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Issues involved: The judgment involves the following issues: (i) confirmation of lump sum addition for foreign traveling expenses, (ii) upholding the disallowance of director's remuneration, and (iii) upholding the disallowance of brokerage expenses.
Issue (i): The Assessing Officer disallowed a portion of foreign traveling expenses claimed by the assessee. The Tribunal found that the expenses claimed were not unreasonable considering the nature of the business and the purpose of the foreign visits. The Tribunal directed the Assessing Officer to delete the disallowance of Rs. 1 lakh as the expenses were found to be incurred for business purposes. Issue (ii): The Assessing Officer disallowed the salary paid to one of the working directors of the assessee-company. The Tribunal, after considering the turnover achieved by the company and the responsibilities shouldered by the director, held that the salary paid was not excessive. The Tribunal directed the Assessing Officer to delete the disallowance of Rs. 54,000 as it was found to be justified and supported by board resolutions. Issue (iii): The Assessing Officer disallowed a portion of brokerage expenses claimed by the assessee. The Tribunal noted that paying brokerage at the rate of 2 percent is a common practice in the business and found no justifiable reason for the disallowance. The Tribunal directed the Assessing Officer to delete the disallowance of Rs. 10,000 as the payment was made through proper channels and no irregularities were found. In conclusion, the Tribunal allowed the appeal of the assessee and directed the Assessing Officer to delete the disallowances made on the aforementioned grounds. The judgment was delivered on April 30, 2010 by the Appellate Tribunal ITAT Jaipur.
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