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Income Tax Appellate Tribunal, DELHI BENCHES “G” : DELHI
Before: SHRI ANIL CHATURVEDI & SHRI ANUBHAV SHARMA
Date of Hearing : 26.07.2022 Date of Pronouncement : 11.08.2022 ORDER PER ANIL CHATURVEDI, A.M. :
The appeal filed by the Assessee against the order of the Ld. CIT(A), Ghaziabad, order dated 30.11.2018 vide Appeal No.586549801090117 for the A.Y. 2014-2015.
2 ITA.No.871/Del./2019 Late Sudhir Kapur Reptd. By Legal Heir MS. Rita Kapur, Ghaziabad.
Briefly stated facts of the case are that the assessee is an individual and proprietor of M/s. XLAR Enterprises. It is stated to be engaged in the business of wholesale trading. The assessee filed his return of income for the A.Y. 2014-15 electronically on 22.11.2014 declaring total income of Rs.44,43,230/-. The case of the assessee was selected for scrutiny and thereafter, assessment was framed under section 143(3) of the I.T. Act, 1961 vide order dated 05.12.2016 and the total income of the assessee was determined at Rs.89,34,060/-. Aggrieved by the order of the A.O. the assessee carried the matter in appeal before the Ld. CIT(A) who vide order dated 30.11.2018 granted partial relief to the assessee.
Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal and has raised the following grounds :
1. “That the Learned CIT(A) has grossly erred on facts & in law by confirming the addition of Rs.14,66,875/- made by Assessing officer on adhoc basis being l/5th 3 ITA.No.871/Del./2019 Late Sudhir Kapur Reptd. By Legal Heir MS. Rita Kapur, Ghaziabad. out of Demestic Travelling & Conveyance of Rs.61,20,338/- and out of Foreign Travelling Expenses of Rs.12,14,039/-.
2. That the Learned CIT(A) has grossly erred on facts and in law in confirming the action of the Assessing officer of adhoc disallowance out of the total legitimate and supported expenditure incurred on domestic & foreign travelling by Assessee and its employees, without any cogent reasons.
3. That the Learned CIT(A) has grossly erred in law and facts in not passing a speaking and reasoned order while disposing the Appeal of the Appellant.
The Appellant craves leave to add/alter any/all grounds of appeal before or at the time of Hearing of the Appeal.”
3.1. Before us, at the outset, the Learned Counsel for the Assessee submitted that though various grounds were raised, but all the grounds are inter-connected and are with respect to adhoc disallowance made by the A.O. and confirmed by the Ld. CIT(A).
4 ITA.No.871/Del./2019 Late Sudhir Kapur Reptd. By Legal Heir MS. Rita Kapur, Ghaziabad. 3.2. Brief facts relating to adhoc disallowance made by the A.O. are that during the course of assessment proceedings and on perusal of the P & L A/c the A.O. noticed that assessee had debited Rs.73,34,377/- under the Head “Travelling “& Conveyance”. The assessee was asked to justify the expenses and also explain as to why a reasonable amount not be disallowed on account of personal use of travelling expenses. The assessee made submissions which were not found acceptable to A.O. The A.O. noted that assessee has not explained that the journeys undertaken was for the purpose of business only. He also noted that expenses for travel was incurred for Mr. Anuj Kapoor who was not doing any work for the proprietorship concern of the assessee. He also noted that assessee had himself disallowed 1/10th of telephone and vehicle repairs and maintenance expenses. He, therefore, held that 1/5th of total travelling expenses amounting to Rs.14,66,875/- to be not allowable and accordingly disallowed the same.
5 ITA.No.871/Del./2019 Late Sudhir Kapur Reptd. By Legal Heir MS. Rita Kapur, Ghaziabad. 4. Aggrieved by the order of the A.O. the assessee carried the matter in appeal before the Ld. CIT(A) who upheld the order of A.O. Aggrieved by the order of Ld. CIT(A), the assessee is now in appeal before the Tribunal.
Before us, the Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that assessee is in the business of trading whereby it imports goods from various foreign countries and the same were sold in India. He submitted that for undertaking the business of the assessee, assessee’s employees were required to travel to foreign countries. He pointed to the page-10 of the PB which gives the details of the foreign travel expenses incurred by the assessee. In support of his contention that assessee imports goods and sells it within India, he pointed to Schedule-8 of Purchases placed at Page-7 of the PB and pointed that out of the total purchases of Rs.4,98,87,534/-, the import purchases constitutes at Rs.4,43,18,370/-. He, therefore, submitted that since the major purchases are from foreign countries, the assessee was required to incur foreign travel
6 ITA.No.871/Del./2019 Late Sudhir Kapur Reptd. By Legal Heir MS. Rita Kapur, Ghaziabad. expenses. He further stated that the observations made by the A.O. that travelling expenses has been incurred for Mr. Anuj Kapoor who is not doing any work of the assessee’s concern is factually incorrect. He pointed to Page-26 of the PB wherein the details of salary paid during the year under consideration is tabulated and from that table he pointed out that during the year assessee has paid salary of Rs.5,42,000/- to Mr. Anuj Kapoor and which has been accepted by Revenue and not disallowed. He thereafter submitted that without pointing out any expenses which are of personal in nature, the A.O. has disallowed the expenses on adhoc basis. He, therefore, submitted that no disallowance is called for in the present case.
6. The Ld. D.R. on the other hand supported the orders of the lower authorities.
We have heard the rival submissions and perused the material on record. The issue in the present appeal is with respect to adhoc disallowance on account of travelling and conveyance expenses made by the A.O. Before us, the Learned Counsel for the Assessee has demonstrated that 7 ITA.No.871/Del./2019 Late Sudhir Kapur Reptd. By Legal Heir MS. Rita Kapur, Ghaziabad. assessee is engaged into the trading business wherein the assessee undertakes importing of goods from foreign countries and sells them within India. He has demonstrated that out of total purchases of Rs.4.98 crores, the import comprises of Rs.4.43 crores. Thus, the assessee is engaged in the business of importing goods from foreign countries and selling it is not in doubt or disputed by the lower authorities. Further the assessee has also pointed out that Mr. Anuj Kapoor is an employee of the assessee and the travel was also undertaken by him. Before us, no material has been placed by the Revenue to point out the personal element in the expenses incurred. The A.O. has merely proceeded to disallow the travelling expenses on adhoc basis. We are of the view without any material on record, the A.O. cannot proceed to disallow the expenditure on adhoc disallowance. We accordingly set aside the addition made by A.O. and upheld by Ld. CIT(A). Thus, grounds of appeal of assessee are allowed.
In the result, appeal of the Assessee is allowed.
8 ITA.No.871/Del./2019 Late Sudhir Kapur Reptd. By Legal Heir MS. Rita Kapur, Ghaziabad. Order pronounced in the open Court on 11.08.2022.