DCIT, NEW DELHI vs. M/S KARUN CARPETS PVT. LTD., NEW DELHI

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ITA 6859/DEL/2015Status: DisposedITAT Delhi21 September 2017AY 2011-124 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal as not maintainable due to low tax effect. It allowed the assessee's ground related to lawyer's travel expenses, holding them to be for business purposes, but dismissed the ground related to visa fees.

What were the facts?

The Revenue filed an appeal against the CIT(A)'s order, but the tax effect was below the mandatory limit for filing appeals. The assessee filed a cross-objection challenging the disallowance of travel expenses for lawyers and visa fees for a director.

What were the issues?

Whether the Revenue's appeal is maintainable given the tax effect below the prescribed limit, and whether certain travel and visa expenses incurred by the assessee were for business purposes.

Which sections of the Income-tax Act were involved?

Not explicitly mentioned, but relates to disallowance of expenses.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES ‘B’ DELHI

Before: SH. P.K.BANSAL & SH. AMIT SHUKLA

Hearing: 21.09.2017Pronounced: 21.09.2017

PER P.K.BANSAL, VICE PRESIDENT

1.

This appeal as well as the cross-objection has been filed against the order of the CIT(A)-17, New Delhi pertaining to AY 2011-12. The appeal filed by the revenue is concerned, the tax effect is less than Rs.10 lacs.

C.O-133/Del/2016 2. We have heard both sides and carefully considered the same. The CBDT Circular No.21/2015 dated 10.12.2015 has decided that the appeal shall not be filed before the Appellate Tribunal in cases where the tax effect does not exceed mandatory limit of Rs.10 Lacs. The Circular would apply to all pending appeals as well. Admittedly in the department appeal, the tax effect is less than Rs.10 Lacs.

Therefore, the departmental appeal is not maintainable as was filed in violation of above circular. Therefore, the appeal filed by the revenue is dismissed.

3.

Now, coming to the CO filed by the assessee, we noted that the assessee has taken the following grounds of appeal:-

1. “The Ld.CIT(A) has erred in upholding the addition made by Ld.AO on account of travel expenses of lawyers amounting to Rs.75,525/-.

2.

The Ld.CIT(A) has erred in upholding the addition made by Ld.AO on account of visa fee of Sh. Karan Thapar amounting to Rs.8,750/-.” 4. Ground No.1 relates to the upholding the disallowance of Rs.75,525/- on account of travel of the expenses of the lawyers.

5.

While Ground No.2 relates to the upholding the disallowance of Rs.8,750/- incurred on account of visa fee of Mr. Karan Thapar. The facts relating to both the grounds are that the AO during the course of the assessment proceedings noted that the assessee has claimed a sum of Rs.3,157,157/- under the head “travelling and Conveyance” which includes Rs.75,525/- in respect of cost of tickets from Del-Mum- Del to restructuring management and Visa fee paid for Mr. Karan Thapar for London amounting to Rs.8,750/-. The assessee is one of the promoter companies of the operating companies under the control of Mr. Karan Thapar. The assessee submitted that a sum of Rs.75,525/- while reimbursement of the travelling expenses of the two lawyers which includes of air tickets of those lawyers with regard to the C.O-133/Del/2016 scheme of amalgamation of the company which was subsequently approved by the respective Hon’ble High Court and, therefore, the expenses incurred for the purpose of the business. The AO disallowed the same. Similarly for the sum of Rs.8,750/-, it was submitted that it was paid for the Visa fee for Mr. Karan Thapar for London for the purpose of the business of the assessee as the tour was for procurement of the maize but the AO disallowed the same. When the mater went before the Ld.CIT(A), we noted that Ld.CIT(A) sustained the disallowance.

6.

After hearing rival submissions and going through the order of the tax authorities below, in our opinion the expenses incurred for air tickets of the lawyers for Del-Mum-Del for restructuring the management of the company and the expenditure which has been wholly and exclusively incurred for the business. We, therefore, delete the said disallowance so far as a sum of Rs.8,750/- relating to Visa fee of Mr. Karan Thapar is concerned since the disallowance of the expenses for hiring the chartered plane amounting to Rs.23,36,981/- and disallowance was confirmed by the Ld.CIT(A) against which the assessee was not come in appeal. This expense is relating to the Visa fee for going to the London. We, therefore, sustain the said disallowance. Thus, Ground No.1 taken by the assessee is allowed while Ground No.2 stands dismissed.

7.

In the result, the appeal filed by the Revenue stands dismissed while cross- objection filed by the assessee is partly allowed.

The order is pronounced in the open court on 21 September, 2017.

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