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Income Tax Appellate Tribunal, BENCH “E”, MUMBAI
Before: SHRI D.KARUNAKARA RAO & SHRI PAWAN SINGH
Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JM: 1. This appeal by assessee u/s 253 of the Income-tax Act (‘Act’) is directed against the order of Ld. Commissioner of Income-tax (Appeals) [for short ‘the CIT(A)] –8, Mumbai dated 27th August 2013 for Assessment Year (AY) 2009-10. The solitary ground of appeal raised by assessee is that “Whether the ld. CIT(A) erred in confirming the disallowance of Foreign Travelling Expenses of Rs. 32,60,477/-.”
2. Brief facts of the case are that the assessee-company is engaged in the business of processing and trading of fabrics, filed its return of income for relevant AY on 30.09.2009 declaring total loss of Rs. 3,22,49,769/-. Subsequently, a revised return of income was filed on 16.01.2010 with a loss of Rs. 3,21,75,798/-. The assessment was completed u/s 143(3) of the Act on 27.12.2011. The Assessing Officer (AO) while framing the assessment disallowed a sum of Rs. 32,60,477/- holding that expenses were not incurred for the purpose of business. On appeal before the ld. CIT(A), the disallowance was confirmed. Thus, further aggrieved by the order of AO, the assessee has filed the present appeal before us.
2 M/s. S.Kumars Ltd.
We have heard the ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. The ld. AR of the assessee argued that Mr. S.S. Kasliwal and Mrs. R.S.Kasliwal went on a foreign trip to Europe on 06.05.2008 to 21.05.2008 and thereafter on a tour to Australia-Newzeland from 21.08.2008 to 04.01.2009. The assessee submitted the details of export sales made by the assessee in pursuance of overseas visit. It was further argued by ld. AR of assessee that though Mr. S.S. Kasliwal and Mrs. R.S.Kasliwal visited to Europe and Australia, where the assessee has no business connection, however, due to their persuasion and the export various gulf country like Kuwait, Dubai and Jeddah was increased. On the other hand, ld. DR for Revenue supported the order of authorities below. The ld. DR for Revenue would argue that the foreign trip of Mr. S.S. Kasliwal and Mrs. R.S.Kasliwal has no business relation and the expenses incurred on their overseas to a trip were their personal expenses. The assessee has not placed on record any documentary evidence which may prove that the expenses incurred on foreign trip were wholly and exclusively for the purpose of business of assessee-company. The ld DR for the revenue prayed for the dismissal of the appeal.
We have considered the rival contention of the parties. The AO while making the assessment observed that assessee debited the Foreign Travel Expenses of Rs. 32,60,477/- to its P&L Account. The assessee was asked to submit the details of these expenses. From the detail submitted, the AO observed that the assessee has made the payment to Ambience Travel and Tours and Quantum Travels Pvt. Ltd. It was further observed that Mr. S.S. Kasliwal and Mrs. R.S.Kasliwal were on tour to Europe from 6th May 2008 to 21st May 2008 and also to Australia-Newzeeland from 21.08.2008 to 04.01.2009. The assessee was asked to furnish the details of export sales by assessee in pursuance of the overseas visit. The assessee submitted the list of the various parties located in Kuwait, Dubai and Jeddah. The AO found no relation between the place visited and the exports made by the assessee and concluded that such linking of personal expenses to the assessee’s business conrtibution as an afterthought story. It was further concluded that Mr. S.S. Kasliwal and Mrs. R.S.Kasliwal visited to Europe in the month of May to Australia-Newzeeland and these periods constitutes the seasons for Holidays to such places. Accordingly, the