ANJELI KISHORE HAZARI PROP M.S, HAZARI REALTORS, MUMBAI V. ITO WD 12(1)(1), MUMBAI

ITA 7130/MUM/2008

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6372 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 16-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, A.M. AND SHRI V. DUR GA RAO, J.M. ITA NO. 7130/M/2008 ASSESSMENT YEAR: 2004-05 ANJELI KISHORE HAZARI APPELLANT PROP.: M/S HAZARI REALTORS 107, REX CHAMBES, WH MARG, FORT, MUMBAI 400 001. (PAN AABPH3383G) VS. INCOME-TAX OFFICER, RESPONDENT 12(1)(1), AAYKAR BHAVAN, MUMBAI. APPELLANT BY : MR. PRAKASH JOTWANI RESP ONDENT BY : MR. JITENDRA YADAV . ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-XII, MUMBAI, PASSED ON 06/10/2008 FOR THE AS SESSMENT YEAR 2004-05. 2. GROUND NO. 1 & ARE IN RESPECT OF DISALLOWANCE O N ACCOUNT OF FOREIGN TRAVELING EXPENDITURE OF ` . 15,78,076/- AND ` . 1,27,397/- OUT OF DOMESTIC TRAVELING EXPENDITURE. 3. AS REGARDS DISALLOWANCE ON ACCOUNT OF FOREIGN TR AVELING EXPENDITURE, THE AO NOTED THAT THE MAJOR SOURCE OF INCOME WAS FROM AGENCY COMMISSION IN REAL ESTATE. ON BEING ASKED TO JUSTIFY THE CLAIM AND PROVE THE NEXUS BETWEEN THE EXPENDITURE INCURRE D ON FOREIGN TOUR ITA NO. 7130/M/08 M/S ANJELI KISHORE HAZARI. 2 AND BROKERAGE INCOME EARNED, THE AR OF THE ASSESSEE EXPLAINED BEFORE THE AO THAT THE EXPENSES WERE INCURRED FOR EARNING FUTURE AGENCY COMMISSION FROM CLIENTS SETTLED IN USA. THE AO WAS OF THE VIEW THAT THE ASSESSEE HAD FAILED TO ESTABLISH AND PROVE WITH DOCUMENTARY EVIDENCES THAT HER FOREIGN TOUR RESULTED IN EARNING AGENCY COMMISSION FROM FOREIGN CLIENTS IN THE SUBSEQUENT YEARS TILL T HE DATE OF ASSESSMENT ORDER. THE ASSESSEE HAD SUBMITTED THE LI ST OF MNCS WITH WHOM SHE HAD PURPORTED TO HAVE BUSINESS DISCUSSION, BUT THE AO WAS OF THE VIEW THAT THE MNCS MENTIONED BY THE ASSESSEE WERE ALL HAVING OFFICES IN INDIA AND AS SUCH THE CLAIM OF THE ASSES SEE OF HAVING INTER ACTION WITH THEM IN A FOREIGN COUNTRY IS NOT JUSTIF IED. THE AO NOTED THAT OUT OF TOTAL FOREIGN TRAVEL EXPENSES CLAIMED T HE ASSESSEE HAD SPENT ` . 2,25,401/- ON TICKETS AND THE REMAINING OF ` . 13,52,675/- WERE UTILIZED FOR PURCHASE OF FOREIGN CURRENCY, THE REFORE, THESE EXPENSES BEARS NO NEXUS WITH THE BUSINESS OF THE AS SESSEE. SINCE THE ASSESSEE HAD FAILED TO SUBSTANTIATE THAT THE FOREIG N TRAVEL EXPENDITURE HAD BEEN EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PU RPOSE OF HER BUSINESS, THE AO DISALLOWED ` . 15,78,076/- AS BEING SPENT NOT FOR THE PURPOSE OF BUSINESS. THE CIT(A) CONFIRMED THE DISAL LOWANCE MADE BY THE AO ON THE GROUND THAT LACK OF SUBSEQUENT CORRES PONDENCE OR COMMUNICATION TO THE EFFECT OF HER HAVING INTERACTE D WITH FOREIGN ESTATE AGENTS LEADING TO SOME CONCRETE RESULTS IN H ER BUSINESS MAKES THE CLAIM OF THE ASSESSEE TO BE NOT GENUINE AND NOT RELATED TO BUSINESS. 4. THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMIT TED THAT THE VISIT TO USA HAS BENEFITED THE ASSESSEE AND GOT AN OPPORTUNITY TO MEET WITH THE INDIVIDUAL CLIENTS AND UNDERSTAND THE IR REQUIREMENTS BASED ON THE JOINT DISCUSSIONS. THEREFORE, THE REVE NUE AUTHORITIES HAVE NOT APPRECIATED THE PURPOSE OF VISIT MADE BY T HE ASSESSEE TO USA AND ERRED IN DISALLOWING THE FOREIGN TRAVEL EXP ENDITURE INCURRED BY THE ASSESSEE ON THE GROUND THAT THERE IS NO NEXU S OF THE FOREIGN TRAVEL WITH THE BUSINESS OF THE ASSESSEE. IN THIS C ONNECTION, THE ITA NO. 7130/M/08 M/S ANJELI KISHORE HAZARI. 3 LEARNED AUTHORISED REPRESENTATIVE HAS INVITED OUR A TTENTION TO PAGES 30, 31 & 32 OF THE PAPER BOOK WHERE THE LIST OF VAR IOUS COMPANIES WERE GIVEN WITH WHOM THE ASSESSEE STRENGTHENED HER BUSINESS RELATIONSHIP BY HER VISIT TO ESTABLISH THAT THE ASE ESSEES FOREIGN TRAVEL IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINE SS. 5. ON THE OTHER HAND, THE LEARNED DR HAS RELIED UPO N THE ORDERS OF THE REVENUE AUTHORITIES. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE REVENUE AUTHOR ITIES DISALLOWED THE ASSESSEES CLAIM OF FOREIGN TRAVEL EXPENDITURE MAINLY ON THE GROUND THAT THE ASSESSEE HAS NOT SUBSTANTIATED HER CLAIM BY PRODUCING DOCUMENTARY EVIDENCE TO ESTABLISH THAT TH E HER FOREIGN VISIT IS EXCLUSIVELY FOR THE PURPOSE OF HER BUSINESS. THE ASSESSEE CLAIMED BEFORE US THAT THE FOREIGN VISIT HELPED HER TO STRE NGTHEN BUSINESS RELATIONSHIP WITH VARIOUS COMPANIES AS PER THE DOCU MENTS FILED VIDE PAGES 30, 31 & 32 OF PAPER BOOK. WE ALSO FIND THAT ONE OF THE CLIENT INVITED THE ASSESSEE TO EXPLORE THE OPPORTUNITIES W ITH MULTI NATIONAL CORPORATIONS IN THE US WHO HAVE INTERESTS IN INVEST ING AND LEASING REAL ESTATE IN MUMBAI AND TO THIS EFFECT A COPY IS PLACED AT PAGE 34 OF PAPER BOOK. AFTER CONSIDERING THE FACTS OF THE CASE , WE ARE OF THE VIEW THAT SINCE THE REVENUE AUTHORITIES DISALLOWED THE F OREIGN TRAVEL EXPENDITURE CLAIM OF THE ASSESSEE ON THE GROUND OF ASSESSEES FAILURE TO SUBSTANTIATE HER CLAIM BY PRODUCING DOCUMENTARY EVIDENCE, IN THE INTEREST OF JUSTICE, WE REMIT THE MATTER BACK TO TH E FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH, AFTER EXAMI NING THE DOCUMENTARY EVIDENCE PRODUCED BEFORE US, IN ACCORDA NCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING T O THE ASSESSEE. 7. AS REGARDS GROUND NO. 2 REGARDING THE DISALLOWAN CE OF DOMESTIC TRAVELING EXPENSES OF ` . 1,27,397/-, IT IS OBSERVED THAT THE REVENUE AUTHORITIES DISALLOWED THESE EXPENSES ALSO ON THE G ROUND THAT THE ITA NO. 7130/M/08 M/S ANJELI KISHORE HAZARI. 4 ASSESSEE HAS NOT PRODUCED BILLS, VOUCHERS AND DETA ILS OF SUCH EXPENSES. SINCE THE DISALLOWANCE IS SIMILAR TO THAT OF GROUND NO. 1, WE REMIT THIS GROUND ALSO TO THE FILE OF AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AFTER EXAMINING THE VOUCHERS, BILL S, DETAILS, ETC., WHICH SHALL PUT-FORTH BY THE ASSESSEE AT THE TIME O F HEARING BEFORE THE ASSESSING OFFICER, IN ACCORDANCE WITH LAW. THE ASSE SSEE IS REQUIRED TO PRODUCE BEFORE THE AO THE REQUIRED DOCUMENTARY EVID ENCE IN SUPPORT OF HER CLAIM. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF NOVEMBER, 2010. SD/- SD/- (J. SUDHAKAR REDDY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED:26 TH NOVEMBER, 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, A BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV/GPR ITA NO. 7130/M/08 M/S ANJELI KISHORE HAZARI. 5 S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 16/11/10 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 19/11/10 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK 26.11.10 SR.P.S./P .S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER