What did the Tribunal hold?

The Tribunal noted that foreign travel expenditure cannot be completely ruled out for such a business and that the assessee had succeeded on identical disallowances in prior years. However, due to lack of detailed documentation, a lump sum disallowance was deemed appropriate.

The assessee company claimed foreign travel expenses for its officials to explore business opportunities. The Assessing Officer and CIT(A) disallowed these expenses for lack of direct nexus with the business.

What were the issues?

Whether foreign travel expenses incurred by the assessee for business augmentation are allowable, and if so, to what extent, considering the lack of detailed documentation.

J. Thomas & Co. Pvt. Ltd. vs DCIT | ITAT Kolkata 2019

Income Tax Appellate Tribunal, KOLKATA BENCH “C” KOLKATA

Before: Shri S.S.Godara & Dr. A.L. Saini

आदेश /O R D E R PER S.S.Godara, Judicial Member:- This assessee’s appeal for assessment year 2012-13 arises from Commissioner of Income Tax (Appeals)-2, Kolkata’s order dated 09.01.2018 passed in case No.1973 CIT(A)-2/14-15, involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused. 2. The assessee’s sole substantive ground challenges both the lower authorities’ action disallowing its foreign travel expenses to the tune of ₹15,88,077/-. Mr. Sinha vehemently contends during the course of hearing that the Assessing Officer as well as CIT(A) have erred in law and on facts in disallowing the impugned foreign travel expenses claim. He places on record this tribunal’s order in assessment year(s) 2010-11 and 2011-12 dated 01.11.2017 and 13.12.2017 in and 569/Kol/2016; respectively deleting identical disallowance in said earlier Assessment Year: 2012-13 J. Thomas & Co. Pvt. Ltd. vs. DCIT, Ciri-4(1), Kol. Page 2 assessment years. The Revenue strongly supports the impugned disallowance made in the course of assessment as affirmed in lower appellate proceedings.

We have given our thoughtful consideration to rival contentions. There is no dispute about the assessee being a company engaged in tea and coffee auctioning, financing and rubber handling business(es). It claimed the impugned foreign travel expenses pertaining to its managing director, chairman and other officials to have made overseas tours to United Kingdom, Dubai and Africa etc. for augmenting its business. The assessee would submit before the Assessing Officer that the purpose of travel in issue was to explore potential requirements of tea importers and improvement in tea quality produce etc., The Assessing Officer disallowed assessee’s claim in assessment order dated 07.01.2015 for the reason that it could not establish any direct nexus between its business and foreign tours in issue. The CIT(A) has affirmed the same in its lower appellate order under challenge. We have already narrated assessee’s arguments in support of the impugned claim in preceding paragraph. It mainly seeks to rely upon the tribunal’s decisions (supra) deleting identical disallowance in earlier assessment years. We find that the assessee has not placed on record even its paper book in support of the impugned foreign travel expenses of its top office bearers along with all necessary details. The fact also remains that it has already succeeded under the very head in preceding assessment year(s). And that foreign travel expenditure cannot be completely ruled out in such a business. We therefore deem it appropriate in these peculiar facts and circumstances that a lump sum disallowance of ₹50,000/- out of ₹15,88,077/- on estimate basis would meet ends of justice with a rider that same shall not be taken as precedent in any other case or assessment year; as the case may be. Balance disallowance amount of ₹15,38,077/- stands deleted.

This assessee’s appeal is partly allowed in above terms. Order pronounced in the open court 15/03/2019 Sd/- Sd/- (लेखा सद%य) (�या'यक सद%य) (Dr.A.L. Saini) (S.S.Godara) (Accountant Member) (Judicial Member) Kolkata, *Dkp, Sr.P.S (दनांकः- 15/03/2019 कोलकाता । Assessment Year: 2012-13 J. Thomas & Co. Pvt. Ltd. vs. DCIT, Ciri-4(1), Kol. Page 3

J. THOMAS & CO. PVT. LTD.,KOLKATA vs. DCIT, CIRCLE - 4(1), KOLKATA, KOLKATA

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