COMM. OF ITLUDH. vs. M/S BHOGAL SONS

ITA NO. 168 of 1999 1 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA NO. 168 of 1999 (O&M) Date of order: 17.12.2013 Commissioner of Income Tax, Ludhiana ..... Appellant Versus M/s Bhogal Sons(Regd.) Industrial Area 'B' Ludhiana

.... Respondents -- CORAM:HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR.BHARAT BHUSHAN PARSOON Present: Mr. Rajesh Katoch, Advocate for the appellant. Ms. Supriya Garg, Advocate for the respondent. *** RAJIVE BHALLA, J(ORAL). The revenue is, before us, challenging correctness of order dated 26.05.1999 passed by the Income-tax Appellate Tribunal, Chandigarh Bench by raising the following questions of law:- “1- Whether, on the facts and in the circumstances of the case, the Income- tax Appellate Tribunal was justified in concluding that the travelling expenses of Rs.1,92,488/- incurred by Shri S.S. Bhogal were correctly claimed as a deduction in the case of M/s Bhogal Sons (Regd.)?. 2- Whether on the facts and in the circumstances of the case, the Income- tax Appellate Tribunal was right in law in deleting the disallowance of Rs.1,92,488/- made on account of foreign travelling expenses of Shri S.S. Bhogal when the assessee firm is admittedly not engaged in export of goods?” Counsel for the appellant submits that Mr. S.S. Bhogal, is a partner in individual capacity in M/s Bhogal Sons (Regd.) and a member of H.U.F. that Kumar Dinesh 2014.01.13 11:41 I attest to the accuracy and integrity of this document High Court,Chandigarh

ITA NO. 168 of 1999 2 constitutes M/s Bhogal Exports. M/s Bhogal Sons (Regd.) is a manufacturing concern which does not export any goods whereas M/s Bhogal Exports is the exporter house. The expenses incurred for “Export Sales Promotion” would, therefore, have to be computed against M/s Bhogal Exports. It is further argued that reason assigned by the Income-tax Appellate Tribunal that it does not fall to the jurisdiction of Income Tax Authorities to regulate the business of an assessee is irrelevant. The expense for export sales promotion must be excluded from the expenses of M/s Bhogal Sons (Regd.) and included in the expense of M/s Bhogal Exports. Counsel for the assessee, however, submits that only if the export business of M/s Bhogal Export increases, would M/s Bhogal Sons (Regd.) be able to increase its business. A foreign trip undertaken by Mr. S.S. Bhogal for export promotion would necessarily enure to the benefit of M/s Bhogal Sons (Regd.). The opinion recorded by the Income-tax Appellate Tribunal, is legal and valid and not liable to be interfered on any question of law, much less, the substantial questions of law framed by the revenue. It is further argued that the Income-tax Appellate Tribunal has rightly recorded a finding of fact that there is no violation of any statutory provision. We have heard counsel for the parties, perused the impugned order and have no hesitation in holding that no question, much less substantial question of law arises for adjudication. Admittedly, there are two concerns i.e. M/s Bhogal Sons (Regd.) and M/s Bhogal Exports. Mr. S.S. Bhogal is a partner in M/s Bhogal Sons (Regd.) and member of the HUF that runs M/s Bhogal Exports. It is not denied that Mr. S.S. Bhogal undertook an export sales Kumar Dinesh 2014.01.13 11:41 I attest to the accuracy and integrity of this document High Court,Chandigarh

ITA NO. 168 of 1999 3 promotion trip. The Assessing Officer disallowed the expense so incurred to M/s Bhogal Sons (Regd.) on the premise that it should have been debited to the account of M/s Bhogal Export. The Income-tax Appellate Tribunal has reversed these findings by holding that the revenue cannot determine the mode and manner of conduct of business particularly where the expense claimed by an assessee does not violate any provision of the Income Tax Act. A perusal of the order passed by the Assessing Officer as well as CIT(A) reveals that these officers have not referred to any provision of law that prohibits the assessee from claiming export expense by debiting it to the income of M/s Bhogal Sons (Regd.). Even otherwise, only if export orders were available, would M/s Bhogal Sons (Regd.) be able to increase its production and consequently its income. The Income-tax Appellate Tribunal has, therefore, rightly held that expenses for foreign trip admittedly for sales promotion of exports has been debited to the account of M/s Bhogal Sons (Regd.). In view of the findings recorded above, the appeal is dismissed. ( Rajive Bhalla ) Judge ( Dr. Bharat Bhushan Parsoon ) 17.12.2013 Judge dinesh Kumar Dinesh 2014.01.13 11:41 I attest to the accuracy and integrity of this document High Court,Chandigarh