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Income Tax Appellate Tribunal, DELHI BENCH “SMC” NEW DELHI
Before: SHRI B.P. JAIN
PER B.P. JAIN, ACCOUNTANT MEMBER:
This appeal of the assessee arises from the order of ld. CIT(A)-14 New Delhi vide order dated 27.2.2015 for the A.Y. 2007-08. The revenue has raised the following grounds of appeal:-
“1. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Rs.32,31,500/- made on account of commission expenses.
Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Rs.2,93,203/- made on account of travelling expenses, without considering that the nature of services rendered was not explained by the assessee.
The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing.”
2. The brief facts of the case are that the assessee company filed its Return of income for the relevant assessment year 2007-08 on 24.10.2007 declaring income of Rs. 14,62,844/-. The case was selected for scrutiny and notice u/s 143(2) was served on the appellant. The assessee company is engaged in the trading of electrical equipment i.e. High Voltage Electric Equipment. During the course of assessment, the Assessing Officer noted that the assessee company has debited its profit and loss account with an amount of Rs. 32,31,500/- towards commission payments. The Assessing Officer requested the appellant to furnish the details of such commission payments. In response, the appellant submitted the name, address and the gross amount of commission payments. In response the appellant submitted the name, address and the gross amount of commission paid to agents along with the details of TDS Page 2 of 8 deducted on such commission payment. The appellant also submitted the copy of confirmations of accounts of the commission agents. However, the Assessing Officer disallowed the claim of commission payment on the ground that the appellant company failed to provide the details of the nature of services rendered by the commission agents and the benefit accruing to the assessee company. The Assessing Officer further noted that the assessee company had debited an amount of Rs. 2,93,2031/- in its profit and loss account on account of travelling expenses. The Assessing Officer requested the appellant company to provide the details of such travelling expenses. In response, the appellant company submitted before the Assessing Officer that during the relevant assessment year, directors of appellant company travelled to Switzerland for business purposes and also furnished the details of travelling expenses such as visa fees, hotel etc. However, the Assessing Officer disallowed the claim of travelling expenses on the ground that the appellant company could not establish the benefit accruing to it from the foreign tour of the directors and added it back to the total income of the appellant company and completed the assessment u/s 143(3) of the Income Tax Act vide order dated 03.12.2009 at the income of Rs. 49,87,547/-. Page 3 of 8
3. Before ld. CIT (A) the assessee submitted additional evidences and accordingly a remand report was taken from the Assessing Officer and after considering remand report and submission of the assessee, the ld. CIT(A) deleted the additions so made by the Assessing Officer. The revenue argued that the assessee has not submitted confirmation of accounts of the commission and also the purpose of travelling abroad.
The ld. AR on the other hand relied upon the order of ld. CIT (A) for the sake of convenience, I hereby reproduce the order of the ld. CIT (A) who has deleted the additions as under:-
“5. I have carefully considered the submission made by the A.R of the appellant and have gone through the assessment order. It is noted that the appellant company is trading in electrical equipment i.e. High Voltage Electrical Equipment. The appellant company is representing M/s Hafley Test AG, Switzerland and Hipotronics Inc., USA (group company of Hafley Test AG) and selling their products in Indian market. The sales are affected by the appellant company with the help of commission agents and during the course of assessment, the appellant has submitted before the Assessing Officer, the names, address, PAN Number, confirmation of accounts of the commission agents. Besides, the Page 4 of 8 appellant has also submitted the details of commission payments and the TDS deducted on account of commission payments. The Assessing Officer has not disputed the genuineness of payments of such commission to the commission agents. It was also explained before the Assessing Officer that the appellant company is representing the electrical Js manufacturing companies of Switzerland and USA and selling them in the Indian market through agents. The appellant company has also submitted before the Assessing Officer samples of copies of sale bills evidencing the sale of electrical goods through the commission agents. Therefore, in my opinion, the commission payments to the agents has been established by the appellant company and accordingly, the Assessing Officer is directed to allow the commission expenses of Rs. 32,31,500/-. It is further noted that the directors of the appellant company namely Mr. Anil Uppal and Mrs. Anu Uppal have travelled to Switzerland and the travelling expenses of Rs. 2,93,203/- pertains to the aforesaid directors of the appellant company. It is worthwhile to mention that the appellant company is trading in electrical goods and selling the goods of M/s Hafley Test AG, Switzerland. The details of travelling expenses such as visa bill, hotel bills have been furnished by the appellant company during the course of assessment and the genuineness of such travelling expenses have not been disputed by the Assessing Officer. The Assessing Officer has disallowed the travelling expenses only on the ground that the appellant company has failed to disclose the purpose of travelling of the directors to Switzerland. However, it Page 5 of 8 is evident that the directors of the company have travelled to Switzerland for business purposes as the company is trading in the electrical goods of M/s Hafley Test reversed the AG, Switzerland. Thus, the travelling expenses have been incurred by the appellant company for business purposes and the same is an allowable expense u/s 37 of the Income Tax Act. Accordingly, the Assessing Officer is directed to delete the impugned addition of Rs. 2,93,203/-.”
Though the ld. DR argued that confirmation of the parties are not there, it was pointed out that it was submitted along with additional evidences which is on the record of the ld. CIT(A). Copies of the sales bills evidencing the electrical goods through commission agent and all the evidences are placed on record which was sent to the Assessing Officer for his examination. Therefore it cannot be said that the Assessing Officer does not have the confirmation of the parties etc. As regards the disallowance of travelling expenses purpose of the business has been mentioned by the assessee before the ld. CIT(A) and is available with Assessing Officer in remand proceedings. Therefore in the circumstances and facts of the case I do not find any infirmity in the order of the ld. CIT(A) who has rightly deleted both the additions. Thus the appeal of the revenue is dismissed.
In the result, the appeal of the revenue is dismissed.
Pronounced in the open court on 10 .03.2017.