THE COMMISSIONER OF IT vs. M/S GROZ BACKERT ASIA LTD

ITA No.2 of 2004 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.2 of 2004 Date of decision:12.10.2006 The Commissioner of Income Tax, Patiala

....Appellant versus M/s Groz Backert Asia Limited, Chandigarh ....Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present: Dr. N.L.Sharda, Advocate, for the appellant. Ms.Radhika Suri, Advocate, for the respondent. JUDGMENT: 1. This appeal has been preferred by the revenue against the order of the Income Tax Appellate Tribunal, Chandigarh Bench 'A', Chandigarh (in short, 'the ITAT') dated 13.5.2003 in ITA No.99/Chandi/96, in respect of assessment year 1992-93, proposing following substantial questions of law:- “1. Whether on the facts and in the circumstances of the case, the ITAT was right in law in holding that the expenditure incurred on foreign travelling was a revenue expenditure? 2. Whether on the facts and in the circumstances of the case, the ITAT was right in law in holding that the value of the finished goods in the closing stock would not include Central Excise Duty components?” 2. As regards the first question, we find that the Tribunal in the impugned order observed as under:- “10.5.We have heard both the parties and carefully considered the rival submissions. No doubt for the a.y.91-92 the Tribunal restricted the disallowance to 10% of the

ITA No.2 of 2004 2 foreign exchange authorised by the RBI. But such finding was given with reference to specific question posed before the 3rd Member. However, provisions of rule 6-D deal with the disallowance of foreign travelling. In the present case, we find that the expenditure incurred on foreign travelling was within the limits of foreign exchange authorised by RBI. Therefore, no disallowance thereof was called for. The CIT(A) was, therefore, justified in deleting the impugned disallowance. Accordingly, we confirm the orders of the CIT(A) and dismiss the respective grounds of appeals of the revenue.” 3. The Tribunal has recorded a clear finding that the expenditure incurred by the assessee was within the limit of foreign exchange authorised by the Reserve Bank of India and, therefore, the same could not be disallowed having regard to Rule 6-D of the Income Tax Rules, 1962. 4. Accordingly, this question also cannot, in any manner, be held to be substantial question of law. 5. We find that question No.2 has already been gone into by this Court in judgment dated 28.7.2006 in ITA No.137 of 2005 in the case of the assessee for the assessment year 1997-98. Appeal of the revenue was dismissed by holding that excise duty component could not be included in the closing stock as the excise duty element in the value of the closing stock does not contain element of profit in the hands of the assessee. 6. Accordingly, the view taken by the Tribunal on second question being in conformity with law laid down by this Court cannot be held to be substantial question of law. 7. The appeal is dismissed. (Adarsh Kumar Goel) Judge October 12, 2006 (Rajesh Bindal) 'gs' Judge