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Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH
Before: SHRI SANJAY GARG & Ms. ANNAPURNA GUPTA
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.
The sole issue raised by the assessee through its grounds of
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.
The Ld. DR while relying upon the orders of the lower
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.
We have considered the rival submissions. The submission
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