ITO Ward-16(2) New Delhi, v. Technava India (P) Ltd,

ITA 2518/DEL/2006 | 2001-2002
Pronouncement Date: 05-02-2010 | Result: Dismissed

Appeal Details

RSA Number 251820114 RSA 2006
Bench Delhi
Appeal Number ITA 2518/DEL/2006
Duration Of Justice 3 year(s) 6 month(s) 15 day(s)
Appellant ITO Ward-16(2) New Delhi,
Respondent Technava India (P) Ltd,
Appeal Type Income Tax Appeal
Pronouncement Date 05-02-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 05-02-2010
Date Of Final Hearing 02-02-2010
Next Hearing Date 02-02-2010
Assessment Year 2001-2002
Appeal Filed On 21-07-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND SHRI B.P. JAIN ACCOUNTANT MEMBER I.T.A.NO.2518/DEL/2006 ASSESSMENT YEAR : 2001-02 INCOME-TAX OFFICER M/S. TECNOVA INDIA PVT. LTD. WARD 16(2) NEW DELHI. VS. A-10 GREEN PARK NEW DELHI. C.O. NO.167/DEL/2008 ASSESSMENT YEAR : 2001-02 M/S. TECNOVA INDIA (P) LTD. ADDL. COMMISSIONER OF INCOME-TAX A-10 GREEN PARK VS. RANGE-16 NEW DELHI. (APPELLANTS) (RESPONDENTS) DEPARTMENT BY : SHRI G.S. SAHOTA SR. DR. RESPONDENT BY : SHRI ASHWANI TANEJA CA. O R D E R PER B.P. JAIN ACCOUNTANT MEMBER. THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIO NER OF INCOME-TAX 2 (APPEALS)-XIX NEW DELHI DATED 28.04.2006 IN AN AP PEAL AGAINST THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE INCOM E-TAX ACT (THE ACT). 2. GROUND NO.1 RAISED BY THE REVENUE IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1 8 7 626/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PURCHASE OF FRESH FLOWERS AND PLANTS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S PAID RS.1 87 626/- TO M/S. TAJ NURSERY/GARDEN CENTRE FOR THE PURCHASE OF PLANTS ON REGULAR BASIS. ON A SHOW CAUSE GIVEN FOR TREATING THE SAID EXPENDI TURE AS CAPITAL EXPENDITURE THE ASSESSEE SUBMITTED THE EXPLANATION VIDE LETTER DATED 16.3.2004 THAT THE ASESSEE HAS PURCHASED FRESH FLOW ERS FOR DAILY DECORATION TO DISPLAY IN VARIOUS LOCATIONS SUCH AS MAIN ENTRAN CE RECEPTION AND VARIOUS CABINS CONSIDERING THE NATURE OF BUSINESS AND DEALI NG WITH FOREIGN CLIENTS WHICH IS NECESSARY FOR THE MAINTENANCE AND SURVIVAL OF BUSINESS. THE BILLS FOR THE SAID EXPENSES WERE PRODUCED AND SUBMITTED T HAT THE EXPENSES INCURRED ARE ONLY FOR THE PURPOSE OF BUSINESS. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND OBSERVED THAT SUCH HUGE AMOUNT ON THE PURCHASE OF PLANTS DEFINITELY ACT IN A LONG WAY TO ENHANCE THE ASSESSEES IMAGE AND IS OF ENDURING NATURE AND THER EFORE TREATED THE SAME AS CAPITAL EXPENDITURE AND ALLOWED DEPRECIATION @ 10% AND ACCORDINGLY ADDED RS.1 68 861/- TO THE INCOME OF THE ASSESSEE. THE L EARNED CIT(A) ACCEPTED 3 THE EXPLANATION OF THE ASSESSEE AND RELYING UPON TH E DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF EMPIRE JUTE CO. LTD. V S. CIT (1980) 124 ITR 1 HELD THAT THE EXPENDITURE INCURRED BY THE ASSESS EE ON PURCHASE OF FLOWERS AND ORNAMENTAL PLANTS IS AN ALLOWABLE BUSINESS EXPE NDITURE AND NOT AS A CAPITAL EXPENDITURE. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE LEARNED DR SHRI G.S. SAHOTA RELIED UPON THE ORD ER OF THE AO AND ARGUED THAT THE PURCHASE OF THE FLOWERS ENHANCES THE REPUT ATION OF THE ASSESSEE WHICH IS OF ENDURING IN NATURE AND THEREFORE THE S AID EXPENDITURE HAS RIGHTLY BEEN TREATED AS CAPITAL EXPENDITURE BY THE AO. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE SHRI ASHWANI TANEJ A CA RELIED UPON THE ORDER OF THE LEARNED CIT(A). IN THE PRESENT CASE T HE ASSESSEE HAS PURCHASED FRESH FLOWERS AND ORNAMENTAL PLANTS WHICH ARE PERI SHABLE IN NATURE. THE AO HAS NOT DOUBTED THE GENUINENESS OF THE EXPENDITU RE. THE TEST APPLIED BY THE AO THAT THE EXPENDITURE ON FLOWERS ENHANCES THE ASSESSEES IMAGE AND IS OF ENDURING IN NATURE IS WITHOUT ANY BASIS AND THE SAME CANNOT BE APPLIED MECHANICALLY WITHOUT HAVING REGARD TO THE PARTICULA R FACTS AND CIRCUMSTANCES OF THE CASE. IN THE PRESENT CASE THE ASSESSEE HAS EARNED A CONSULTANCY RECEIPTS OF RS.2 68 08 545/- AND EXPENDITURE OF RS. 1 87 623/- APPEARS TO BE REASONABLE AND CANNOT BE SAID TO BE EXCESSIVE. BY INCURRING SUCH AN 4 EXPENDITURE NO ASSET OF ENDURING NATURE IS CREATED BY THE ASSESSEE AND THEREFORE IN VIEW OF THE DECISION OF HONBLE SUPRE ME COURT IN THE CASE OF EMPIRE JUTE CO. LTD. (SUPRA) THE SAID EXPENDITURE HAS RIGHTLY BEEN TREATED AS REVENUE EXPENDITURE BY THE LEARNED CIT(A). WE FIND NO INFIRMITY IN HIS ORDER. THUS GROUND NO.1 OF THE REVENUE IS DISMISSE D. 5. GROUND NO.2 OF THE REVENUE IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.7 0 9 136/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROVISION FO R LEAVE ENCASHMENT PAYABLE TO THE EMPLOYEES. 6. THE BRIEF FACTS OF THE CASE AS PER PARA 7 OF THE AOS ORDER ARE AS UNDER:- IT HAS BEEN NOTICED THAT THE ASSESSEE HAS CREDITE D A PROVISION OF RS.7 09 136/- ON ACCOUNT OF LEAVE ENCA SHMENT AND DEBITED THE SAME FROM PROFIT AND LOSS ACCOUNT. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS B EEN ASKED TO EXPLAIN AS TO WHY THE SAME SHALL NOT BE DISALLOW ED. IN A LETTER DATED 16.3.2004 THE ASSESSEES REPRESENTATIV E FURNISHED THE EXPLANATION AS FOLLOWS: THE ASSESSEE COMPANY HAS PROVIDED A SUM OF RS.7 09 136/- PAYABLE IN LIEU OF LEAVE AT THE CREDIT OF HIS EMPLOYEE DURING THE YEAR UNDER CONSIDERATION AND CLAIMED AS REVENUE EXPENSES ON THE BASIS OF JUDGEMENT OF BHARAT EARTH MOVERS VS. CIT (2000) 245 ITR 428 OF HONBLE SUPREME COURT. IT WAS HELD THAT IF A BUSINESS LIABILITY HA S DEFINITELY ARISEN IN THE ACCOUNTING YEAR THE DEDUCTION SHOULD BE ALLOWED ALTHOUGH THE LIABILITY MAY HAVE TO BE QUANTIFIED AND DISCHARGED AT A FUTURE DATE. HOWEVER SUB CLAUSE (F) OF SECTION 5 43B OF THE INCOME TAX ACT WAS INSERTED WITH EFFECT FROM 1.4.2002 (BY FINANCE ACT 2001) STATING THAT ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER IN LIEU OF ANY LEAVE AT THE CREDIT OF HIS EMPLOYEE SHALL BE ALLOWED ONLY IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF THE PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM. THEREFORE PROVISION OF SECTION 43B(F) IS NOT APPLICABLE TO THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION AS THE SAME IS INSERTED FROM 1 ST APRIL 2002. ACCORDINGLY PROVISION FOR AMOUNT PAYABLE TO EMPLOYEE IN LIEU OF LEAVE IS ALLOWABLE EXPENDITURE IN THE YEAR THE LIABILITY HAS ARISEN AS PER THE PROVISION APPLICABLE PRIOR TO THE AMENDMENT OF SECTION 43B. THE ABOVE EXPLANATION HAS BEEN PERUSED AND I TEND TO DISAGREE WITH THE VIEW POINTS EXPRESSED BY THE ASSE SSEE. THE ASSESSEE AHS NOT GIVEN ANY BASIS ON WHICH PROVISION OF RS.7 09 136/- IS MADE ON ACCOUNT OF LEAVE ENCASHMEN T. ASSESSEE HAS ALSO BEEN ASKED PROVIDE THE DOCUMENTAR Y EVIDENCES FOR CREATING THIS LIABILITY I.E. IN THE S HAPE OF CLAIMS TO BE FORWARDED BY THE EMPLOYEES WHICH REMAINED PENDIN G AS ON 31.3.2001 ETC. BUT HERE ALSO ASSESSEE FAILED TO FU RNISH ANY EVIDENCES. AS THE PROVISION FOR THIS LIABILITY IS CREDITED WITHOUT ANY EVIDENCES HENCE THE SAME SHALL BE DISALLOWED TREATING THIS AS A CONTINGENT LIABILITY AND ADDED BACK TO THE INC OME. CONCEALMENT PENALTY PROCEEDINGS U/S 271(1)(C) SHALL BE INITIATED FOR THE SAME. THE LEARNED CIT(A) VIDE PARA 14.1 OF HIS ORDER HELD THAT THE PROVISION HAS BEEN MADE ON THE BASIS OF SCHEME OF LEAVE ENCASHMEN T WHICH PERMITS QUANTIFICATION OF ESTIMATED LIABILITY AND THE DEDUC TION OF THE PROVISION IS ALLOWABLE ALTHOUGH THE LIABILITY IS DISCHARGED AT A FUTURE DATE. THE SAID PROVISION IS BASED ON THE ACTUARIAL VALUATION CERTI FICATE. THE LEARNED CIT(A) 6 ON THE SIMILAR FACTS RELIED UPON THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF BHARAT EARTH MOVERS VS. CIT 245 ITR 42 8 AND IN THE CASE OF METAL BOX CO. OF INDIA LTD. VS. THEIR WORKMEN 73 I TR 53 (SC) AND ACCORDINGLY ALLOWED THE CLAIM OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LEARNED CIT(A) THAT WHERE THE PROVISION IS MADE ON THE BASIS OF SCHEME OF LEAVE ENCASHMENT TH E DEDUCTION OF PROVISION IS ALLOWABLE ALTHOUGH THE LIABILITY IS DI SCHARGED AT A FUTURE DATE. IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN TH E CASE OF BHARAT EARTH MOVERS (SUPRA) AND METAL BOX CO. OF INDIA LTD. (SUP RA). SECTION 43B(F) OF THE ACT WAS INSERTED WITH EFFECT FROM 1.4.2002 APPL ICABLE FOR THE ASSESSMENT YEAR 2002-03 WHEREAS THE PRESENT ISSUE IS FOR THE A SSESSMENT YEAR 2001-02. THEREFORE IN THE CIRCUMSTANCES AND FACTS OF THE CA SE AND THE DECISIONS RELIED UPON WE FIND NO INFIRMITY IN THE ORDER OF THE LEAR NED CIT(A). THUS GROUND NO.2 OF THE REVENUE IS DISMISSED. 8. GROUND NO.3 OF THE REVENUE READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2 2 7 168/- MADE BY THE ASSESSING OFFICER OUT OF REPAIR AND MAINTENA NCE EXPENSES ON ACCOUNT OF REFURNISHING AND PARTITIONI NG OF THE OFFICE PREMISES. 7 9. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS PAID RS.2 27 168/- TO M/S. BANYAN TREE. IT WAS SUBMITTED BY THE ASSES SEE THAT THE SAID EXPENSES HAD BEEN INCURRED FOR REPAIR REFURNISHING TEMPORA RY PARTITION ETC. COPIES OF THE BILLS WERE ALSO PRODUCED ALONG WITH THE LETTER DATED 16.2.2004. THE AO OBSERVED SUCH EXPENDITURE IS OF CAPITAL IN NATURE A ND THEREFORE CONSIDERED RS.2 07 148/- OUT OF THE SAID EXPENDITURE BEING OF CAPITAL IN NATURE AND AFTER ALLOWING DEPRECIATION MADE AN ADDITION OF RS.1 97 0 47/-. THE LEARNED CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASS ESSEE AND RELYING UPON THE DECISION OF VARIOUS COURTS OF LAW ALLOWED THE C LAIM OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE HAS NOT DERIVED ANY END URING BENEFIT BY INCURRING SUCH EXPENDITURE. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT TEM PORARY ALTERATION AND PARTITION OF THE OFFICE SPACE WAS DONE TO MAKE THE OFFICE PRESENTABLE TO FOREIGN CLIENTS AND ALSO TO INCREASE EFFICIENCY OF THE WORKERS. THE RENTED PREMISES FOR WHICH THE PERMISSION FROM THE LESSOR W AS TAKEN AND THE SAME WAS PLACED ON RECORD. RELIANCE HAS BEEN PLACED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF IN STALMENT SUPPLY PVT. LTD. VS. CIT 149 ITR 52 (DEL) AND CIT VS. HI LINE PENS PVT. LTD. (2008 306 ITR 182 (DEL) ON THE SIMILAR FACTS. IN THE PRESENT CAS E THE EXPENSES INCURRED BY 8 THE ASSESSEE WERE TOWARDS REPAIR OF THE PREMISES TA KEN ON LEASE TO MAKE THEM MORE CONDUCIVE TO ITS BUSINESS ACTIVITIES AND NO NEW CAPITAL ASSET HAS BEEN CREATED AND THERE WAS NO INTENTION OF THE ASSE SSEE TO BRING ANY NEW CAPITAL ASSET INTO EXISTENCE. THEREFORE SUCH EXPE NDITURE ON THE REPAIRS COULD FALL UNDER SECTION 30(A)(I) WHICH IS AN ALLOWABLE E XPENDITURE. IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE LEARNED CIT (A) HAS RIGHTLY ACCEPTED THE EXPLANATION OF THE ASSESSEE AND WE FIND NO INFI RMITY IN HIS ORDER. THUS GROUND NO.3 OF THE REVENUE IS DISMISSED. 11. GROUND NO.4 OF THE REVENUE READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1 6 0 000/- MADE BY THE ASSESSING OFFICER OUT OF REPAIR AND MAINTENA NCE ON ACCOUNT OF EXPENDITURE INCURRED FOR INSTALLATION ON CONCRETE INTERLOCKING BLOCKS MUD PHASKA TILES GLAZED DOORS AND FIXING CHARGES. 12. THE BRIEF FACTS OF THE CASE AS PER PARA 9 AT PA GE 7 OF THE ASSESSING OFFICERS ORDER ARE AS UNDER:- REPAIR & MAINTENANCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT HA S BEEN NOTICED THAT THE ASSESSEE HAS INCURRED FOLLOWING AM OUNTS TOWARDS INSTALLATION OF CONCRETE INTERLOCKING BLOCK S FOR RS.84 000/- MUD PHASKA TILES FOR RS.26 000/- GLAZ ED DOORS FOR RS.49 000/- AND FIXING CHARGES FOR RS.1000/-. ASSE SSEE HAS BEEN ASKED TO EXPLAIN AS TO WHY THE SAME SHOULD NOT BE TAKEN AS CAPITAL EXPENDITURE. EXCEPT FILING THE BILLS FOR T HIS EXPENDITURE ASSESSEE HAS NOT FURNISHED ANY OTHER EXPLANATION IN SUPPORT OF ITS CLAIM. ACCORDINGLY SAME ARE TREATED AS CAPITA L EXPENDITURE 9 AND DEPRECIATION SHALL BE ALLOWED. THESE ASSETS HA VE BEEN PUT TO USE FOR LESS THAN 180 DAYS ACCORDINGLY DEPRECI ATION @ 5% SHALL BE GRANTED TO THE ASSESSEE WHICH COMES TO RS. 8000/-. ADDITION UNDER THIS HEAD IS WORKED OUT AT RS.1 52 0 00/- AFTER EXCLUDING DEPRECIATION. PENALTY PROCEEDINGS U/S 27 1(1)(C) IS INITIATED SEPARATELY. THE LEARNED CIT(A) FOLLOWING THE DECISION OF HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF INSTALLMENT SUPPLY PVT. LTD. ( SUPRA) HELD THAT THE ASSESSEE HAD INCURRED EXPENDITURE ON ALTERATIONS OR RENOVATION IN THE RENTED BUILDING AND THE ASSESSEE HAS NOT ACQUIRED ANY CAPI TAL ASSET AND THEREFORE ALLOWED THE CLAIM OF THE ASSESSEE. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LEARNED CIT(A) THAT BY INCURRING SUCH EXPENDITURE IN THE RENTED PREMISES THE ASSESSEE HAS NOT CREATED ANY NEW CAPITAL ASSET AND THEREFORE THE LEARNED CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO RELYING UPON THE DECISION O F HONBLE DELHI HIGH COURT IN THE CASE OF INSTALLMENT SUPPLY PVT. LTD. ( SUPRA). THEREFORE WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). T HUS GROUND NO.4 OF THE REVENUE IS DISMISSED. 14. GROUND NO.5 OF THE APPEAL OF THE REVENUE READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.19 43 477/- MADE BY THE ASSESSING OFFICER OUT OF PROFESSIONAL C HARGES. 10 15. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AD PAID PROFESSIONAL CHARGES OF RS.34 62 474/- TO VARIOUS PARTIES. THE ASSESSEE WAS REQUIRED TO FILE THE CONFIRMATION LETTERS AND THE ASSESSEE HAD SUBMITTED THE CONFIRMATION LETTERS OF VARIOUS PARTIES AMOUNTING TO RS.15 19 00 0/- BUT COULD NOT SUBMIT THE CONFIRMATION LETTERS FOR THE PROFESSIONAL CHARG ES AMOUNTING TO RS.19 43 477/-. THE AO ADDED THE SAME TO THE INCOM E OF THE ASSESSEE. BEFORE THE LEARNED CIT(A) THE ASSESSEE FILED ALL CO NFIRMATIONS WHICH COULD NOT BE SUBMITTED DURING THE ASSESSMENT PROCEEDINGS AS AN ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME-TAX RULES AND THE LEARNED CIT(A) FORWARDED THE SAME TO THE AO FOR COMMENTS. THE AO IN THE REPORT DATED 25.01.2005 SUBMITTED TO THE CIT(A) THAT THE ADDITIO NAL EVIDENCE SUBMITTED BY THE ASSESSEE COMPANY MAY BE ADMITTED AND THE CAS E MAY BE DECIDED ON MERITS. THE LEARNED CIT(A) BY ACCEPTING THE CONFIR MATIONS AND THE EXPLANATION OF THE ASSESSEE DELETED THE ADDITION M ADE BY THE AO. 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE C OULD NOT FURNISH CERTAIN CONFIRMATIONS DURING THE ASSESSMENT PROCEEDINGS WHI CH WERE FILED BEFORE THE LEARNED CIT(A) AS AN ADDITIONAL EVIDENCE AND AF TER THE REMAND REPORT ALL THE CONFIRMATIONS WERE CONSIDERED BY THE LEARNED CI T(A) WHICH CONTAINS THE CONFIRMATION OF RECEIPT OF PAYMENT AND THE INCOME-T AX PARTICULARS OF EACH 11 PARTY. THE ASSESSEE HAD BEEN MAKING SIMILAR PROFES SIONAL PAYMENTS IN THE NORMAL COURSE OF BUSINESS WHICH WERE ALLOWED IN TH E EARLIER YEARS BY THE DEPARTMENT. IN THE CIRCUMSTANCES AND FACTS OF THE CASE WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO. THUS GROUND NO.5 OF THE REVENUE IS DISM ISSED. 17. GROUND NO.6 OF THE REVENUE AND GROUND NO.1 IN T HE CROSS OBJECTION OF THE ASSESSEE READ AS UNDER:- REVENUES APPEAL ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.7 3 0 010/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF FOREIGN TRAV ELLING. ASSESSEES C.O. 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN S USTAINING THE DISALLOWANCE OF RS.17 50 044/- OUT OF RS.24 80 054/ - ON ACCOUNT OF FOREIGN TRAVELING EXPENSES AND FURTHER E RRED IN OBSERVING THAT EXPENSES INCURRED IN THIS REGARD WAS NOT FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. 18. BRIEF FACTS OF THE CASE AS PER PARA 11 AT PAGE 9 OF THE ASSESSMENT ORDER ARE AS UNDER:- 11. FOREIGN TRAVEL : THE ASSESSEE FURNISHED THE DETAILS OF FOREIGN TRAV ELLING FOR RS.24 84 054/-. AS PER THE DETAILS FILED SHRI AJAY MUTREJA AND AJAY YOGRAJ MD VISITED COUNTRIES LIKE GERMANY USA AUSTRALIA SWEDEN BELGIUM FRANCE SWITZERLAND HON G KONG FOR THE PURPOSE OF MARKETING. DURING THE COURSE OF 12 PROCEEDINGS THE ASSESSEE HAS BEEN SPECIFICALLY ASK ED TO FURNISH THE AIR TICKETS IN ORIGINAL ALONG WITH DATEWISE SCH EDULE IN THE FOREIGN COUNTRY. THE PERSONS ASSESSEE MET ABROAD A ND ANY CORRESPONDENCE MADE BY THE ASSESSEE WITH THE FOREIG N PARTIES BEFORE THE SPENT OF THE FOREIGN VISIT AND/OR AFTER THE FINISH OF THE FOREIGN VISIT. THE ASSESSEE FAILED TO FURNISH ANY EXPLANATION FOR THE SAME WHICH MEAN THAT THE ASSESSEE FAILED TO JUS TIFY THE NATURE OF EXPENDITURE ON FOREIGN TOURS. IN VIEW OF THIS EXPENDITURE OF RS.24 80 054/- STATED TO HAVE BEEN I NCURRED ON FOREIGN VISIT IS DISALLOWED BEING PERSONAL IN NATUR E. PENALTY PROCEEDINGS U/S 271(1)(C) SHALL BE INITIATED ACCORD INGLY. ADDITION: RS.24 84 054/-). BEFORE THE LEARNED CIT(A) THE ASSESSEE SUBMITTED CO PY OF CORRESPONDENCE WITH FOREIGN PARTIES AND COPY OF VISITING CARDS OF FOREIGN PARTIES. THE SAID ADDITIONAL EVIDENCES WERE SENT TO THE AO FOR THE RE PORT. THE AO SUBMITTED THAT SUCH ADDITIONAL EVIDENCES MAY BE ADMITTED AND THE CASE MAY BE DECIDED ON MERITS. THE LEARNED CIT(A) VIDE PARAS 26 27 & 28 OF HIS ORDER OBSERVED THAT SHRI AJAY MUTTREJA UNDERTOOK THE FOREIGN VISIT S FOR THE PURPOSE OF BUSINESS. WHEREAS THE VISITS UNDERTAKEN BY SHRI AB HEY YOGRAJ AND NEERA YOGRAJ TO BELGIUM FRANCE SINGAPORE AUSTRALIA SW ITZERLAND ITALY HAD NO APPARENT BUSINESS PURPOSE. THE REASONS GIVEN BY TH E LEARNED CIT(A) FOR CONSIDERING SUCH EXPENDITURE FOR NON-BUSINESS PURPO SE IS THAT ANY FOREIGN VISIT FOR THE PURPOSE OF BUSINESS WOULD BE PRECEDED BY CONTACT WITH POTENTIAL COLLABORATORS OR CLIENTS. THE VISIT WOULD BE FOLLO WED BY EXCHANGE OF MESSAGES AND DETAILED BUSINESS NEGOTIATIONS. NO SU CH EVIDENCE IS ON RECORD AND ACCORDINGLY THE LEARNED CIT(A) UPHELD THE ACTIO N OF THE AO FOR 13 DISALLOWANCE OF EXPENDITURE ON FOREIGN VISIT TO THE TUNE OF RS.17 50 044/- AND GRANTED RELIEF OF RS.7 30 010/- VIDE PARA 28 OF HIS ORDER. 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LEARNED CIT(A) THAT THE VISIT OF AJAY MUTTREJA IS MEANT FOR THE BUSINESS PURPOSE AND NOTH ING IS ON RECORD TO SHOW THAT ANY EXPENDITURE FOR THE PERSONAL PURPOSE HAS B EEN INCURRED BY SHRI AJAY MUTTREJA. THEREFORE THE LEARNED CIT(A) AFTER ADMI TTING THE ADDITIONAL EVIDENCE AND OBTAINING THE REMAND REPORT HAS RIGHTL Y ACCEPTED THE EXPLANATION OF THE ASSESSEE IN THIS REGARD. WE FIN D NO INFIRMITY IN HIS ORDER TO THE EXTENT OF THE EXPENDITURE INCURRED BY SHRI A JAY MUTTREJA. AS REGARDS THE EXPENDITURE INCURRED BY SHRI ABHEY YOGRAJ AND N EERA YOGRAJ TO VARIOUS COUNTRIES THE OBSERVATION OF THE LEARNED CIT(A) IS THAT ANY FOREIGN VISIT HAS TO BE PRECEDED BY CONTACT WITH POTENTIAL COLLABORAT ORS OR CLIENTS FOLLOWED BY EXCHANGE OF MESSAGES AND DETAILED BUSINESS NEGOTIAT IONS ETC. IN THIS REGARD THE LEARNED COUNSEL FOR THE ASSESSEE SHRI ASHWANI T ANEJA INVITED OUR ATTENTION TO THE SUBMISSIONS BEFORE THE LEARNED CIT (A) AT PAPER BOOK PAGES 33 TO 36 AND 40-41 WHERE THE DETAILS OF THE FOREIGN TRAVELLING WERE SUBMITTED ALONG WITH ITINERARIES FOR EVIDENCE. THE ASSESSEE HAS ALSO SUBMITTED THE DATE-WISE SCHEDULE IN THE FOREIGN COUNTRY FOR THE V ISITS OF THE SAID PERSONS ALONGWITH COPY OF CORRESPONDENCE WITH THE FOREIGN P ARTIES AND COPY OF 14 VISITING CARDS OF THE SAID PARTIES. A SPECIAL ATTE NTION WAS INVITED BY SHRI TANEJA LEANED COUNSEL FOR THE ASSESSEE AT PB PAGE 47 TO 77 WHERE THE DETAILED SCHEDULE OF THE VISIT OF VARIOUS PERSONS THE CONFERENCES THE DATES THE TIME THE TELEPHONE NUMBERS OF THE PARTIES VISI TED WERE SUBMITTED. THERE IS NOTHING ON RECORD THAT ANY PERSONAL EXPENDITURE HAS BEEN INCURRED BY ANY OF THE PERSONS. IT WAS ALSO SUBMITTED THAT THE ASS ESSEE EARNED MORE THAN 70% OF THE TURNOVER FROM THE FOREIGN CLIENTS I.E. R S.243.46 LAKH OUT OF THE TOTAL TURNOVER OF RS.268.08 LAC IS FROM THE FOREIGN CLIENTS. THEREFORE THE OBSERVATION OF THE LEARNED CIT(A) THAT THE ASSESSE HAS NOT SUBMITTED VARIOUS DETAILS FOR THE VISITS OF SHRI ABHEY YOGRAJ AND NEE RA YOGRAJ CANNOT BE ACCEPTED AND MOREOVER THERE IS NOTHING ON RECORD T O SHOW THAT THESE VISITS OF THE SAID PERSONS ARE PERSONAL VISITS AND NOTHING CAN BE CONCLUDED ON SURMISES AND CONJECTURES SPECIALLY WHEN ALL THE DET AILS HAVE BEEN SUBMITTED. IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE LEA RNED CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION AND THE SAME IS DIRECTED TO BE DELETED. THUS GROUND NO.6 OF THE REVENUE IS DISMISSED AND GROUND NO.1 RAISED IN THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 20. GROUND NOS. 2 TO 6 IN THE CROSS OBJECTION OF TH E ASSESSEE ARE NOT PRESSED AND THE SAME ARE THEREFORE DISMISSED AS NO T PRESSED. 15 ITA NO.2518/DEL/2006 & C.O. NO.167/DEL/2008 21. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED WHEREAS THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 5 TH FEBRUARY 2010. SD/- SD/- (A.D. JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 5 TH FEBRUARY 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.