India Gelatine & Chemicals Ltd., Ahmedabad V. The Jt. CIT, Range-4, Ahmedabad

ITA 876/AHD/2015

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7424 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 13-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: M J SHAH
• Keywords: Depreciation; Earning of tax free income; Revenue expenditure; Capital expenditure; Rule 8D; Set aside
• Section: 14A; 37(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) [THROUGH VIRTUAL COURT] ITA. NOS: 876 & 934/AHD/2015 (ASSESSMENT YEARS: 2010-11 & 2011-12) INDIA GELATINE & CHEMICALS LTD. 703/704, SHILP BUILDING C.G. ROAD, AHMEDABAD-9 PAN NO. AAACI3676F JOINT COMMISSIONER OF INCOME TAX RANGE-4, AHMEDABAD (APPELLANT) (RESPONDENT) ITA. NO: 1376/AHD/2017 (ASSESSMENT YEAR: 2012-13) INDIA GELATINE & CHEMICALS LTD. 703/704, SHILP BUILDING C.G. ROAD, AHMEDABAD-9 PAN NO. AAACI3676F JOINT COMMISSIONER OF INCOME TAX RANGE-4, AHMEDABAD (APPELLANT) (RESPONDENT) ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 2 ITA. NOS: 2844 & 2845/AHD/2017 (ASSESSMENT YEARS: 2013-14 & 2014-15) INDIA GELATINE & CHEMICALS LTD. 703/704, SHILP BUILDING C.G. ROAD, AHMEDABAD-9 PAN NO. AAACI3676F JOINT COMMISSIONER OF INCOME TAX RANGE-4, AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.J. SHAH RESPONDENT BY : SHRI LALIT P. JAIN, A.R. ( )/ ORDER DATE OF HEARING : 23-08-2021 DATE OF PRONOUNCEMENT : 27-08-2021 PER MAHAVIR PRASAD, J.M. 1. THESE FIVE APPEALS HAVE BEEN FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) VIDE APPEAL NO. CIT(A)-2/JT. CIT, R-4/62/2013-14 ORDER DATED 30/01/2015 ARISING OUT OF ASSESSMENT ORDER DATED 15/03/2013. 2. SINCE ALL THESE APPEALS HAVE BEEN ALMOST COMMON GROUNDS THEREFORE, FOR THE SAKE OF BREVITY, WE WOULD LIKE TO DISPOSE OF ALL APPEALS BY WAY OF COMMON ORDER. 3. FIRST OF ALL, WE WOULD LIKE TO TAKE UP ITA NO. 876/AHD/2015. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 3 (I) THAT LD. CIT(A) HAS ERRED IN LAW AND ON FACTS FOR MAKING DISALLOWANCE OF ADMINISTRATION AND COLLECTION CHARGES U/S. 14A OF RS. 1,47,007/-. (II) THAT LD. CIT(A) HAS ERRED IN LAW AND ON FACTS FOR MAKING ADHOC DISALLOWANCE OF TRAVELLING EXPENSES OF DIRECTORS OF RS. 10,00,000/- 4. BRIEF FACTS OF THE CASE THAT ASSESSEE IS IN THE BUSINESS OF MANUFACTURING & SELLING OF OSSEIN, DI-CALCIUM PHOSPHATE, GELATINE. 5. IN THIS CASE, ASSESSEE HAD MADE INVESTMENT OF RS. 28,49,11,636/- IN SHARES AND MUTUAL FUNDS. THE ASSESSEE HAS DISALLOWED AMOUNT OF RS. 2,00,000/- ON ACCOUNT OF SECTION 14A OF INCOME TAX ACT. THE LD. A.O. MADE DISALLOWANCE U/S. 14A BECAUSE ASSESSEE WAS NOT ABLE TO JUSTIFY THAT THE INVESTMENT MADE IN SHARES IS FROM HIS OWN FUND OR FROM THE FUNDS ON WHICH NO INTEREST PAYMENT IS MADE BY THE ASSESSEEE. HOWEVER, LD. A.O. HAS NOT GIVEN ANY CALCULATION OR FORMULA FOR MAKING DISALLOWANCE U/S. 14A. 6. THEREAFTER, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE LD. A.O. 7. NOW APPELLANT HAS COME BEFORE US BY WAY OF SECOND STATUTORY APPEAL. 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE IMPUGNED ORDER. THE LD. A.O. HAS DOUBTED THE SOURCE OF THE INVESTMENT IN ORDER TO EARN EXEMPT INCOME WHETHER SAME WAS MADE OUT OF ITS OWN FUND OR WAS FROM BORROWED FUND BUT MADE ADDITION U/S. 14A OF THE ACT. IT IS NOT PERMITTED UNDER LAW THAT NOTICE IS ISSUED BY THE A.O. FOR DOUBTING OF SOURCE OF INVESTMENT BUT MADE ADDITION U/S. 14A. . 9. LD. A.R. CITED A JUDGMENT OF HONBLE APEX COURT WHEREIN COPY OF THE HEADNOTE IS GIVEN BELOW: 10. SINCE LD. A.O. HAVE NOT COMMENTED UPON CORRECTNESS OR OTHERWISE ASSESSEE IS WORKING OF EXPENDITURE IN ORDER TO EARN EXEMPT INCOME AND HE HAS HELD THAT ASSESSEE ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 4 HAS BEEN FAILED TO SUBSTANTIATE ITS CLAIM WHETHER INVESTMENT WERE MADE FROM ITS OWN FUND OR FROM BORROWED FUND. 11. IN OUR CONSIDERED OPINION, IN SUCH CASE DISALLOWANCE U/S. 14A CANNOT BE MADE. LOWER AUTHORITIES ARE REQUIRED TO GIVE CORRECT AND EXACT FINDING FOR THE WORKING OF EXPENDITURE TO BE DISALLOWED U/S.14A. 12. AS WE CAN SEE, SAME EXERCISE HAS NOT BEEN DONE BY THE LOWER AUTHORITIES. SO, IN SUCH CASE, WE DO NOT FIND AN APPROPRIATE TO CONFIRM THE ACTION OF THE LOWER AUTHORITIES. AND WE AGREE WITH THE CONTENTION OF THE ASSESSEE AS WAS ITSELF HAS MADE DISALLOWANCE OF RS. 2,00,000/-. SO, IN SUCH CASE, APPEAL OF THE ASSESSEE IS ALLOWED. 13. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. 14. NOW WE COME TO GROUND NO. 2 WHEREIN ASSESSEE HAS CHALLENGED THE ADHOC DISALLOWANCE OF TRAVELLING EXPENSES OF DIRECTORS OF THE COMPANY. 15. IN THIS CASE, THE COMPANY IS EXPORTING ITS GOODS FROM VARIOUS COUNTRIES INCLUDING JAPAN, USA, UK, FRANCE, GERMANY, NEITHERLAND, UAE, JORDAN, THAILAND AND KOREA ETC. IN ORDER TO FETCH BUSINESS FROM THE OTHER COUNTRIES DIRECTOR OF THIS COMPANY VISITED VARIOUS COUNTRIES AND CLAIMED TOTAL TRAVELLING EXPENSE OF RS. 1,01,97,448/- WHICH INCLUDED TRAVELLING EXPESNES OF RS. 75,86,060/-. LOOKING TO THE EXORBITANT TRAVELLING EXPENSES OF THE COMPANY LD. A.O. ISSUED A NOTICE TO THE ASSESSEE. 16. IN ITS REPLY, IT IS STATED THAT THE COMPANY IS A JOINT VENTURE COMPANY AND PROMOTED BY JAPANEES PROMOTERS VIZ KONICA GELATINE & NICHIMEN AND INDIAN PROMOTERS. M/S. KHIMJI VISRAM & SONS. AND COMPANIES PRODUCTS ARE SOLD IN VARIOUS COUNTRIES INCLUDING EUROPEAN COUNTRIES USA, SOUTH EAST ASIAN COUNTRIES, THEREFORE, DIRECTORS OF THE COMPANY REGULARLY HAVE TO MEET THEIR CUSTOMERS TO ABROAD FOR THE PURPOSE OF BUSINESS AND DIRECTORS HAVE VISITED FOREIGN COUNTRIES FOR ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 5 (I)IDENTIFICATION OF SUPPLIER (II) PROCUREMENT AND PURCHASE OF THE MATERIALS. (III) MANUFACTURING OF GOODS. (IV) QUALITY CONTROL (V) MARKETING OF PRODUCTS BOTH DOMESTIC AS WELL AS EXPORT. (VI) BUILDING RELATIONS AND LIASIONING WITH OVERSEAS CUSTOMERS. (VII) ADMINISTRATIVE WORK. 17. BUT LD. A.O. DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND HELD THAT SINCE TRAVELLING WAS MADE UNDER TOURIST VISA AND BUSINESS WAS NOT OBTAINED BY THE ASSESSEE THEREFORE, ADHOC TRAVELLING DISALLOWANCE WERE MADE BY THE LOWER AUTHORITIES. 18. ON THE OTHER HAND, LD. A.R. ARGUMENT WAS THAT IN ORDER TO OBTAIN BUSINESS VISA IS A CUMBERSOME JOB AND TOURIST VISA EASY TO OBTAIN FROM THE DIFFERENT EMBASSIES. 19. LD. A.R. CITED A JUDGMENT OF KARNATAKA HIGH COURT IN THE MATTER OF CIT VS. SWADESHI INTERNATIONALS [2019] 102 TAXMANN.COM 373 (KARNATAKA) WHEREIN IT IS HELD THAT ONE OF TRUSTEES HAD GONE ABORAD FOR PROMOTING BUSINESS OF ASSESSEE-TURST MERE FACT THAT HE WENT ON A TOURIST VISA COULD NOT BE A GROUND TO CONCLUDE THAT NO BUSINESS WAS TRANSACTED AND, THUS, IMPUGNED DISALLOWANCE OF 50 PER CENT OF FOREIGN TRAVEL EXPENDITURE WAS TO BE DELETED. 20. ON THE OTHER HAND, LD. D.R. CITED AN ORDER OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NO. 611/AHD/2011 FOR A.Y. 2009-10 WHEREIN IT IS HELD THAT THE PHOTOCOPIES FROM THE PASSPORTS OF THE DIRECTORS SHOWING TOURIST VISA GRANTED TO THE DIRECTORS FOR FOREIGN TRAVEL. IT IS SEEN THAT IN MOST OF THE CASES, VISA IS TOURIST VISA AND NOT BUSINESS VISA. IT IS THE FACT THAT THE TRAVEL WAS UNDERTAKEN ENTIRELY FOR BUSINESS PURPOSES HAS NOT BEEN ESTABLISHED. HE RELIED ON THE ORDERS OF LOWER AUTHORITIES. 21. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER AND HEARD BOTH THE PARTIES. WHEN THERE ARE TWO ORDERS ON SAME SUBJECT WHEREIN CO-ORDINATE BENCH HAS HELD AGAINST THE ASSESSEE AND DISALLOWED THE TRAVEL EXPENSES. ON THE OTHER HAND, ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 6 HONBLE KARNATAKA HIGH COURT IN SIMILAR FACTS AND CIRCUMSTANCES HAS GIVEN RELIEF TO THE ASSESSEE. WE ALSO NOTICE THAT TURNOVER OF THE COMPANY DURING THE LAST FOUR YEARS IS ALMOST INCREASING AND TRAVELLING EXPENSES ARE ALMOST SAME AS EVIDENT FROM THE FOLLOWING TABLE: - ASST. YEAR 2011-12 - RS. 3670.53 LACS - ASST. YEAR 2010-11 - RS. 4973.61 LACS - ASST. YEAR 2009-10 - RS. 4678.76 LACS - ASST. YEAR 2008-09 - RS. 3411.50 LACS - ASST. YEAR 2007-08 - RS. 3576.22 LACS 22. DETAILS OF LAST THREE YEARS TRAVELLING EXPENSES, INCREASE IN TURNOVER OF THE PRODUCTS OF THE COMPANY ARE MENTIONED BELOW: ACCOUNTING YEAR TURNOVER TRAVELLING EXPENSES 2006-07 61.09 1.08 2007-08 56.56 1.10 2008-09 78.26 1.25 2009-10 79.79 1.18 2010-11 85.43 1.01 23. SINCE THE HONBLE KARNATAKA HIGH COURT IS IN FAVOUR OF THE ASSESSEE. THUS, RESPECTFULLY FOLLOWING THE KARNATAKA HIGH COURT WE, ACCEPT THE PLEA OF THE ASSESSEE. IN THE MEANWHILE, LD. A.R. MADE A REQUEST THAT IN ORDER TO PUT AN END TO THE LITIGATION IF RS. 5,00,000/- ARE CONFIRMED IN ALL BUYERS THAT CASE ASSESSEE WILL NOT HAVE ANY OBJECTION. SINCE ASSESSEE HAS VOLUNTARILY REQUESTED FOR DISALLOWANCE OF RS. 5,00,000/- AND IN THE INTEREST OF JUSTICE AND IN ORDER TO PUT AN END TO LITIGATION, WE RESTRICT DISALLOWANCE OF RS. 5,00,000/- IN ALL CONNECTED APPEALS. 24. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 1376/AHD/2017 FOR A.Y. 2012-13 ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 7 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE MEMBERS MAY KINDLY BE PLEASED TO HOLD THAT THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT (APPEALS) IS BAD IN LAW AND ON FACTS, ON DUE APPRECIATION OF ANY ONE OR MORE OF THE FOLLOWING CONTENTIONS: 1. TO DELETE DISALLOWANCE AND ADDITION MADE U/S 14A OF RS.5.49.105/- (I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE FACTS, HON'BLE COMMISSIONER OF INCOME TAX HAS RETAINED DISALLOWANCE OF ADMINISTRATION AND COLLECTION CHARGES OF RS. 5,49,105/- BY APPLYING RULE 8D ON ADHOC AND AUTOMATIC BASIS. SEC. 14(A) COMES INTO EFFECT FOR DEEMING DISALLOWANCE AND RESORTING TO RULE-80 ONLY IN THE CASE OF WHEN THE ASSESSING OFFICER IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. (II) THAT HON'BLE MEMBERS OF ITAT IN ASSESSEE'S OWN CASE IN ASST. YEAR 2009-10 HAS DELETED THE DISALLOWANCE OF ADMINISTRATION AND MANAGEMENT EXPENSES. THERE IS NO CHANGE IN FACTS AND ALSO INVESTMENTS PATTERN AND QUANTUM HAS ALSO REMAINED THE SAME, THE APPELLANT COMPANY REQUESTS THE MEMBERS TO FOLLOW THE PRECEDENT SET IN EARLIER YEAR. (III) THAT THE MAJORITY OF INVESTMENTS ARE MADE IN THE ASSOCIATE CONCERNS FOR STRATEGIC PURPOSE ON LONG TERM BASIS AS PROMOTER'S CONTRIBUTION AND NOT FOR EARNING DIVIDEND OR SIMILAR EXEMPT INCOME. (IV) THAT THE APPELLANT COMPANY ITSELF HAS DISALLOWED RS.2 LACS BY GIVING BIFURCATION OF EXPENSES WHICH ARE RELATABLE TO ADMINISTRATION COST OF MAINTAINING INVESTMENTS. (V) THAT THE APPELLANT COMPANY REQUEST TO DELETE THE DISALLOWANCE OF ADMINISTRATION AND COLLECTION CHARGES OF RS. 5.49.105/- IN VIEW OF THE FACT THAT A SUM OF RS.2,00,000/- HAS ALREADY BEEN DISALLOWED BY YOUR APPELLANT IN THE COMPUTATION OF INCOME, NO FURTHER DISALLOWANCE EVEN TOWARDS ADMINISTRATIVE EXPENSES IS NOT WARRANTED AND THEREFORE THE DISALLOWANCE MAY KINDLY BE DELETED IN FULL. 2. TO DELETE ADDITION MADE ON ACCOUNT OF REPAIRS TO BUILDING OF RS.9.41.591/-. (I) THAT THE APPELLANT COMPANY HAS INCURRED EXPENDITURE FOR CURRENT REPAIRS TO ITS EXISTING BUILDING OF RS.9,41,591/-. (II) THE ASSESSEE COMPANY HAS BUILDINGS OF RS. 1630.35 LACS. (III) THAT THE EXPENDITURE IS IN THE NATURE OF CURRENT REPAIRS OF ITS EXISTING BUILDING AND ACCORDINGLY THE SAME ARE TO BE ALLOWED AND DISALLOWANCE OF EXPENDITURE MADE BY THE ASSESSING OFFICER OF RS. 9,41,591/- WITHOUT VERIFYING THE FACTS IS REQUIRED TO BE DELETED. 3. TO DELETE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF FOREIGN TRAVELLING EXPENSES BY THE DIRECTOR U/S 37(1) OF RS.10,00,000/- ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 8 (VI) THAT THE APPELLANT COMPANY IS AGGRIEVED BY THE DISALLOWANCE OF TRAVELING EXPENDITURE RETAINED BY HON'BLE COMMISSIONER OF INCOME TAX ON ADHOC BASIS IN CONTRADICTION TO HIS OWN FINDINGS. (VII) THAT THE APPELLANT COMPANY IS IN THE BUSINESS SINCE LAST MORE THAN 36 YEARS AND HAS EXPORTS IN U.S.A. AND EUROPEAN AND SOUTH ASIAN COUNTRIES. (VIII) THAT THE DISALLOWANCE MADE BY LD. ASSESSING OFFICER IN RESPECT OF TRAVELING EXPENDITURE OF RS. 10,00,000/- AND RETAINED BY HON'BLE COMMISSIONER OF INCOME TAX (A) IS ARBITRARY, ADHOC AND AGAINST THE FACTS OF THE COMPANY AND REQUIRED TO BE DELETED IN FULL. (IX) THAT THE ARBITRARY DISALLOWANCE OF TRAVELLING EXPENDITURE WITHOUT IDENTIFYING ANY EXPENDITURE OF PERSONAL OR NON-BUSINESS NATURE, THE DISALLOWANCE MADE BY LD. A.O. AND RETAINED BY HON'BLE COMMISSIONER OF INCOME TAX REQUIRED TO BE DELETED IN FULL. THAT YOUR HONOUR MAY KINDLY BE PLEASED TO GRANT SUCH FURTHER OR ALTERNATIVE RELIEFS AS ARE JUST AND EQUITABLE ON DUE APPRECIATION OF FACTS SUBMITTED & FILED BEFORE YOUR HONOUR AND FURTHER IT CRAVES YOUR HONOUR'S LEAVE TO ADD OR AMEND ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR IN THE COURSE OF HEARING. 25. IN THIS APPEAL, ASSESSEE HAS TAKEN GROUND OF DISALLOWANCE OF ADDITION U/S. 14A OF RS. 5,49,105/- AND (II) ASSESSEE HAS REQUESTED THAT LD. CIT(A) HAS ERRED MAKING DISALLOWANCE OF ON FOREIGN TRAVEL EXPENSES BY THE DIRECTOR U/S. 37(1) OF RS. 10,00,000/-. 26. SINCE WE HAVE ALREADY IN CONNECTED APPEAL IN ITA NO. 876/AHD/2015 GRANTED RELIEF TO THE ASSESSEE. THUS, IN PARITY WITH THE AFORESAID ORDER, DISALLOWANCE U/S. 14A IS RESTRICTED TO RS. 2,00,000/- AND DISALLOWANCE FOR TRAVELLING EXPENSES IS RESTRICTED TO RS. 5,00,000/-. 27. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 28. IN THIS APPEAL, ASSESSEE HAS TAKEN ADDITIONAL ONE GROUND THAT LOWER AUTHORITIES HAS ERRED IN LAW AND ON FACTS BY DISALLOWANCE ON ACCOUNT OF REPAIRS TO BUILDING OF RS. 9,41,591/-. ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 9 29. ASSESSEE COMPANY ACQUIRED A CASH FOR A BUSINESS ACTIVITIES IN THE ASSESSMENT YEAR 2007-08 AND MADE REPAIRS OF EXISTING BUILDING AND MADE EXPENDITURE OF RS. 9,41,591/- . LD. A.O. DISALLOWED THE EXPENDITURE BY HOLDING REPAIR TO THE ROAD IS A CAPITAL EXPENDITURE SINCE IT IS NOT A REVENUE EXPENDITURE. THEREFORE, SUCH EXPENSES CANNOT BE CLAIMED. 30. THEREAFTER APPEAL BEFORE THE LD. CIT(A) HAS HELD APPELLANT HAS FAILED TO PROVE THAT ANY EXISTING ROADS HAVE BEEN REPAIRED BY THE SAID CONTRACTOR THAT IN THE ABSENCE OF ANY DEFINITION OF NATURE OF HIS WORK, APPELLANT OUGHT TO HAVE CAPITALIZED THE ABOVE EXPENDITURE OF RS. 9,41,591/- ALONG WITH OTHER WORK CARRIED OUT OF RS. 35,67,601/- FROM THE SAME PARTY AND APPELLANT HAS MADE AN ATTEMPT TO CLAIM THE AFORESAID EXPENDITURE AS REVENUE WITHOUT ANY BASIS AND JUST TO REDUCE ITS INCOME WHICH IS NOT PERMISSIBLE AND CONFIRMED THE ACTION OF THE A.O. 31. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE IMPUGNED ORDER. THE LD. A.O. HAS MADE DISALLOWANCE FOR THE REASON THAT PAYMENTS WERE MADE FOR NEW WORK IN RESPECT OF ROAD WHICH WAS CAPITAL IN NATURE. THUS, EXPENDITURE WERE REQUIRED TO BE CAPITALIZED WITH THE COST OF THE ROAD IF ABOVE SAID IS A CAPITAL EXPENDITURE IN THAT CASE APPELLANT IS ENTITLED TO BET DEPRECIATION AS PER LAW. THEREFORE, WE SET ASIDE MATTER TO THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO CALCULATE THE DEPRECIATION AND GAVE HIM BENEFIT OF THE SAME. 32. THUS, THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 934/AHD/2015 FOR A.Y. 2011-12 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE MEMBERS MAY KINDLY BE PLEASED TO HOLD THAT THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER AND ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 10 CONFIRMED BY THE LD. CIT (APPEALS) IS BAD IN LAW AND ON FACTS, ON DUE APPRECIATION OF ANY ONE OR MORE OF THE FOLLOWING CONTENTIONS: 1. TO DELETE DISALLOWANCE OF ADMINISTRATION & COLLECTION CHARGES U/S 14A OF RS.1,91,178/- (I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE FACTS, HON'BLE COMMISSIONER OF INCOME TAX HAS RETAINED DISALLOWANCE OF ADMINISTRATION AND COLLECTION CHARGES OF RS. 1,91,178/- BY APPLYING RULE 8D ON ADHOC AND AUTOMATIC BASIS. SEC. 14(A) COMES INTO EFFECT FOR DEEMING DISALLOWANCE AND RESORTING TO RULE-80 ONLY IN THE CASE OF WHEN THE ASSESSING OFFICER IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. (II) THAT HON'BLE MEMBERS OF ITAT IN ASSESSEE'S OWN CASE IN ASST. YEAR 2009-10 HAS DELETED THE DISALLOWANCE OF ADMINISTRATION AND MANAGEMENT EXPENSES. THERE IS NO CHANGE IN FACTS AND ALSO INVESTMENTS PATTERN AND QUANTUM HAS ALSO REMAINED THE SAME, THE APPELLANT COMPANY REQUESTS THE MEMBERS TO FOLLOW THE PRECEDENT SET IN EARLIER YEAR. (III) THAT THE MAJORITY OF INVESTMENTS ARE MADE IN THE ASSOCIATE CONCERNS FOR STRATEGIC PURPOSE ON LONG TERM BASIS AS PROMOTER'S CONTRIBUTION AND NOT FOR EARNING DIVIDEND OR SIMILAR EXEMPT INCOME. (IV) THAT THE APPELLANT COMPANY ITSELF HAS DISALLOWED RS.2 LACS BY GIVING BIFURCATION OF EXPENSES WHICH ARE RELATABLE TO ADMINISTRATION COST OF MAINTAINING INVESTMENTS. (V) THAT THE APPELLANT COMPANY REQUEST TO DELETE THE DISALLOWANCE OF ADMINISTRATION AND COLLECTION CHARGES OF RS. 1.91.178/- IN VIEW OF THE FACT THAT A SUM OF RS.2,00,000/- HAS ALREADY BEEN DISALLOWED BY YOUR APPELLANT IN THE COMPUTATION OF INCOME, NO FURTHER DISALLOWANCE EVEN TOWARDS ADMINISTRATIVE EXPENSES IS NOT WARRANTED AND THEREFORE THE DISALLOWANCE MAY KINDLY BE DELETED IN FULL. 2. TO DELETE THE ADHOC DISALLOWANCE OF TRAVELING EXPENSES OF DIRECTORS OF RS.10,00,000/-. (I) THAT THE APPELLANT COMPANY IS AGGRIEVED BY THE DISALLOWANCE OF TRAVELING EXPENDITURE RETAINED BY HON'BLE COMMISSIONER OF INCOME TAX ON ADHOC BASIS IN CONTRADICTION TO HIS OWN FINDINGS. (II) THAT THE APPELLANT COMPANY IS IN THE BUSINESS SINCE LAST MORE THAN 36 YEARS AND HAS EXPORTS IN U.S.A. AND EUROPEAN AND SOUTH ASIAN COUNTRIES. (III) THAT THE DISALLOWANCE MADE BY LD. ASSESSING OFFICER IN RESPECT OF TRAVELING EXPENDITURE OF RS. 10,00,000/- AND RETAINED BY HON'BLE COMMISSIONER OF INCOME TAX (A) IS ARBITRARY, ADHOC AND AGAINST THE FACTS OF THE COMPANY AND REQUIRED TO BE DELETED IN FULL. ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 11 (IV) THAT THE ARBITRARY DISALLOWANCE OF TRAVELLING EXPENDITURE WITHOUT IDENTIFYING ANY EXPENDITURE OF PERSONAL OR NON-BUSINESS NATURE, THE DISALLOWANCE MADE BY LD. A.O. AND RETAINED BY HON'BLE COMMISSIONER OF INCOME TAX REQUIRED TO BE DELETED IN FULL. 2. TO DELETE DISALLOWANCE OF REPAIRS TO BUILDING EXPENSES OF RS.6.38,871/-. (I) THAT THE APPELLANT COMPANY HAS INCURRED EXPENDITURE FOR CURRENT REPAIRS TO ITS EXISTING BUILDING OF RS.94.63 LACS. (II) THE ASSESSEE COMPANY HAS BUILDINGS OF RS. 1630.35 LACS. (III) THAT THE EXPENDITURE IS IN THE NATURE OF CURRENT REPAIRS OF ITS EXISTING BUILDING AND ACCORDINGLY THE SAME ARE TO BE ALLOWED AND DISALLOWANCE OF EXPENDITURE MADE BY THE ASSESSING OFFICER OF RS. 6,38,871/- WITHOUT VERIFYING THE FACTS IS REQUIRED TO BE DELETED. THAT YOUR HONOUR MAY KINDLY BE PLEASED TO GRANT SUCH FURTHER OR ALTERNATIVE RELIEFS AS ARE JUST AND EQUITABLE ON DUE APPRECIATION OF FACTS SUBMITTED & FILED BEFORE YOUR HONOUR AND FURTHER IT CRAVES YOUR HONOUR'S LEAVE TO ADD OR AMEND ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR IN THE COURSE OF HEARING. 33. IN THIS APPEAL, ASSESSEE HAS TAKEN GROUND OF DISALLOWANCE OF ADDITION U/S. 14A OF RS. 1,91,178/- AND (II) ASSESSEE HAS REQUESTED THAT LD. CIT(A) HAS ERRED MAKING DISALLOWANCE OF ON FOREIGN TRAVEL EXPENSES BY THE DIRECTOR U/S. 37(1) OF RS. 10,00,000/-. 34. SINCE ALREADY IN CONNECTED APPEAL IN ITA NO. 876/AHD/2015, WE HAVE GRANTED PARTLY RELIEF TO THE ASSESSEE. SO, IN PARITY WITH THE AFORESAID ORDER, THE ASSESSEE HAS ALREADY DISALLOWED AN AMOUNT OF RS. 2,00,000/- U/S. 14A THEREFORE NO FURTHER DISALLOWANCE IS REQUIRED. IN RESPECT OF DISALLOWANCE OF TRAVELLING EXPENSES IS RESTRICTED TO RS. 5,00,000/-. 35. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 2844/AHD/2017 FOR A.Y. 2013-14 ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 12 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE MEMBERS MAY KINDLY BE PLEASED TO HOLD THAT THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT (APPEALS) IS BAD IN LAW AND ON FACTS, ON DUE APPRECIATION OF ANY ONE OR MORE OF THE FOLLOWING CONTENTIONS: 1. TO DELETE DISALLOWANCE AND ADDITION MADE U/S 14A OF RS.5.49.105/- (I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE FACTS, HON'BLE COMMISSIONER OF INCOME TAX HAS RETAINED DISALLOWANCE OF ADMINISTRATION AND COLLECTION CHARGES OF RS. 63,,510/- BY APPLYING RULE 8D ON ADHOC AND AUTOMATIC BASIS. SEC. 14(A) COMES INTO EFFECT FOR DEEMING DISALLOWANCE AND RESORTING TO RULE-80 ONLY IN THE CASE OF WHEN THE ASSESSING OFFICER IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. (II) THAT HON'BLE MEMBERS OF ITAT IN ASSESSEE'S OWN CASE IN ASST. YEAR 2009-10 HAS DELETED THE DISALLOWANCE OF ADMINISTRATION AND MANAGEMENT EXPENSES. THERE IS NO CHANGE IN FACTS AND ALSO INVESTMENTS PATTERN AND QUANTUM HAS ALSO REMAINED THE SAME, THE APPELLANT COMPANY REQUESTS THE MEMBERS TO FOLLOW THE PRECEDENT SET IN EARLIER YEAR. (III) THAT THE MAJORITY OF INVESTMENTS ARE MADE IN THE ASSOCIATE CONCERNS FOR STRATEGIC PURPOSE ON LONG TERM BASIS AS PROMOTER'S CONTRIBUTION AND NOT FOR EARNING DIVIDEND OR SIMILAR EXEMPT INCOME. (IV) THAT THE APPELLANT COMPANY ITSELF HAS DISALLOWED RS.4 LACS BY GIVING BIFURCATION OF EXPENSES WHICH ARE RELATABLE TO ADMINISTRATION COST OF MAINTAINING INVESTMENTS. (V) THAT THE APPELLANT COMPANY REQUEST TO DELETE THE DISALLOWANCE OF ADMINISTRATION AND COLLECTION CHARGES OF RS. 5.49.105/- IN VIEW OF THE FACT THAT A SUM OF RS.4,00,000/- HAS ALREADY BEEN DISALLOWED BY YOUR APPELLANT IN THE COMPUTATION OF INCOME, NO FURTHER DISALLOWANCE EVEN TOWARDS ADMINISTRATIVE EXPENSES IS NOT WARRANTED AND THEREFORE THE DISALLOWANCE MAY KINDLY BE DELETED IN FULL. 2. TO DELETE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF FOREIGN TRAVELLING EXPENSES BY THE DIRECTOR U/S 37(1) OF RS.10,00,000/- (VI) THAT THE APPELLANT COMPANY IS AGGRIEVED BY THE DISALLOWANCE OF TRAVELING EXPENDITURE RETAINED BY HON'BLE COMMISSIONER OF INCOME TAX ON ADHOC BASIS IN CONTRADICTION TO HIS OWN FINDINGS. (VII) THAT THE APPELLANT COMPANY IS IN THE BUSINESS SINCE LAST MORE THAN 36 YEARS AND HAS EXPORTS IN U.S.A. AND EUROPEAN AND SOUTH ASIAN COUNTRIES. (VIII) THAT THE DISALLOWANCE MADE BY LD. ASSESSING OFFICER IN RESPECT OF TRAVELING EXPENDITURE OF RS. 10,00,000/- AND RETAINED BY HON'BLE COMMISSIONER OF INCOME ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 13 TAX (A) IS ARBITRARY, ADHOC AND AGAINST THE FACTS OF THE COMPANY AND REQUIRED TO BE DELETED IN FULL. (IX) THAT THE ARBITRARY DISALLOWANCE OF TRAVELLING EXPENDITURE WITHOUT IDENTIFYING ANY EXPENDITURE OF PERSONAL OR NON-BUSINESS NATURE, THE DISALLOWANCE MADE BY LD. A.O. AND RETAINED BY HON'BLE COMMISSIONER OF INCOME TAX REQUIRED TO BE DELETED IN FULL. THAT YOUR HONOUR MAY KINDLY BE PLEASED TO GRANT SUCH FURTHER OR ALTERNATIVE RELIEFS AS ARE JUST AND EQUITABLE ON DUE APPRECIATION OF FACTS SUBMITTED & FILED BEFORE YOUR HONOUR AND FURTHER IT CRAVES YOUR HONOUR'S LEAVE TO ADD OR AMEND ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR IN THE COURSE OF HEARING. 36. IN THIS APPEAL, ASSESSEE HAS TAKEN GROUND OF DISALLOWANCE OF ADDITION U/S. 14A OF RS. 5,49,105/- AND (II) ASSESSEE HAS REQUESTED THAT LD. CIT(A) HAS ERRED MAKING DISALLOWANCE OF ON FOREIGN TRAVEL EXPENSES BY THE DIRECTOR U/S. 37(1) OF RS. 10,00,000/-. 37. SINCE ALREADY IN CONNECTED APPEAL IN ITA NO. 876/AHD/2015, WE HAVE GRANTED PARTLY RELIEF TO THE ASSESSEE. SO, IN PARITY WITH THE AFORESAID ORDER, NO FURTHER DISALLOWANCE U/S. 14A IS REQUIRED AND DISALLOWANCE OUT OF TRAVELLING EXPENSES IS RESTRICTED RS. 5,00,000/-. 38. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 2845/AHD/2017 FOR A.Y. 2014-15 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE MEMBERS MAY KINDLY BE PLEASED TO HOLD THAT THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT (APPEALS) IS BAD IN LAW AND ON FACTS, ON DUE APPRECIATION OF ANY ONE OR MORE OF THE FOLLOWING CONTENTIONS: 1. TO DELETE DISALLOWANCE AND ADDITION MADE U/S 14A OF RS.1.76,603/- (I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE FACTS, HON'BLE COMMISSIONER OF INCOME TAX HAS RETAINED DISALLOWANCE OF ADMINISTRATION AND COLLECTION CHARGES OF RS. 1,76,603/- BY APPLYING RULE 8D ON ADHOC AND AUTOMATIC BASIS. SEC. 14(A) COMES INTO EFFECT FOR DEEMING DISALLOWANCE AND RESORTING TO RULE-80 ONLY IN THE ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 14 CASE OF WHEN THE ASSESSING OFFICER IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. (II) THAT HON'BLE MEMBERS OF ITAT IN ASSESSEE'S OWN CASE IN ASST. YEAR 2009-10 HAS DELETED THE DISALLOWANCE OF ADMINISTRATION AND MANAGEMENT EXPENSES. THERE IS NO CHANGE IN FACTS AND ALSO INVESTMENTS PATTERN AND QUANTUM HAS ALSO REMAINED THE SAME, THE APPELLANT COMPANY REQUESTS THE MEMBERS TO FOLLOW THE PRECEDENT SET IN EARLIER YEAR. (III) THAT THE MAJORITY OF INVESTMENTS ARE MADE IN THE ASSOCIATE CONCERNS FOR STRATEGIC PURPOSE ON LONG TERM BASIS AS PROMOTER'S CONTRIBUTION AND NOT FOR EARNING DIVIDEND OR SIMILAR EXEMPT INCOME. (IV) THAT THE APPELLANT COMPANY ITSELF HAS DISALLOWED RS.5 LACS BY GIVING BIFURCATION OF EXPENSES WHICH ARE RELATABLE TO ADMINISTRATION COST OF MAINTAINING INVESTMENTS. (V) THAT THE APPELLANT COMPANY REQUEST TO DELETE THE DISALLOWANCE OF ADMINISTRATION AND COLLECTION CHARGES OF RS. 5.49.105/- IN VIEW OF THE FACT THAT A SUM OF RS.5,00,000/- HAS ALREADY BEEN DISALLOWED BY YOUR APPELLANT IN THE COMPUTATION OF INCOME, NO FURTHER DISALLOWANCE EVEN TOWARDS ADMINISTRATIVE EXPENSES IS NOT WARRANTED AND THEREFORE THE DISALLOWANCE MAY KINDLY BE DELETED IN FULL. 2. TO DELETE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF FOREIGN TRAVELLING EXPENSES BY THE DIRECTOR U/S 37(1) OF RS.10,00,000/- (VI) THAT THE APPELLANT COMPANY IS AGGRIEVED BY THE DISALLOWANCE OF TRAVELING EXPENDITURE RETAINED BY HON'BLE COMMISSIONER OF INCOME TAX ON ADHOC BASIS IN CONTRADICTION TO HIS OWN FINDINGS. (VII) THAT THE APPELLANT COMPANY IS IN THE BUSINESS SINCE LAST MORE THAN 36 YEARS AND HAS EXPORTS IN U.S.A. AND EUROPEAN AND SOUTH ASIAN COUNTRIES. (VIII) THAT THE DISALLOWANCE MADE BY LD. ASSESSING OFFICER IN RESPECT OF TRAVELING EXPENDITURE OF RS. 10,00,000/- AND RETAINED BY HON'BLE COMMISSIONER OF INCOME TAX (A) IS ARBITRARY, ADHOC AND AGAINST THE FACTS OF THE COMPANY AND REQUIRED TO BE DELETED IN FULL. (IX) THAT THE ARBITRARY DISALLOWANCE OF TRAVELLING EXPENDITURE WITHOUT IDENTIFYING ANY EXPENDITURE OF PERSONAL OR NON-BUSINESS NATURE, THE DISALLOWANCE MADE BY LD. A.O. AND RETAINED BY HON'BLE COMMISSIONER OF INCOME TAX REQUIRED TO BE DELETED IN FULL. THAT YOUR HONOUR MAY KINDLY BE PLEASED TO GRANT SUCH FURTHER OR ALTERNATIVE RELIEFS AS ARE JUST AND EQUITABLE ON DUE APPRECIATION OF FACTS SUBMITTED & FILED BEFORE YOUR HONOUR AND FURTHER IT CRAVES YOUR HONOUR'S LEAVE TO ADD OR AMEND ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR IN THE COURSE OF HEARING. ITA NOS. 934/AHD/2015 AND ORS. . A.YS. 2010-11 TO 2014-15 15 39. IN THIS APPEAL, ASSESSEE HAS TAKEN GROUND OF DISALLOWANCE OF ADDITION U/S. 14A OF RS. 1,76,603/- AND (II) ASSESSEE HAS REQUESTED THAT LD. CIT(A) HAS ERRED MAKING DISALLOWANCE OF ON FOREIGN TRAVEL EXPENSES BY THE DIRECTOR U/S. 37(1) OF RS. 10,00,000/-. 40. SINCE ALREADY IN CONNECTED APPEAL IN ITA NO. 876/AHD/2015, WE HAVE GRANTED PARTLY RELIEF TO THE ASSESSEE. SO, IN PARITY WITH THE AFORESAID ORDER, NO FURTHER DISALLOWANCE U/S. 14A IS REQUIRED AND DISALLOWANCE OUT OF TRAVELLING EXPENSES IS RESTRICTED RS. 5,00,000/-. 41. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 42. IN THE COMBINED RESULT, ALL APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 27 - 08- 2021 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 27/08/2021 RAJESH COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD