTD, MUMBAI V. ASST CIT (OSD) RG 4(3), MUMBAI

ITA 6624/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1713 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 12-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Commercial expediency; Revised return
• Section: 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.6624/MUM/2013 FOR (ASSESSMENT YEAR : 2009-10 ) M/S. S. KUMARS LTD. 99, NIRANJAN, GROUND FLOOR, MARINE DRIVE, MUMBAI-400002 PAN: AAACS0728A VS. ACIT-RANGE-4(3), AAYAKAR BHAVAN, MUMBAI-400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHOK J. PATIL ( AR ) REVENUE BY : MS. ANUPAMA SINGH ( DR) DATE OF HEARING : 17.11.2016 DATE OF PRONOUNCEMENT : 09.12.2016 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THIS APPEAL BY ASSESSEE U/S 253 OF THE INCOME-TAX A CT (ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS) [ FOR SHORT THE CIT(A)] 8, MUMBAI DATED 27 TH AUGUST 2013 FOR ASSESSMENT YEAR (AY) 2009-10. THE SOLITARY GROUND OF APPEAL RAISED BY ASSESSEE IS THAT WHETHER THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF FOREIGN TRAVELLING E XPENSES OF RS. 32,60,477/-. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS ENGAGED IN THE BUSINESS OF PROCESSING AND TRADING OF FABRICS, FILED ITS RETURN OF INCOME FOR RELEVANT AY ON 30.09.2009 DECLARING TOTAL LOSS OF RS. 3,22,49,769/ -. SUBSEQUENTLY, A REVISED RETURN OF INCOME WAS FILED ON 16.01.2010 WITH A LOSS OF RS. 3 ,21,75,798/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 27.12.2011. THE ASSESSING OFFICER (AO) WHILE FRAMING THE ASSESSMENT DISALLOWED A SUM OF RS. 32,6 0,477/- HOLDING THAT EXPENSES WERE NOT INCURRED FOR THE PURPOSE OF BUSINESS. ON A PPEAL BEFORE THE LD. CIT(A), THE DISALLOWANCE WAS CONFIRMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 2 ITA NO. 6624/M/2013 M/S. S.KUMARS LTD. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE ARGUED THAT M R. S.S. KASLIWAL AND MRS. R.S.KASLIWAL WENT ON A FOREIGN TRIP TO EUROPE ON 06 .05.2008 TO 21.05.2008 AND THEREAFTER ON A TOUR TO AUSTRALIA-NEWZELAND FROM 21 .08.2008 TO 04.01.2009. THE ASSESSEE SUBMITTED THE DETAILS OF EXPORT SALES MADE BY THE ASSESSEE IN PURSUANCE OF OVERSEAS VISIT. IT WAS FURTHER ARGUED BY LD. AR OF ASSESSEE THAT THOUGH MR. S.S. KASLIWAL AND MRS. R.S.KASLIWAL VISITED TO EUROPE AN D AUSTRALIA, WHERE THE ASSESSEE HAS NO BUSINESS CONNECTION, HOWEVER, DUE TO THEIR P ERSUASION AND THE EXPORT VARIOUS GULF COUNTRY LIKE KUWAIT, DUBAI AND JEDDAH WAS INCR EASED. ON THE OTHER HAND, LD. DR FOR REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELO W. THE LD. DR FOR REVENUE WOULD ARGUE THAT THE FOREIGN TRIP OF MR. S.S. KASLIWAL AN D MRS. R.S.KASLIWAL HAS NO BUSINESS RELATION AND THE EXPENSES INCURRED ON THEI R OVERSEAS TO A TRIP WERE THEIR PERSONAL EXPENSES. THE ASSESSEE HAS NOT PLACED ON R ECORD ANY DOCUMENTARY EVIDENCE WHICH MAY PROVE THAT THE EXPENSES INCURRED ON FOREI GN TRIP WERE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF ASSESSEE -COMPANY. THE LD DR FOR THE REVENUE PRAYED FOR THE DISMISSAL OF THE APPEAL. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES. THE AO WHILE MAKING THE ASSESSMENT OBSERVED THAT ASSESSEE DEBITED THE FOREI GN TRAVEL EXPENSES OF RS. 32,60,477/- TO ITS P&L ACCOUNT. THE ASSESSEE WAS A SKED TO SUBMIT THE DETAILS OF THESE EXPENSES. FROM THE DETAIL SUBMITTED, THE AO O BSERVED THAT THE ASSESSEE HAS MADE THE PAYMENT TO AMBIENCE TRAVEL AND TOURS AND QUANTUM TRAVELS PVT. LTD. IT WAS FURTHER OBSERVED THAT MR. S.S. KASLIWAL AND MRS . R.S.KASLIWAL WERE ON TOUR TO EUROPE FROM 6 TH MAY 2008 TO 21 ST MAY 2008 AND ALSO TO AUSTRALIA-NEWZEELAND FROM 21.08.2008 TO 04.01.2009. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF EXPORT SALES BY ASSESSEE IN PURSUANCE OF THE OVERSEAS VISI T. THE ASSESSEE SUBMITTED THE LIST OF THE VARIOUS PARTIES LOCATED IN KUWAIT, DUBAI AND JE DDAH. THE AO FOUND NO RELATION BETWEEN THE PLACE VISITED AND THE EXPORTS MADE BY T HE ASSESSEE AND CONCLUDED THAT SUCH LINKING OF PERSONAL EXPENSES TO THE ASSESSEES BUSINESS CONRTIBUTION AS AN AFTERTHOUGHT STORY. IT WAS FURTHER CONCLUDED THAT M R. S.S. KASLIWAL AND MRS. R.S.KASLIWAL VISITED TO EUROPE IN THE MONTH OF MAY TO AUSTRALIA-NEWZEELAND AND THESE PERIODS CONSTITUTES THE SEASONS FOR HOLIDAYS TO SUCH PLACES. ACCORDINGLY, THE 3 ITA NO. 6624/M/2013 M/S. S.KUMARS LTD. AO DISALLOWED THE SAID ENTIRE EXPENSES. THE LD. LD. CIT(A) WHILE CONSIDERING THE CONTENTION OF THE ASSESSEE CONCLUDED THAT MR. S.S. KASLIWAL AND MRS. R.S.KASLIWAL WERE ON TRIP TO EUROPE AND THEREAFTER ANOTHER TRIP TO AUSTRALIA-NEWZEELAND AND THESE VISITS HAVE NOTHING TO DO WITH THE ASSESSEE SALES MADE TO THE PARTIES LOCATED IN KUWAIT, DUBAI AND JEDDAH. THE LD CIT(A) FURTHER CON CLUDED THAT THERE WAS NO DOUBT THAT COMMERCIAL EXPEDIENCY IS TO BE SEEN FROM THE P OINT OF BUSINESS-MEN AND NOT OF THE REVENUE. HOWEVER, UNDER THE LAW THE BURDEN OF P ROOF IS ON THE ASSESSEE TO SHOW THAT EXPENDITURE INCURRED WAS WHOLLY AND EXCLUSIVEL Y FOR THE PURPOSE OF BUSINESS AND NOT OTHERWISE. THEREFORE, THE SAME CANNOT BE ALLOWE D U/S 37 OF THE ACT AND SUSTAINED THE ADDITION. WE HAVE SEEN THAT EVEN BEFORE US, TH E ASSESSEE HAS NOT PLACED ON RECORD THE DETAILS OF ITINERARY OF MR. S.S. KASLIWAL AND M RS. R.S.KASLIWAL AND THEIR PLACE OF VISIT IN EUROPE AND FURTHER IN AUSTRALIA-NEWZEELAND . THE ASSESSEE HAS NOT FILED EVEN SINGLE PIECE OF EVIDENCE WHICH MAY SUGGEST THAT A NY EXPORT TO THE GULF COUNTRY AFTER THE VISIT OF MR. S.S. KASLIWAL AND MRS. R.S.KASLIWA L HAS ANY CO-RELATION. NO BUSINESS EXPEDIENCY IS PRIMA FACIE IS SHOWN OR PROVED BY THE ASSESSEE ABOUT THEIR VISIT IN FOREIGN COUNTRY. THERE IS NO EVIDENCE ON RECORD WAS MAY SHOW THAT THEIR FOREIGN VISIT WAS WHOLLY AND EXCLUSIVELY FOR BUSINESS. AS THE ASSESSEE FAILED TO DISCHARGE THE ONUS LIED UPON THEM TO SHOW THAT EXPENSES WERE INCU RRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. HENCE, WE FIND NO MERIT IN THE APPEAL AND THE SAME IS DISMISSED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH DECEMBER, 2016. SD/- SD/- (D.KARUNAKARA RAO) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 09/12/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/