GOYAL KNITWEAR (P) LTD.,LUDHIANA vs. DCIT, LUDHIANA

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee

against the order dated 17.03.2016 of the Commissioner of Income

Tax [hereinafter referred to as CIT(A)]-5, Ludhiana.

appeal relates to disallowance of Rs. 1,80,435/- made by the

Assessing officer out of the travelling expenses of Rs. 3,60,869/-

i.e. 50% of the expenses attributable to the foreign trip of the

wife of the Director of assessee company. The Ld. Counsel for

the assessee, at the outset, has submitted that the director of the

ITA No.807/Chd/2016- Goyal Knitwears (P) Ltd, Ludhiana 2

company namely Shri Manav Goyal had taken his wife namely

Smt. Silky Goyal along with him to foreign tour for business

purposes. He has further submitted that Smt. Silky Goyal was a

Chartered Accountant (C.A.) and was well conversant with the

company’s business and that her joining alongwith the director

helped in procuring the business for the company. That the

expenditure incurred by the Company on the foreign trip of the

wife alongwith director was for business purposes solely

attributable to the business activity of the assessee company.

authorities has submitted that the lower authorities have rightly

disallowed the expenditure relating to the foreign trip of the wife

of the Director. That the assessee could not prove with reliable

evidence that Smt. Silky Goyal contributed in any manner in

procuring business for the assessee company.

of the Ld. Counsel is that the wife of the director namely Smt.

Sikly Goyal, who is a C.A., had participated in the negotiations in

procuring business deal for the company. On the other hand, Ld.

DR has pointed out that the work of the C.A. is to maintain

accounts and that she would not have contributed in procuring the

deal. Admittedly, the wife of the director is not a household lady

but a professionally qualified C.A. who certainly would be aware

about the financial position and accounts of the assessee company

and would be in a position to atleast advising the assessee

ITA No.807/Chd/2016- Goyal Knitwears (P) Ltd, Ludhiana 3

company in relation to the financial matters. However, it is also a fact on the file that she was not fully involved in business activity of the assessee and some sort of element of personal enjoyment on foreign trip along with director also cannot be ruled out. Hence, considering the overall facts and circumstances of the case, we restrict the disallowance on this issue to 50% of the disallowance made by the Assessing officer on this issue. The appeal of the assessee is accordingly treated as partly allowed.

Order pronounced in the Open Court

Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 23.04.2018 Rkk

Copy to: • The Appellant • The Respondent • The CIT • The CIT(A) • The DR