TMI Blog2011 (11) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration, Shri Shailesh Kachalia, Director of the assessee company visited Bustan, Dubai, Istambul and Turkey along with his wife Mrs. Aarti Kachalia. The total expenses incurred on the said visit amounting to ₹ 1,47,071/- were claimed as deductible business expenditure. During the course of assessment proceedings, the AO found that Mrs. Aarti Kachalia was neither the employee of the assessee company nor did she have any professional qualification. The assessee also could not establish any business expediency of the foreign trip undertaken by Mrs. Aarti Kachalia along with her husband except saying that it was a custom in foreign countries for the spouse of the Director of the Company to attend social functions. The assessee, however, could not support or substantiate this stand by adducing any evidence and in the absence of the same as well as relying on the decision of Hon ble Kerala High Court in the case of Ram Bahadur Thakur Ltd. vs. CIT 257 ITR 289 and that of Hon ble Madras High Court in the case of D.B. Madan vs. CIT 261 ITR 193, 50% of the foreign travel expenses claimed by the assessee company were disallowed by the AO. On appeal, the learned CIT(Appeals) confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . and the same, therefore, was written off in the books of account as irrecoverable. The AO, however, noted that the assessee company continued to have business with M/s Kotak Mahindra Primus Ltd. He also found that the assessee could not bring anything on record to show that the amount of ₹ 1,38,074/- written off by it in the books of account had actually become irrecoverable. He, therefore, disallowed the claim of the assessee for deduction on account of finance commission receivable written off. On appeal, the learned CIT(Appeals) confirmed the said disallowance on the ground that no satisfactory reason was given by the assessee for writing off the amount in question as irrecoverable. According to him, in the absence of any such satisfactory explanation, the claim of the assessee for bad debt written off was not bonafide and the said claim, therefore, was not allowable. 6. We have heard the arguments of both the sides and also perused the relevant material on record. As agreed by learned representatives of both the sides, this issue now stands squarely covered in favour of the assessee by the decision of Hon ble Supreme Court in the case of TRF Ltd. 323 ITR 397 (SC) whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the total prior period expenses of ₹ 60,297/- disallowed by the AO and confirmed by the learned CIT(Appeals), the assessee on its own had made a disallowance to the extent of ₹ 41,534/-. He has submitted that the balance amount of rebate allowed by the assessee in respect of Disha Financial Services actually pertained to the year under consideration and not to the earlier year. In support of this contention, he has invited our attention to the copy of ledger account extract of Srikant Gupta placed at page No. 4 of his paper book to point out that the relevant transaction pertained to the financial year 2004-05 relevant to assessment year 2005-06. The learned DR has submitted that this stand now taken by the assessee before the Tribunal specifically for the first time requires verification by the AO. We find merit in the contention of the learned DR. Accordingly the impugned order of the learned CIT(Appeals) on this issue is set aside and the matter is restored to the file of the AO for deciding the same afresh after verifying the submission of the assessee from the relevant record. Ground No. 3 is accordingly treated as allowed for statistical purposes. 10. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entually helped its business since he was instrumental in acquiring and looking after business in Volvo Division. It was submitted that only because of his training in foreign countries, the assessee company could get distributorship of Volvo and the expenses incurred on such training, therefore, were wholly and exclusively incurred by the assessee for the purpose of its business. 13. The learned CIT(Appeals) did not find merit in the submissions made on behalf of the assessee on this issue and proceeded to confirm the disallowance made by the AO on account of remuneration paid to Mr. Krishna Kachalia as well as expenses incurred on his training for the following reasons given in paragraph No. 5.3 of his impugned order : I have considered the facts of the case. The appellant company has paid fee of ₹ 1 ,75,000/- to S.P.Jain Institute of management and research for management course of Mr. Krishna Kachalia, who is the son of the director of the appellant company. The duration of course was 18 months from October 2003 to April 2005. He has completed his B.Com study in 2003 and also done M Corn Part I. He was shown to be the director of the appellant company on 30.09.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the facts and circumstances of the case existing in the appellant company, it is held that expenditure on the education of the son of the director, Shri Krishna Kachalia, is not expenditure incurred for the purpose of business and cannot be allowed as deduction in the hand of appellant. Accordingly, the action of Assessing Officer is upheld. The appellant has also given salary of ₹ 3,12,5001- to Shri Krishna Kachalia. The Assessing Officer has stated that Shri Krishna Kachalia was looking after the marketing activity at Borivali centre wherein another director is also posted to whom also salary has been paid. There can not be two directors at the same place looking after the work of the appellant company in the same position. This shows that his appointment is only for name sake and to enable the appellant company to bear education expenses of Shri Krishna Kachalia. The facts of the present case do not show that Shri Krishna Kachalia was made director of the appellant company for the purpose of business of the appellant company. Shri Krishna Kachalia was doing management course with S.P.Jain Institute of management and research from October 2003 to April 2005 and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation that was sought to be given in this regard has already been found to be not acceptable by the AO by giving specific reasons. Although the learned counsel for the assessee has relied on various judicial pronouncements in support of the assessee s case on this issue, we are of the view that the issue in dispute is a factual issue and having claimed deduction on account of remuneration paid to Mr. Krishna Kachalia and expenses incurred on his training, the onus is on the assessee to establish on evidence that the said expenditure is incurred wholly and exclusively for the purpose of its business. Having regard to all the facts of the case and the material available on record, we find that the assessee company has failed to discharge this onus. We, therefore, find no infirmity in the impugned order of the learned CIT(Appeals) confirming the disallowance made by the AO on account of assessee s claim for deduction towards remuneration paid to Mr. Krishna Kachalia and the expenses incurred on his training and upholding the same, we dismiss ground No. 4 of the assessee s appeal. 15. Now we shall take up the appeal of the assessee for assessment year 2006- 07 being ITA No.48 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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