HAWKINS COOKERS LTD, MUMBAI V. ACIT (OSD) 3(1), MUMBAI

ITA 7445/MUM/2012

• Counselvise Citation: 744519914 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 17-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAILASH MANGAL
• Assessee Lawyers: BHAVIN SHAH
• Keywords: Corroborative evidences

Judgement Text

, ,P ,P,P ,P INCOME TAX APPELLATE TRIBUNAL,MUMBAI - H BENCH. , MK0 ,L VH ,E IKOYU MK0 ,L VH ,E IKOYU MK0 ,L VH ,E IKOYU MK0 ,L VH ,E IKOYU BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & DR. S.T.M . PAVALAN,JUDICIAL MEMBER /. ITA NO.7445/MUM/2012, ! ! ! ! / ASSESSMENT YEAR-2009-10 HAWKINS COOKERS LTD. F-101 MAKER TOWER, CUFFE PARADE,MUMBAI-400005 VS ACIT(OSD) 3(1), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 PAN:AAACH1784M ( '# / APPELLANT) ( $%'# / RESPONDENT) &' ( ) / ASSESSEE BY : SHRI BHAVIN SHAH ( ) / REVENUE BY : SHRI KAILASH MANGAL ( (( ( '+ '+ '+ '+ / DATE OF HEARING : 17-04-2014 ,-! ( '+ / DATE OF PRONOUNCEMENT : 17-04-2014 , 1961 ( (( ( 254 )1( '.' '.' '.' '.' / / / / ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM : CHALLENGING THE ORDER DATED 16.08.2012 OF THE CIT(A )-7, MUMBAI ASSESSEE-COMPANY HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1:0 RE.: DISALLOWANCE OF A SUM OF RS. 27,97,007/- B EING FOREIGN TRAVELLING EXPENSES: 1:1 THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ER RED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF DISALLOWING A SUM OF RS. 27,97,007/- BEI NG FOREIGN TRAVEL EXPENSES INCURRED BY THE APPELLANT. 1:2 THE APPELLANT SUBMITS THAT THE FOREIGN TRAVEL E XPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF ITS BUSINESS AND ARE ALLOWABLE AS A DEDUCTION WHILE COMPUTING ITS TOTAL INCOME FOR THE YEAR AND THE DISALLOWANCE MADE BY THE ASSES SING OFFICER IN THIS REGARD IS MISCONCEIVED, ERRONEOUS, INCORRECT AND NOT IN ACCORDANCE WITH LAW AND THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE HELD AS SUCH. 1:3 THE APPELLANT SUBMITS THAT THE ASSESSING OFFICE R BE DIRECTED TO DELETE THE DISALLOWANCE SO MADE BY HIM AND TO RE-COMPUTE ITS TOTAL INCOME ACCORDINGLY. 2:0 RE.: GENERAL: 2:1 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND , SUBSTITUTE AND/OR OTHERWISE MODIFY IN ANY MANNER WHATSOEVER ALL OR ANY OF THE FOREGOING GROUNDS OF A PPEAL AT OR BEFORE THE HEARING OF THE APPEAL. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF MANUFAC TURING OF PRESSURE COOKERS, TRADING AND MARKETING OF PRESSURE COOKERS,FILED ITS RETURN OF I NCOME ON 26.09.2009,DECLARING TOTAL INCOME OF RS29.21 CRORES.AO FINALISED THE ASSESSMENT U/S.143( 3) OF THE ACT ON 08.12.2011 DETERMINING THE INCOME OF THE ASSESSEE AT RS. 29.49 CRORES. 3. DURING THE ASSESSMENT PROCEEDINGS, ASSESSING OFFICE R (AO) FOUND THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS. 1,65,63,561/- ON ACCOUNT OF TRAVEL LING AND CONVEYANCE EXPENSES, THAT OUT OF THE SAID EXPENDITURE AN AMOUNT OF RS. 27.97 LAKHS WAS C LAIMED TO HAVE BEEN INCURRED UNDER THE HEAD FOREIGN TRAVEL EXPENSES OF DIRECTORS ETC. VIDE ORDE R-SHEET NOTING DATED 02.12.2011, AO DIRECTED THE ASSESSEE TO FURNISH DETAILS OF FOREIGN TRAVEL E XPENSES ALONG WITH THE SUPPORTING EVIDENCES, 2 ITA NOS. 7445/MUM/2012 HAWKINS COOKERS LTD. ASSESSEE FILED ITS REPLY ON 07.12.2011. AFTER CONSI DERING THE SUBMISSION, AO HELD THAT ASSESSEE HAD NOT FURNISHED ANY EVIDENCE TO SHOW THAT FOREIGN TRA VELS WERE UNDERTAKEN WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, THAT THE ASSESSEE HAD FURN ISHED A CHART SHOWING COUNTRY-WISE EXPORT MADE DURING THE YEAR, THAT IT HAD NOT PRODUCED EVIDENCE TO SHOW THAT EXPORTS WERE DIRECTLY ATTRIBUTABLE TO THE VISITS UNDERTAKEN BY THE VICE-CHAIRMAN OR OTHER OFFICIALS OF THE COMPANY, THAT THE FOREIGN TRAVEL EXPENSES INCLUDED EXPENSES INCURRED BY WIFE OF CHAI RMAN ON ONE PARTICULAR JOURNEY TO U.S.A. IN THE MONTH OF MARCH 2009, THAT THE EXPENSES INCURRED ON VISIT OF WIFE OF THE CHAIRMAN COULD NOT BE CONSIDERED AN EXPENSE INCURRED WHOLLY AND EXCLUSIVE LY FOR THE PURPOSE OF BUSINESS, THAT WIFE OF THE CHAIRMAN WAS A FOREIGN CITIZEN AND WAS HAVING NUMBE RS OF FAMILY MEMBERS AND RELATIVES IN THE U.S.A. FINALLY, HE DISALLOWED THE EXPENDITURE AMOUN TING TO RS. 27,97,007/- INCURRED BY THE ASSESSEE-COMPANY IN RELATION TO FOREIGN TRAVELS. 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). BEFORE HIM IT WAS CONTENDED THAT THE PURPOSE OF VISIT TO THE FOREIGN COUNTRIES WAS TO SUPPLY THE PRODUCTS AND EXPLAIN LAUNCH NEW PRODUCTS AND TO UNDERSTAND AND KNOW THE MARKET TREND IN THE COUNTRY OF EXPORT, THAT COMPANY DID NOT HAVE ANY BRANCH OFFICE OR HIS SUBSI DIARY IN ANY OVERSEAS MARKET, THAT IT WAS NECESSARY FOR THE COMPANY TO SEND ITS SENIOR PERSON S TO VARIOUS COUNTRIES, THAT THE ASSESSEE WAS REGULARLY PARTICIPATING IN THE TRADE FAIR, THAT IN TERNATIONAL HOUSEWARE-SHOW WAS HELD AT CHICAGO DURING THE MONTH OF MARCH EVERY YEAR, THAT IN THE S AID SHOW THE CUSTOMERS FROM DIFFERENT CORNERS OF THE WORLD WOULD VISIT, THAT THE COMPANY THROUGH ITS CHAIRMAN AND CEO INTERACTED WITH THEM, THAT ASSESSEE WAS EXPORTING GOODS TO AMERICA, EUROPE, AN D MAURITIUS, THAT EXPORT SALES TO MAURITIUS FOR THE YEAR UNDER CONSIDERATION CONSTITUTED 16% OF THE TOTAL EXPORT SALES, THAT VICE-CHAIRMAN AND THE C.E.O. WOULD UNDERTAKE AN TOUR OF MAURITIUS ONCE IN A YEAR, THAT THE EXPORT SALES OF THE COMPANY HAD GROWN BY MORE THAN 60% OVER THE LAST TWO YEARS, THAT ASSESSEE HAD INCURRED ONLY 2.2% OF THE TOTAL EXPORT TURNOVER FOR FOREIGN TRAVEL EXPENSES, THAT EXPENSES WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, THAT ON 02.12.2011 AO HAD ASKED FOR DETAILS OF FOREIGN TRAVEL EXPENDITURE BUT DID NOT ASK ANY SPECIFIC EVIDENCE, THAT ON 07.12.2011 ASSESSEE HAD JUSTIFIED THE EXPENDITURE, THAT THE AO PASSED THE ASSESSMENT ORDE R ON 08.12.2011 WITHOUT DETERMINING ANY SPECIFIC EVIDENCE WHICH HE WANTED. 5. IN THE SUBMISSIONS MADE TO THE FAA,ASSESSEE FURNIS HED NAMES OF THE IMPORTERS, DATES OF VISIT, NAMES OF THE COUNTRY, VISITED BY THE OFFICIALS OF T HE COMPANY IN A TABULAR FORM. IT WAS FURTHER STATED THAT ORDERS WORTH RS. 555 LAKHS WERE GENERATED FROM SUCH VISITS, THAT THE TRAVEL EXPENSES OF MRS. VASUDEVA WERE CONTRACTUAL AS PER THE CONTRACT APPRO VED BY THE SHAREHOLDER OF THE COMPANY AND BY THE CENTRAL GOVERNMENT. A COPY OF THE AGREEMENT WAS FURNISHED IN SUPPORT OF THE CONTENTION BY THE ASSESSEE. AFTER CONSIDERING THE SUBMISSION OF THE A SSESSEE AND THE ASSESSMENT ORDER, FAA HELD THAT THERE WAS NO MERIT IN THE ARGUMENTS OF THE ASSESSEE , THAT THE ASSESSEE HAD NOT SUSTAINED ITS CLAIM IN RESPECT OF FOREIGN TRAVEL EXPENSES, THAT NO NEW DOC UMENTARY EVIDENCES OR ANY KIND OF SUBSTANTIAL BASE HAD BEEN PRODUCED BEFORE HIM, THAT AO HAD GIVE N AMPLE OPPORTUNITY TO THE ASSESSEE FOR SUBMISSION OF VALID DOCUMENTARY EVIDENCES, THAT ASS ESSEE DID NOT ADDUCE ANY EVIDENCE THAT TRAVEL EXPENSES RELATED TO SMT. SUSAN VASUDEV WIFE OF THE ONE OF THE OFFICERS OF THE COMPANY, THAT AO WAS JUSTIFIED IN MAKING THE AFORESAID DISALLOWANCE. FINALLY, HE UPHELD THE ORDER OF THE AO. 6. BEFORE US, AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT ASSESSEE-COMPANY REGULARLY PARTICIPATED IN THE TRADE FAIR THE INTERNATIONAL HOUSEWARE SHOW AT CHICAGO HELD DURING THE MONTH OF MARCH EVERY YEAR, THAT TRIBUNAL HAD ALLOWED THE ENTIRE FOREIGN TRAVEL EXPENSES INCLUDING EXPENDITURE INCURRED ON FOREIGN TRAVEL OF SMT. SUSA N VASUDEV DECIDING THE APPEALS FOR THE AY 2007-08 AND 2008-09, THAT AO HAD NOT MADE ANY ADDIT ION ON ACCOUNT OF FOREIGN TRAVEL EXPENSES IN THE YEAR 2011-12, THAT FAA HAD NOT CONSIDERED THE S UBMISSIONS MADE BY THE ASSESSEE. HE REFERRED ORDERS OF TRIBUNAL FOR THE AY 2007-08 AND 2008-09 ( ITA NO. 6664/MUM/2011-AY 2007-08 AND (ITA NO. 1482/MUM/2012-AY 2008-09 DT. 24.07.2013). HE ALSO REFERRED TO PAGES NO. 27, 24 & 16 OF THE PAPER BOOK. DR SUPPORTED THE ORDER OF THE FA A. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT ASSESSEE- COMPANY HAD FILED A DETAILS CHART BEFORE THE FAA AB OUT THE FOREIGN VISITS BY THE OFFICERS OF THE 3 ITA NOS. 7445/MUM/2012 HAWKINS COOKERS LTD. COMPANY WHICH IS APPEARING AT PAGE NO.5 OF HIS ORDE R. DETAILS FURNISHED BY THE ASSESSEE WITH REGARD TO FOREIGN TRAVEL EXPENSES (PAGE NO.24 AND 37 OF TH E PAPER BOOK) WERE ALSO AVAILABLE TO THE FAA. IN THESE CIRCUMSTANCES, IT CANNOT BE HELD THAT ASSESSE E HAD NOT PRODUCED ANY DOCUMENTARY EVIDENCE BEFORE HIM. ASSESSEE HAD TAKEN SPECIFIC PLEA IN THE STATEMENT OF FACTS, FILED ALONG WITH THE FORM NO. 35,THAT AO HAD NOT CALLED FOR ANY EVIDENCE FROM THE ASSESSEE-COMPANY AND PASSED THE ORDER ON VERY NEXT DAY OF THE SUBMISSIONS MADE BY THE ASSESS EE. IN THESE CIRCUMSTANCES FAA SHOULD HAVE CONSIDERED ALL THE MATERIAL BEFORE HIM BEFORE ARRIV ING AT ANY CONCLUSION. WE FIND THAT HE HAS NOT PASSED THE REASONED ORDER. IN OUR OPINION MATTER NE EDS FURTHER VERIFICATION BY THE FAA. THEREFORE, IN THE INTEREST OF JUSTICE, WE RESTORED BACK THE MA TTER TO THE FILE OF THE FAA. HE SHOULD DECIDE THE ISSUE AFTER AFFORDING A REASONABLE OPPORTUNITY OF H EARING TO THE ASSESSEE AND AFTER CONSIDERING THE ORDERS OF THE TRIBUNAL FOR THE YEAR 2007-08 AND 200 8-09 (SUPRA). EFFECTIVE GROUND OF APPEAL FILED BY THE ASSESSEE-COMPANY IS ALLOWED, IN PART. AS A RESULT APPEAL FILE D BY THE ASSESSEE STANDS PARTLY ALLOWED. 0'1 &' 2 3 VKAFKD :IK LS VKAFKD :IK LS VKAFKD :IK LS VKAFKD :IK LS 4 4 4 4 ( ' 56. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH APRIL,2014 . / ( ,-! 8 9 17 VIZSY VIZSY VIZSY VIZSY , 201 4 - ( . : SD/- SD/- ( MK MKMK MK0 00 0 ,L VH ,E IKOYU ,L VH ,E IKOYU ,L VH ,E IKOYU ,L VH ,E IKOYU / DR. S.T.M.PAVALAN) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 9 /DATE: 17.04.2014. SK / / / / ( (( ( $'; $'; $'; $'; <;!' <;!' <;!' <;!' / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / '# 2. RESPONDENT / $%'# 3. THE CONCERNED CIT(A)/ = > , 4. THE CONCERNED CIT / = > 5. DR H BENCH, ITAT, MUMBAI / ;?. $' ,P ,P,P ,P , . . . 6. GUARD FILE/ . 0 %;' %;' %;' %;' $' $'$' $' //TRUE COPY// / / BY ORDER, @ / 5 DY./ASST. REGISTRAR , /ITAT, MUMBAI