Camac Leathers Pvt. Ltd., Kolkata V. DCIT-Ccircle-8, Kolkata, Kolkata

ITA 815/KOL/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1461 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 21-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MURTHY SHRI SAURABH KUM
• Assessee Lawyers: T VARKEY JUDIC IA L M EMBER
• Keywords: Opportunity of being heard; Principle of natural justice; Earning of tax free income; Speculation loss; Corroborative evidences
• Section: 143(3); 14A; 43(5)

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI ABY.T VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 815 & 646 / KOL / 2012 ASSESSMENT YEAR :2008-09 CAMAC LEATHERS PVT. LTD. 61B, PARK STREET, KOLKATA-16 [ PAN NO.AABCC 1017 B ] ITO,WARD-8(2), AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, 5 TH FLOOR, ROOM NO16, KOLKATA-69 V/S . V/S . CIT(A)-VIII, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 M/S CAMAC LEATHER (P) LTD.,61B, PARK STREET, KOLKATA-16 /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI M.S. MURTHY, /BY REVENUE SHRI SAURABH KUMAR, ADDL. CIT-DR !'# /DATE OF HEARING 31-07-2017 $% # /DATE OF PRONOUNCEMENT 15-09-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THESE ARE CROSS-APPEAL FILED BY THE ASSESSEE AS WE LL AS REVENUE IS DIRECTED AGAINST THE COMMON ORDER OF COMMISSIONER O F INCOME TAX (APPEALS)-VIII, KOLKATA DATED 23.01.2012. ASSESSMEN T WAS FRAMED BY DCIT, CIRCLE-8, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 31.12.2010 FO R ASSESSMENT YEAR 2008-09. ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 2 SHRI M.S. MURTHY, LD. AUTHORIZED REPRESENTATIVE APP EARED ON BEHALF OF ASSESSEE AND SHRI SAURABH KUMAR, LD. DEPARTMENTAL R EPRESENTATIVE REPRESENTED ON BEHALF OF REVENUE. 2. BOTH THE APPEAL ARE HEARD TOGETHER AND BEING DIS POSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. FIRST WE TAKE UP ASSESSEES APPEAL IN ITA NO.815/KO L/2012 . 3. THE ASSESSEE HAS FILED REVISED GROUNDS OF APPEAL AS REPRODUCED HEREUNDER:- 1. THAT THE LD. CIT(APPEALS) ERRED IN UPHOLDING TH E ADDITION OF RS.5,61,815/- IN ADDITION TO DISALLOWANCE OF RS.23, 07,623/- AND RS.5,00,000/- ON ACCOUNT OF MANAGEMENT FEES AND PL ACEMENT FES BY THE LD. ASSESSING OFFICER IN TERMS OF SECTION 14A R EAD WITH RULE 8(2)(II) OF THE INCOME TAX ACT, 1961 AS THERE WAS NO ELEMENT OF INTEREST WHICH WAS INCURRED IN RELATION TO INCOME WHICH DID NOT FO RM PART OF TOTAL INCOME. HENCE THE ADDITION OF RS.5,61,815/- IS BAD IN LAW AND AGAINST THE CAUSE OF NATURAL JUSTICE. FURTHER THE LD. CIT(A PPEALS) HAD ALLOWED THE TOTAL INTEREST PAID ON BORROWED CAPITAL AMOUNTI NG TO RS.14,12,977/- THEREBY CONTRADICTING HIS OWN STAND. 2. THAT THE LD. CIT(APPEALS)HAS WRONGLY UPHELD THE ACTION OF THE LD. ASSESSING OFFICER BY DISALLOWING THE LOSS ON FUTURE S & OPTIONS AMOUNTING TO RS.16,52,816/- AS A SPECULATIVE LOSS A ND NOT ALLOWING THE SAME TO BE SET OFF AGAINST THE CURRENT YEARS INCOM E AND ALLOWING IT TO BE SET OFF AGAINST SPECULATIVE INCOME IN THE SUCCEE DING ASSESSMENT YEARS, WHICH IS BAD IN LAW AND AGAINST THE CAUSE OF NATURAL JUSTICE. 3. THAT THE LD. CIT(APPEALS)ERRED IN NOT ALLOWING T HE LOSS OF RS.73058/- BEING THE LOSS ON SALE OF SHARES TO BE SET OFF AGAI NST INCOME FOR THE CURRENT YEAR, WHICH IS BAD IN LAW AND AGAINST THE C AUSE OF NATURAL JUSTICE. 4. FOR THAT YOUR PETITIONER CRAVES LEAVE TO ADD, AL TER, AMEND AND/OR MODIFY ALL OR ANY OF THE AFOREMENTIONED CLAUSES DUR ING THE COURSE OF HEARING OF THE APPEAL PETITION. 4. FIRST ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER BY SUSTAI NING THE DISALLOWANCE OF 5,61,816/- U/S 14A R.W.R. 8(2)(II) OF INCOME TAX RU LE, 1962. ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 3 5. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PRIV ATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF MANUFACTURING, PROCESSIN G AND EXPORT OF LEATHER ITEMS. THE ASSESSEE, DURING THE YEAR BESIDES THE IN COME FROM THE MANUFACTURING ACTIVITY HAS ALSO EARNED DIVIDEND INC OME AMOUNTING TO 15,83,327/- WHICH WAS CLAIMED AS EXEMPTED U/S. 10(3 4) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED T HAT ASSESSEE HAS NOT SEGREGATED ITS EXPENSES OF ITS MANUFACTURING ACTIVI TY VIS--VIS INVESTMENT ACTIVITY. THEREFORE, THE AO INVOKED THE PROVISION O F RULE 8D OF THE IT RULES AND MADE DISALLOWANCE OF OF AVERAGE INVESTMENT WH ICH COMES TO 5,61,815/- ONLY. ACCORDINGLY, AO MADE THE DISALLOWA NCE OF 5,61,815/- U/S. 14A OF THE ACT AND ADDED TO THE TOTAL INCOME OF ASS ESSEE. 6. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT EXPENSE H AS BEEN DISALLOWED BY AO UNDER RULE 8D(20(II) OF THE IT RULES I.E. INTERE ST EXPENSE. HOWEVER, THERE WAS NO BORROWED WHICH WAS FUND UTILIZED IN THE INVE STMENT. ALL THE LOANS WERE UTILISED BY THE ASSESSEE FOR THE PURPOSE OF THE MAN UFACTURING BUSINESS AND CONSEQUENTLY THE INTEREST ON SUCH RELATES TO THE MA NUFACTURING ACTIVITY. THUS, THERE IS NO QUESTION OF MAKING THE DISALLOWANCE OF INTEREST EXPENSE. THE ASSESSEE FURTHER SUBMITTED THE DETAILS OF INTEREST EXPENSE AS UNDER:- (A) FOR PACKING CREDIT (FOR UTILIZING FACILITY WIT H RS. INDUS IND BANK SECURED AGAINST COLLECTION OF BILLS) 11,68,456/- (B) FOR BANK INTEREST (FOR UTILIZING CREDIT FACILI TY) 1,81,124/- (C) INTEREST ON CAR LOAN (PAID TO ICICI BANK) 63,397/- 14,12,977/- IN VIEW OF ABOVE, THE ASSESSEE SUBMITTED THAT NO IN TEREST EXPENSE HAS BEEN INCURRED IN RELATION TO INVESTMENT ACTIVITY AND CON SEQUENTLY IT CAN BE INFERRED THAT NO INTEREST HAS BEEN INCURRED IN RELATION TO T HE EXEMPTED INCOME. HOWEVER, LD. CIT(A) DISREGARDED THE CONTENTION OF A SSESSEE AND CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS PUT FOR TH ON BEHALF OF THE APPELLANT. IN CIT V. WALLFORT SHARE & STOCK BROKERS (P) LTD.[2010] 192 TAXMAN 211/326 ITR 1 (SC), THE HON'BLE SUPREME COUR T HAS HELD THAT WORDS EXPENDITURE INCURRED IN SECTION 14A REFER TO EXPENDITURE ON RENT, TAXE S, ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 4 SALARIES, INTEREST, ETC., IN RESPECT OF WHICH ALLOW ANCES ARE PROVIDED UNDER SECTIONS 30 TO 37, A RETURN OF INVESTMENT OR A PAY BACK IS NOT EXPENDITURE INCURRED IN TERMS OF SECTION 14A FOR ATTRACTING SECTION 14 A, THERE HAS TO BE A PROXIMATE CAUSE FOR DISALLOWANCE WHICH IS ITS RELAT IONSHIP WITH TAX EXEMPT INCOME. IN CIT V. HERO CYCLES LTD. [2010] 189 TAXMA N 50/323 ITR 518 (PUNJ.&HAR.) IT HAS BEEN HELD THAT DISALLOWANCE UND ER SEC. 14A REQUIRES FINDING OF INCURRING EXPENDITURE AND WHERE IT IS FO UND THAT FOR EARNING EXEMPTED INCOME NO EXPENDITURE HAS BEEN INCURRED, D ISALLOWANCE UNDER SEC. 14A CANNOT STAND. HOWEVER, IT MAY BE NOTED THAT SUB -SECTION (3) WAS INSERTED BY THE FINANCE ACT, 2006 WITH EFFECT FROM APRIL 1, 2007, I.E., WITH EFFECT FROM ASSESSMENT YEAR 2007-08, TO PROVIDE THAT THE PROVIS IONS OF SUBSECTION (2) WILL ALSO APPLY IN RELATION TO A CASE WHERE AN ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INCURRED BY HIM IN RELATION TO ASSESSMENT YEARS 2000-01 AND 2004- 05 RESPECTIVELY, AND THEREFORE, HAVE NO APPLICATION TO THE FACTS OF THE PRESENT CASE IN VIEW OF THE INSERTION OF THE SUB-SECTION (3 ) UNDER SEC. 14A OF THE ACT. THE APPELLANT HAS, OTHERWISE, NOT DISPUTED THE WORK ING OF THE DISALLOWANCE IN TERMS OF RULE 8D(2)(II). THEREFORE, THE ASSESSING O FFICER IS JUSTIFIED IN MAKING THE DISALLOWANCE UNDER SEC. 14A OF THE ACT BY INVOK ING RULE 8D OF THE IT RULES FOR THE RELEVANT ASSESSMENT YEAR 200878-09. T HUS, THE SAME IS CONFIRMED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 7. BEFORE US LD. AR FOR THE ASSESSEE FILED THREE S ETS OF PAPER BOOK VOLUME I, II & III CONTAINING PAGES 1 TO 48 AND 1 T O 100 & A1 TO D6 RESPECTIVELY. HE SUBMITTED THAT THE DISALLOWANCE HA S BEEN MADE U/S 14A R.W.R. 8D(2)(II) OF THE IT RULES IN MECHANICAL MANNER AND WITHOUT GIVING ANY OPPORTUNITY TO ASSESSEE. HE FURTHER SUBMITTED THAT THE AO HAS ALREADY MADE THE DISALLOWANCE OF 23,07,623/- AND 5 LAKH ON ACCOUNT OF PORTFOLIO MANAGEMENT AND PLACEMENT FEES RESPECTIVELY. THEREFO RE THE DISALLOWANCE US/S. 14A OF THE ACT IS NOT WARRANTED. LD. AR FURTHER SUBMITTED THAT AO HAS ALSO MADE THE DISALLOWANCE OF TOTAL INTEREST OF 14,12,971/- WHICH WAS CLAIMED AS BUSINESS EXPENDITU RE IN PROFIT AND LOSS ACCOUNT. THE AO MADE THE DISALLOWANCE ON T HE GROUND THAT THIS INTEREST HAS BEEN INCURRED ON THE BORROWED FUND WHI CH WAS UTILIZED FOR THE PURPOSE OF INVESTMENT IN SECURITY. HOWEVER, IT IS P ERTINENT TO NOTE THAT ENTIRE EXPENSE OF INTEREST CLAIMED BY ASSESSEE HAS ALREADY BEEN DELETED BY LD. CIT(A) BY OBSERVING THAT THE BORROWED FUND WAS UTIL IZED FOR THE MANUFACTURING ACTIVITIES. THUS THE FURTHER DISALLOWANCE OF RS. 5, 61,815.00 IS NOT WARRANTED. ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 5 ON THE OTHER HAND, LD. DR VEHEMENTLY RELIED ON THE ORDER OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, AO HAS MADE THE DISALLOWANCE UNDER THE PROVISION OF RULE 8D @ % O F THE AVERAGE INVESTMENT MADE BY ASSESSEE. THE ASSESSEE HAS TAKEN THE MATTER TO LD. CIT(A) WHERE IT WAS SUBMITTED THAT NO BORROWED FUND HAS BEEN UTILIZED IN THE IMPUGNED INVESTMENT AND THEREFORE NO INTEREST EXPEN SE CAN BE DISALLOWED. HOWEVER, LD. CIT(A) DISREGARDED THE CONTENTION ASSE SSEE BY OBSERVING THAT PROVISION OF SECTION 14A REQUIRES TO MAKE THE DISAL LOWANCE OF THE EXPENDITURE WHICH ARE INCURRED BY ASSESSEE UNDER ADMINISTRATIVE HEAD SUCH AS RENT, TAXES, SALARIES AND INTEREST ETC. 8.1 FROM THE ABOVE, WE FIND THAT AO HAS NOWHERE MEN TIONED THAT THE DISALLOWANCE IS BEING MADE ON ACCOUNT OF INTEREST E XPENSES. THE AO HAS INVOKED THE PROVISION OF RULE 8D AND MADE THE DISAL LOWANCE MERELY BY OBSERVING AS UNDER:- NO EXPENSES WERE SEGREGATED FOR INVESTMENT ACTIVIT Y. THEREFORE, AS PER PROVISIONS CONTAINED U/S 14A READ WITH RULE 8, % OF AVERAGE INVESTMENT WHICH COMES TO RS.5,61,815/- IS DISALLOW ED U/S 14A OF IT ACT. FROM THE ABOVE, WE FIND THAT THERE IS NO WHISPER FO R MAKING THE DISALLOWANCE UNDER RULE 8D OF THE IT RULES FOR THE INTEREST EXPE NSE. THEREFORE IN OUR CONSIDERED VIEW THE PLEA TAKEN BEFORE LD. CIT(A) BY ASSESSEE WAS BASED ON WRONG ASSUMPTION OF FACT. THUS, WE HOLD THAT THE DI SALLOWANCE WAS MADE BY THE AO ON ACCOUNT OF ADMINISTRATIVE EXPENSE. IT IS ALSO PERTINENT TO NOTE THAT THE MANAGEMENT FEES AND PLACEMENT FEES FOR 23,07,623 AND 5 LAKH RESPECTIVELY WERE DISALLOWED BY THE AO AS THESE AR E DIRECT EXPENSES INCURRED BY ASSESSEE FOR INVESTMENT ACTIVITY. THEREFORE THIS EXPENSE CANNOT BE TREATED AS ADMINISTRATIVE EXPENSE. ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 6 8.2 HOWEVER, WE FIND FORCE IN THE ARGUMENTS PLACED BY LD.AR THAT THE DISALLOWANCE WAS MADE IN A MECHANICAL MANNER. THERE FORE WE ARE OF THE OPINION AS ENVISAGED FROM THE ORDER OF AO ORDER THA T NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE BY THE AO BEFORE MAKING SUCH DISALL OWANCE. THE PROVISIONS OF SECTION 14A OF THE ACT REQUIRE THE ASSESSING OFF ICER TO RECORD HIS SATISFACTION AFTER HAVING REFERENCE TO THE BOOKS OF ACCOUNT OF THE ASSESSEE BEFORE MAKING ANY DISALLOWANCE IN RELATION TO THE E XEMPTED INCOME. THE LD. DR HAS ALSO NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE ARGUMENT ADVANCED BY THE LD. AR. IN THIS REGARD WE FIND THE SUPPORT FROM THE ORDER OF HONBLE TRIBUNAL OF KOLKATA IN THE CASE OF DCIT VS. ASHISH JHUNJHUNWALA IN ITA NO. 1809/KOL/2012 FOR A.Y. 2009-10 DATED 14.05.2013, WHEREIN IT WAS HELD AS UNDER:- 6. WE FIND FROM THE FACTS OF THE ABOVE CASE THAT TH E AO HAS NOT EXAMINED THE ACCOUNTS OF THE ASSESSEE AND THERE IS NO SATISF ACTION RECORDED BY THE ASSESSING OFFICER ABOUT THE CORRECTNESS OF THE CLAI M OF THE ASSESSEE AND WITHOUT THE SAME HE INVOKED RULE 8D OF THE RULES. W HILE REJECTING THE CLAIM OF THE ASSESSEE WITH REGARD TO EXPENDITURE OR NO EX PENDITURE, AS THE CASE MAY BE, IN RELATION TO EXEMPTED INCOME, THE AO HAS TO INDICATE COGENT REASONS FOR THE SAME. FROM THE FACTS OF THE PRESENT CASE IT IS NOTICED THAT THE AO HAS NOT CONSIDERED THE CLAIM OF THE ASSESSEE AND STRAIGHT AWAY EMBARKED UPON COMPUTING DISALLOWANCE UNDER RULE 8D OF THE RU LES ON PRESUMING THE AVERAGE VALUE OF INVESTMENT AT % OF THE TOTAL VA LUE. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE COORDINATE BENCH DEC ISION IN THE CASE OF J.K. INVESTORS (BOMBAY) LTD., SUPRA, WE UPHOLD THE ORDER OF CIT. THIS APPEAL OF REVENUE IS DISMISSED. THE ABOVE ORDER WAS SUBSEQUENTLY CONFIRMED BY HON'B LE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ASHISH JHUNJHUNWALA IN GA NO.2990 OF 2013 & ITAT NO. 157 OF 2013. THE RELEVANT OPERATIVE PORTIO N OF THE JUDGMENT IS REPRODUCED BELOW:- IT IS AGAINST THE ORDER OF THE COMMISSIONER OF INCO ME TAX THAT THE REVENUE APPROACHED THE TRIBUNAL. THE TRIBUNAL HAS DISMISSED THE APPEAL HOLDING AS FOLLOWS: WHILE REJECTING THE CLAIM OF THE ASSESSEE WITH REG ARD TO EXPENDITURE OR NO EXPENDITURE, AS THE CASE MAY BE, IN RELATION TO EXEMPTED INCOME, THE AO HAS TO INDICATE COGENT REASONS FOR THE SAME. FROM THE FACTS OF THE PRESENT CASE, IT IS NOTICED THAT THE AO HAS NOT CONSIDERED THE CLAIM OF THE ASSESSEE AND STRAIGHT AWAY EMBARKED UPON COM PUTING DISALLOWANCE UNDER RULE 8D OF THE RULES ON PRESUMIN G THE AVERAGE ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 7 VALUE OF INVESTMENT AT % OF THE TOTAL VALUE. IN VI EW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISIO N IN THE CASE OF J.K. INVESTORS (BOMBAY) LTD., SUPRA, WE UPHOLD THE ORDER OF CIT(A). WE FIND NO INFIRMITY IN THE ORDER UNDER CHALLENGE. THE APPEAL AND THE APPLICATION ARE THEREFORE DISMISSED. SIMILARLY, WE ALSO RELY ON THE ORDER OF THIS CO-ORD INATE BENCH IN THE CASE OF DCIT VS. REI AGRO LTD. IN ITA NO.1811/KOL/2012 FOR A.Y. 2009-10 DATED 14.05.2013, WHEREIN IT WAS HELD AS UNDER:- 9. WE FIND FROM THE FACTS OF THE ABOVE CASE THAT TH E AO HAS NOT EXAMINED THE ACCOUNTS OF THE ASSESSEE AND THERE IS NO SATISF ACTION RECORDED BY THE AO ABOUT THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE AND WITHOUT THE SAME HE INVOKED RULE 8D OF THE RULES. WHILE REJECTING THE CLAIM OF THE ASSESSEE WITH REGARD TO EXPENDITURE OR NO EXPENDITURE, AS THE CAS E MAY BE, IN RELATION TO EXEMPTED INCOME, THE AO HAS TO INDICATE COGENT REAS ONS FOR THE SAME. FROM THE FACTS OF THE PRESENT CASE IT IS NOTICED THAT TH E AO HAS NOT CONSIDERED THE CLAIM OF THE ASSESSEE AND STRAIGHT AWAY EMBARKED UP ON COMPUTING DISALLOWANCE UNDER RULE 8D OF THE RULES ON PRESUMIN G THE AVERAGE VALUE OF INVESTMENT AT % OF THE TOTAL VALUE. IN VIEW OF TH E ABOVE AND RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISION IN THE CASE OF J.K. INVESTORS (BOMBAY) LTD., SUPRA, WE UPHOLD THE ORDER OF CIT(A) . THIS GROUND OF APPEAL OF REVENUE IS DISMISSED. THE ABOVE ORDER WAS SUBSEQUENTLY CONFIRMED BY HON'B LE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. REI AGRO LTD. IN GA NO. 3022 OF 2013 & ITAT NO. 161 OF 2013. THE RELEVANT OPERATIVE PORTION OF THE JUDGMENT IS REPRODUCED BELOW:- THE ASSESSING OFFICER ALSO DISALLOWED THE EXPENDITU RE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 WITHOUT FIRST RECORDING TH AT HE WAS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM AS REGARDS THE CLAIM T HAT NO EXPENDITURE WAS MADE BY THE ASSESSEE. THE CIT, IN THE CIRCUMSTANCES, ALLOWED THE APPEAL O F THE ASSESSEE AND THE TRIBUNAL DID NOT INTERFERE. CHALLENGING THE ORDER OF THE TRIBUNAL, THE PRESENT APPEAL HAS BEEN FILED. WE HAVE HEARD MR. BHOWMIK AND ARE OF THE OPINION TH AT NO POINT OF LAW HA BEEN RAISED. THEREFORE, THIS APPEAL IS DISMISSED. IN VIEW OF ABOVE, WE CONCLUDE THAT AO FAILED TO REC ORD HIS SATISFACTION AS MANDATED UNDER THE PROVISION OF SEC. 14A R.W.R. 8D OF THE RULES. THEREFORE, IN OUR CONSIDERED VIEW, NO ADDITION IN THE AFORESAID F ACTS AND CIRCUMSTANCES WITHOUT RECORDING THE SATISFACTION CAN BE MADE UNDE R THE PROVISION OF SECTION ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 8 14A R.W.R. RULE 8D OF THE RULE. HENCE, THIS GROUND ASSESSEES APPEAL IS ALLOWED. 9. NEXT ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY TREATING THE LOSS ON ACCOUNT OF FUTURE AND OPTION ACTIVITIES FOR 16,52,816/- AS SPECULATIVE IN NATURE. 10. THE AO HAS TREATED THE LOSS OF 16,52,816/- AS SPECULATION LOSS BY OBSERVING AS UNDER:- 12. FUTURE OPTION LOSS RS.1652816/- (SPECULATION BU SINESS): THE ASSESSEE COMPANY SUFFERED LOSS IN SPECULATIVE TRANSACTION U/ S. 43(3) BUT THE SAME WAS NOT SEGREGATED AND SHOWN UNDER THE HEAD BUSINESS SP ECULATION). THE AFORESAID LOSS SEGREGATED AND ASSESSED UNDER THE HE AD BUSINESS (SPECULATION) AND LOSS INCURRED ALLOWED TO BE CARRI ED FORWARD. 11. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER:- 5.8 GROUNDNO.10: IN THIS GROUND, THE APPELLANT HAS AGITATED THE DISALLOWANCE OF LOSS INCURRED FUTURE OPTION LOSS AMOUNTING TO RS .16,52,816/- WHICH BEING RELEVANT TO HEDGING TRANSACTIONS OUGHT TO HAVE BEEN ALLOWED BY THE AO. THE APPELLANT HAS NOT PLACED ON RECORD ANY MATERIAL TO ESTABLISH THAT THE TRANSACTIONS ARE NOT SPECULATIVE TRANSACTIONS ADD T HAT THEY ARE ELIGIBLE TRANSACTIONS UNDER SEC. 43(5)(D) OF THE ACT OR THAT THEY ARE RELATING TO HEDGING TRANSACTIONS. THEREFORE ACTION OF THE ASSESSING OFF ICER IS DISALLOWING THE CLAIM OF THE LOSS AS BUSINESS LOSS IS UPHELD. HOWEVER, TH E APPELLANT IS ENTITLED FOR CARRY FORWARD AND SET OFF OF THE LOSS AGAINST SPECU LATION PROFITS IN THE SUCCEEDING ASSESSMENT YEARS(S). BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 12. BEFORE US LD. AR SUBMITTED THAT THE LOSS INCURR ED FROM THE DERIVATIVE ACTIVITY ARE ELIGIBLE TRANSACTIONS WHICH FALLS IN T HE EXCEPTION PROVIDED UNDER CLAUSE (D) TO SECTION 43(5) OF THE ACT. LD. AR IN S UPPORT OF ASSESSEES CLAIM ALSO DREW OUR ATTENTION ON PAGES A-1 TO A-17 OF VOL UME-III OF PAPER BOOK WHERE COPY OF THE LEDGER OF FUTURE AND OPTION WAS P LACED. ON THE OTHER HAND, LD. DR SUBMITTED THAT DISALLOWAN CE WAS MADE BY THE AUTHORITIES BELOW DUE TO NON-SUBMISSION OF NECESSAR Y SUPPORTING EVIDENCE. ACCORDINGLY, LD. DR PRAYED BEFORE THE BENCH TO REST ORE THE MATTER BACK TO THE ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 9 FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WIT H LAW. IN REJOINDER LD. AR CONCEDED THE SUBMISSION RAISED BY LD. DR. 13. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, LOSS WAS TREATED BY AO AS SPECULATION IN NATURE WHICH WAS ALSO CONFIRMED BY L D. CIT(A). HOWEVER, LD. AR BEFORE US SUBMITTED THAT LOSSES WERE ARISEN FROM DERIVATIVE ACTIVITIES WHICH FALL UNDER THE EXCEPTION GIVEN UNDER CLAUSE ( D) TO SECTION 43(5) OF THE ACT. FROM THE ABOVE, WE NOTICE THAT THE NECESSARY D OCUMENTS WERE NOT MADE AVAILABLE TO THE AUTHORITIES BELOW FOR VERIFICATION . THEREFORE, IN THE INTEREST OF NATURAL JUSTICE AND FAIR PLAY WE REMIT THE MATTER B ACK TO THE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW AND AFTER PROVI DING REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. HENCE, THIS GROUND OF A SSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 14. NEXT ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY NOT ALLOWING THE LOSS OF 73,058/- ON ACCOUNT OF SALE OF SHARES TO BE SET OFF AGAINST THE INCOME OF CURRENT YEAR. 15. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT LOSS OF 73,058/- FROM THE SALE SHARES IS IN THE NATURE OF S PECULATION BY VIRTUE OF EXPLANATION TO SECTION 73 OF THE ACT. THEREFORE THE IMPUGNED LOSS CANNOT BE SET OFF AGAINST ANY OTHER INCOME OTHER THAN SPECULA TION LOSS. 16. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER:- 5.9 GROUND NO.11: THIS GROUND RELATES TO DISALLOWAN CE OF LOSS RS.73,058/- BEING THE LOSS ON SALE OF SHARES. THE APPELLANT HAS NOT FURNISHED COMPLETE DETAILS EVEN DURING THE APPELLATE PROCEEDINGS. THER EFORE, THE CLAIM THAT THE SAID LOSS REPRESENTS A BUSINESS LOS SHAVING NOT BEE N SUBSTANTIATED WITH ANY MATERIAL EVIDENCE CANNOT BE ENTERTAINED. THE ACTION OF THE ASSESSING OFFICER ON THIS SCORE IS UPHELD AND THE CONSEQUENT ADDITION IN THIS REGARD IS CONFIRMED. ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 10 BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 17. BEFORE US LD. AR SUBMITTED THAT THE NECESSARY D ETAILS WERE NOT SUBMITTED BEFORE THE AUTHORITIES BELOW AND THEREFOR E THE MATTER MAY BE RESTORED BACK TO THE FILE OF AO FOR FRESH ADJUDICAT ION. IN REJOINDER LD. DR FOR THE REVENUE HAS CONCEDED THE SUBMISSION RAISED BY L D. AR TO THIS POINT. HE RELIED ON THE ORDER OF AUTHORITIES BELOW. 18. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. UPON CAREFUL CONSIDER ATION, WE NOTE THAT INTEREST OF NATURAL JUSTICE WILL BE SERVED IF THE MATTER IS REMITTED BACK TO THE FILE OF AO. THE AO IS DIRECTED TO CONSIDER THE ISSUE AFRESH AND ADJUDICATE THE SAME IN ACCORDANCE WITH THE LAW. THE AO SHALL TAKE INTO ACC OUNT THE SUBMISSIONS OF THE ASSESSEE. ACCORDINGLY, WE REMIT THE ISSUE RAISE D BY ASSESSEE. NEEDLESS TO SAY THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPO RTUNITY OF BEING HEARD. HENCE, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 19. LAST ISSUE IS GENERAL IN NATURE AND DOES NOT RE QUIRE ANY SEPARATE ADJUDICATION. 20. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSE. COMING TO REVENUES APPEAL IN ITA NO. 646/KOL/2012 . 21. GROUNDS RAISED BY REVENUE PER ITS APPEAL AS UND ER:- 1) THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN GIVING RELIEF TO THE ASSESSEE, HOLDING THAT THE ASSESSEES LONG TERM CAPITAL GAIN FROM SALE OF MUTUAL FUND / S HARES WAS ELIGIBLE FOR DEDUCTION U/S. 10(38) OF THE ACT, WITHOUT MAKING IT CLEAR ON RECORD, THE NATURE OF EVIDENCE WHICH HAS BEEN RELIED UPON BY HIM TO HO LD THAT SECURITIES TRANSACTION TAX (STT) HAS BEEN PAID OR WITHOUT GIVI NG THE AO TO VERIFY THE SAME. 2) THAT, ON THE FATS AND IN CIRCUMSTANCES OF THE CA SES AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ENTIRE AMOUNT OF CLAIM OF FOREIGN TRAVEL EXPENDITURE WAS ALLOWABLE, WHEREAS THE WITHOUT CONS IDERING THAT THE ASSESSEE COMPANY HAD FAILED TO SUBSTANTIATE WITH EV IDENCE THAT THE FOREIGN TOUR OF WIFE OF THE DIRECTOR WAS RELATED TO BUSINES S PURPOSE OF THE ASSESSEE COMPANY, AS HAS BEEN HELD IN ANY DECISIONS OF VARIO US FORMS AND ALSO IGNORING THAT THE PLACES, VISITED BY THE DIRECTOR O F THE ASSESSEE COMPANY AND HIS WIFE, HAS NO BUSINESS CONNECTION. ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 11 22. FIRST ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN HOLDING THAT THE LONG TERM CAPITAL GAINS (LTCG) IS ELIGIBLE FOR DEDUCTION U/S 10(38) OF THE ACT ON THE BASIS OF ADDITIONAL EVIDEN CE. 23. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT LTCG OF 26,73,145/- IS NOT ELIGIBLE U/S 10(38) OF THE ACT O N THE GROUND THAT NO SECURITY TRANSACTION TAX (STT) HAS BEEN PAID BY ASS ESSEE. ACCORDINGLY, AO TAXED THE AFORESAID INCOME AT A SPECIAL RATE OF TAX I.E. 20% UNDER THE PROVISION OF SECTION 112 OF THE ACT. 24. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE SUBMITTED BEFORE LD. CIT(A) THAT STT WAS P AID ON THE SALE OF SHARES. LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- THE SUBMISSION OF THE APPELLANT IS FOUND CORREC T. THE TRANSACTIONS ARE APPARENTLY EXEMPT UNDER SEC. 10(38) OF THE IT A CT. THEREFORE, TAXING THE LTCG ON MUTUAL FUNDS AND SHARES BY APPLYING THE PROVISIONS OF SEC. 112 IS HELD TO BE UNJUSTIFIED. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 25. LD. DR BEFORE US SUBMITTED THAT NO DETAILS WERE SUBMITTED BY THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS SUGG ESTING THAT STT WERE PAID BY THE ASSESSEE ON THE SALE OF MUTUAL FUND AND SHARE. THEREFORE LD. DR REQUESTED THE BENCH TO RESTORE THE ISSUE TO THE FIL E OF AO FOR FRESH ADJUDICATION. ON THE OTHER HAND, LD. AR AGREED WITH THE SUBMISSIO NS MADE BY THE LD. DR FOR RESTORING THE MATTER BACK TO THE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. 26. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSE THE MATERIAL AVAILABLE ON RECORD. UPON CAREFUL CONSIDER ATION, WE NOTE THAT INTEREST OF NATURAL JUSTICE WILL BE SERVED IF THE MATTER IS REMITTED BACK TO THE FILE OF AO. ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 12 THE AO IS DIRECTED TO CONSIDER THE ISSUE AFRESH AND ADJUDICATE THE SAME IN ACCORDANCE WITH THE LAW. THE AO SHALL TAKE INTO ACC OUNT THE SUBMISSIONS OF THE ASSESSEE. ACCORDINGLY, WE REMIT THE ISSUE RAISE D BY REVENUE. NEEDLESS TO SAY THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTU NITY OF BEING HEARD. HENCE, THIS GROUND OF REVENUE IS ALLOWED FOR STATIS TICAL PURPOSE. 27. NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR 6,09,724/- ON ACCOUNT OF FOREIGN TRAVEL EXPENSES. 28. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HA S CLAIMED FOREIGN TRAVEL EXPENSE ON ACCOUNT OF TOURING TO BANGKOK, SINGAPORE AND GOA. THE NECESSARY OBSERVATION OF THE AO IS REPRODUCED BELOW :- S.K.PUNWANI, DIRECTOR, VISITED BANGKOK DURING MAY 2 007, EXPENSE CLAIMED IS RS.70,739/- SUNSIL PUNWANI & ANITA PUNWANI, DIRECTO R & DIRECTORS WIFE VISITED SINGAPORE IN SEPT 2007, EXPENSES CLAIMED IS RS.5,02 ,307/- SUNIL PUNWANI IN MARCH 2008 VISITED GOA, EXPENSE CLAIMED IS RS.36678 /- THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ASSESSEE EXPORTS GOODS TO NORWAY, GERMANY, SPAIN & FRANCE AND THERE WAS NO EXPORT MADE EITHER TO SINGAPORE OR BANGKOK. ACCO RDINGLY, AO OBSERVED THAT TRIP TO ABOVE COUNTRIES IS OF PERSONAL IN NATU RE AND HAS NO NEXUS WITH BUSINESS EXIGENCY. ACCORDINGLY, AO DISALLOWED THE F OREIGN TRAVEL EXPENSE AND ADDED TO THE TOTAL OF THE ASSESSEE. 29. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE DIREC TORS HAD VISITED THOSE COUNTRIES TO EXPLORE / DEVELOPED THE EXPORT MARKET. BOTH THE DIRECTORS OF THE ASSESSEE-COMPANY ARE HUSBAND-AND-WIFE. SHRI S.K. PU NWANI HAS BEEN ACTING AS DIRECTOR FOR THE LAST TWO DECADES AND PLAYING A VERY SIGNIFICANT AND IMPORTANT ROLE IN DESIGNING THE PRODUCTS OF THE ASS ESSEE-COMPANY AS WELL AS EXPORT OF THOSE ITEMS. THE ALLEGATION OF THE AO THA T NO EXPORT HAS BEEN MADE BY ASSESSEE TO THE AFORESAID COUNTRIES IS UNREASONA BLE GROUND FOR ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 13 DISALLOWANCE. IT IS BECAUSE THE ASSESSEE HAS VISITE D THOSE COUNTIES TO DEVELOP THE EXPORT MARKET. THE ASSESSEE IS HAVING A BUSINES S DEALING WITH NETHERLAND AND GATEWAY TO NETHERLAND IS THROUGH IS EITHER VIA BANGKOK OR SINGAPORE. THE ASSESSEE ALSO SUBMITTED THAT IT HAS BEEN INCURRING FOREIGN TRAVEL EXPENSE FOR THE LAST MANY YEARS AND THESE EXPENSES IN RELATION TO THE EXPORT TURNOVER IS OF NEGLIGENT VALUE. THE ASSESSEE IN SUPPORT OF HIS CLA IM HAS GIVEN STATISTICS FOR THE EARLIER ASSESSMENT YEARS AS WELL AS SUBSEQUENT YEARS. THE ASSESSEE FURTHER SUBMITTED THAT NO BENEFIT WAS DERIVED BY IT IN THE YEAR IN WHICH FOREIGN TOUR WAS CONDUCTED BUT THE BENEFIT OF IT WAS ACHIEV ED IN THE SUBSEQUENT YEARS. ACCORDINGLY IN THE SUBSEQUENT YEAR EXPORT TURNOVER WAS INCREASED SUBSTANTIALLY. LD. CIT(A) AFTER CONSIDERING THE SUB MISSION OF ASSESSEE HAS DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER:- I HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS OF TH E APPELLANT. I HAVE ALSO GONE THROUGH THE MATERIAL PLACED ON RECORD. IT IS S EEN THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL TO S UGGEST THAT THE FOREIGN TRAVELS WERE RATHER PLEASURE TRIPS, WHICH ARE IN NO WAY CONNECTED WITH THE BUSINESS AFFAIRS OF THE APPELLANT COMPANY. THE ASSE SSING OFFICER HAS ALSO NOT POINTED OUT ANY SPECIFIC ITEM OF EXPENDITURE OF DIS ALLOWABLE IN NATURE. HE HAS NEITHER VERIFIED THE REASONABLENESS OF SUCH EXPENDI TURE BEFORE MAKING THE IMPUGNED DISALLOWANCE. ON THE OTHER HAND, WITH REFE RENCE TO PAST RECORDS, THE CLAIM OF THE EXPENDITURE UNDER THIS HEAD THIS Y EAR APPEARS TO BE REASONABLE IN PROPORTION TO THE QUANTUM OF TURNOVER . THEREFORE, HAVING REGARD TO THE FACTS, THE DISALLOWANCE, IN MY OPINION, IS N OT CORRECT AND PROPER. THE CONSEQUENT ADDITION OF RS.609,724/- IS DELETED RESU LTING IN RELIEF TO THE APPELLANT OF LIKE AMOUNT. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 30. BEFORE US BOTH PARTIES RELIED ON THE ORDER OF A UTHORITIES BELOW AS FAVOURABLE TO THEM. 31 . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE T HE DISALLOWANCE WAS MADE BY AO ON ACCOUNT OF FOREIGN TRAVEL EXPENSES INCURRE D BY ASSESSEE ON THE REASONING THAT ASSESSEE IS NOT EXPORTING ANY GOODS TO THE AFORESAID COUNTRIES. ACCORDINGLY, AO TREATED THE SAME AS PERSONAL TRIP O F THE DIRECTORS OF THE ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 14 ASSESSEE-COMPANY WHO ARE BEING HUSBAND-AND-WIFE. HO WEVER, LD. CIT(A) DELETED THE ADDITION MADE BY AO BY OBSERVING THAT F OREIGN TOUR EXPENSES WERE COMMENSURATE TO THE QUANTUM OF TURNOVER AS WEL L AS AFTER CONSIDERING THE STATISTICS OF FOREIGN TOUR EXPENSES OF THE OTHE R YEARS OF THE ASSESSEE- COMPANY. FROM THE FOREGOING DISCUSSION, WE FIND THAT AO HAS ADMITTED THAT ASSESSEE IS ENGAGE IN EXPORT BUSINESS AND CURRENTLY EXPORTING T HE PRODUCTS NORWAY, GERMANY, SPAIN & FRANCE. THUS, THE UNDISPUTED FACT IS THAT ASSESSEE IS INTO THE BUSINESS OF EXPORTING THE PRODUCTS. ACCORDINGLY , WE FIND THAT THERE IS NOTHING WRONG IF A FOREIGN TRIP IS UNDERTAKEN TO SI NGAPORE, BANGKOK TO EXPLORE THE BUSINESS. WE ALSO FIND THAT ASSESSEE HAS BEEN C LAIMING FOREIGN TOUR EXPENSES IN THE EARLIER YEARS AS WELL AS IN SUBSEQU ENT YEAR AND THE RELEVANT EXTRACT IS REPRODUCED BELOW:- COMPARATIVE STATEMENT OF FOREIGN TRAVEL EXPENSES V IS--VIS EXPORT TURNOVER:- A.Y FOREIGN TRAVEL EXP. RS/LAKHS EXPORT TURNOVER RS./LAKHS % 06-07 7.99 LACS 588 LAS 1.36 07-08 5.33 LACS 669 LACS 0.77 08-09 6.09 LACS 514 LACS 1.19 09-10 11.29 LACS 451 LACS 2.50 10-11 12.40 LACS 535 LACS 2.32 11-12 14.03 LACS 566 LACS 2.48 FROM THE ABOVE PRECEDENT, IT WAS OBSERVED THAT NO D ISALLOWANCE WAS MADE BY THE REVENUE IN RESPECT OF AFORESAID FOREIGN TOUR EXPENSES. IN VIEW OF THE ABOVE, WE HOLD THAT THE FOREIGN TRIPS TO BANGKOK AN D SINGAPORE WERE CONDUCTED TO EXPLORE THE NEW MARKET AND THUS, IT WA S DIRECTLY CONNECTED WITH THE BUSINESS OF ASSESSEE. THUS, WE HOLD NO INTERFER ENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A). HENCE, WE UPHOLD THE SAME. THI S GROUND OF REVENUES APPEAL IS DISMISSED. ITA NO.815 & 646/KOL/2012 A.Y. 2008-09 CAMAC LEATHERS PVT. LTD. VS. CIT(A)-VIII KOL. PAGE 15 32. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. 33. IN COMBINE RESULT, APPEAL OF ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES AND THAT OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 15/ 09/2017 SD/- SD/- (ABY. T. VARKEY) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP &!'(- 15 / 09 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-CAMAC LEATHERS PVT. LTD. 61B, PARK STREET , KOLKATA-16 2. /REVENUE-CIT(A)-VIII, AAYAKA BHAWAN, P-7, CHOWRINGH EE SQUARE, KOL-69 3.'0'1 2 / CONCERNED CIT KOLKATA 4. 2- / CIT (A) KOLKATA 5.56788!1 , 1 , / DR, ITAT, KOLKATA 6.7:;<= / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 1 ,