2002 (11) TMI 736 - AT - Income Tax

Summary

Issues:
1. Disallowance of foreign traveling expenses for the Director of the Company.
2. Disallowance of deduction under section 80-IA due to lack of business income.

Issue 1: Disallowance of foreign traveling expenses
The Appellate Tribunal ITAT Chandigarh dealt with an appeal concerning the disallowance of foreign traveling expenses incurred by the Director of the Company. The Assessing Officer disallowed the expenses as not being for business purposes due to lack of concrete evidence of business meetings or trade transactions during the visits to U.K., France, and Switzerland. The CIT(A) allowed a relief of Rs. 3,12,835, holding that the tour was undertaken to explore export possibilities as per the company's directions. The Director visited these countries to study the export market for hosiery goods. The Tribunal noted that the company provided details of the visits, companies met, and days spent, which were considered sufficient. The disallowance was deemed unjustified, and the CIT(A)'s decision was upheld.

Issue 2: Disallowance of deduction under section 80-IA
The second issue involved the disallowance of a deduction under section 80-IA due to the absence of business income. The assessee had claimed the deduction, but the Assessing Officer disallowed it as there was no business income after considering interest income from sources like loans. The Tribunal observed that since the assessee's business income turned negative after deducting other sources of income, the deduction under section 80-IA was rightfully disallowed. The Tribunal upheld the Assessing Officer's decision in this regard, emphasizing that the deduction was not applicable in the absence of business income.

In conclusion, the Tribunal dismissed the revenue's appeal and ruled in favor of the assessee, upholding the relief granted on foreign traveling expenses and the disallowance of deduction under section 80-IA.