METTLER-TOLEDO INDIA PVT. LTD,MUMBAI vs. DCIT CIRCLE 10(2)(2), MUMBAI

The dispute in the present appeal is confined to the disallowance of an amount of ` 39,79,656, representing travelling expenditure.

Brief facts are, the assessee, a resident company, is engaged in the business of manufacturing and dealing in weighing and analytical scales and software development. For the assessment year under dispute, the assessee filed its return of income on 30th September 2010, declaring total income of ` 14,31,12,688. In the course of assessment proceedings, the Assessing Officer noticed that the amount of ` 3,67,96,563, has been debited to the Profit & Loss Account towards operating and administrative expenditure. After calling upon the assessee to furnish the details and verifying them, the Assessing Officer observed that the assessee has not furnished the details of travelling expenses in the format provided by him. Thus, stating that supporting evidence was not furnished by the assessee to justify the claim, the Assessing Officer disallowed 10% working out to ` 36,79,656, out of the expenditure claimed and added back to the income of the assessee.

Though, the assessee challenged the aforesaid disallowance before the first appellate authority, however, learned Commissioner (Appeals) also sustained the disallowance made by the Assessing Officer.

The learned Authorised Representative submitted, the disallowance has been made by the Assessing Officer purely on guess work and only for the reason that details were not furnished in the 3 Mettler–Toledo India Pvt. Ltd. format provided by the Assessing Officer. He submitted, the travelling expense was incurred by the employees spread over the country and numbering to 444. He submitted, in case of 325 employees / parties, the assessee has furnished PAN details and address representing the amount of ` 3,30,26,231. In respect of 106 employees / parties representing amount of ` 26,48,483, the assessee has furnished address and in respect of 64 employees / parties representing an amount of ` 6,46,419, neither PAN details nor address is available. Thus, he submitted, at least in respect of parties whose PAN details and address is available, no disallowance can be made. He submitted, for the balance amounts of ` 26,48,483, and ` 6,46,419, in respect of which either PAN details and address or both are not available, the disallowance can be restricted to 10% of the amount claimed. Further, he submitted, though, the assessee had claimed similar expenditure in earlier as well as subsequent assessment years, no such disallowance has ever been made.

The learned Departmental Representative submitted, before the Departmental Authorities, the assessee did not furnish PAN details and address of the persons for whom travelling expenses was incurred. She submitted, since now the assessee has furnished further details regarding the PAN and address, the issue may be restored back to the file of the Assessing Officer.

We have considered rival submissions and perused the material on record. As could be seen, the assessee has offered substantial amount of income to the tune of ` 14,31,12,688. Thus, from the aforesaid facts, it becomes clear that assessee’s turnover is running into crore. Compared to that, the expenditure claimed by the assessee towards travelling amounting to ` 3,67,96,562, appears to be reasonable. Be that as it may, the primary ground on which the Assessing Officer disallowed a part of the expenditure, that too, purely on ad–hoc basis is due to non–availability of PAN details and address of employees / parties in respect of whom such expenditure has been incurred. However, before us, the assessee has furnished both PAN details and address of 325 employees / parties representing the amount of ` 3,30,26,231. Therefore, to that extent the doubt, if any, harboured by the Assessing Officer stands removed. However, since the aforesaid information was not furnished before the Departmental Authorities, as alleged by the Revenue, we direct the Assessing Officer to verify the information furnished by the assessee and allow the expenditure of ` 3,30,26,231. As regards the balance amount of ` 32,94,902, the learned Authorised Representative has submitted before us that in some cases, though, address is available, but PAN details are not available, but in some cases, PAN details and address both are not available. Therefore, he has submitted before us to 5 Mettler–Toledo India Pvt. Ltd. restrict the disallowance made by the Assessing Officer only to those cases. Considering the above, we direct the Assessing Officer to restrict the disallowance to 10% of the amount of ` 32,94,902. Grounds are partly allowed.

In the result, appeal is partly allowed. Order pronounced in the open Court on 26.02.2020