2010 (10) TMI 1013 - AT - Income Tax

Summary

Issues Involved: The judgment involves the disallowance of foreign tour expenditure and repair expenditure u/s 143(3) of the Income Tax Act, 1961.

Foreign Tour Expenditure Disallowance:
The appeal pertains to the disallowance of foreign tour expenditure of &8377; 3,09,506 by the CIT(A). The AO and CIT(A) contended that the expenditure lacked evidence to prove its business purpose. However, the assessee argued that the visit to Germany was for business negotiations related to the manufacturing of toothbrushes. The Tribunal noted that the visit was for acquiring spares and machinery necessary for the business, hence allowing the claim based on business necessity and purpose.

Repair Expenditure Disallowance:
The appeal challenges the disallowance of repair expenses amounting to &8377; 84,118 by the CIT(A). The AO treated the expenditure as capital in nature due to construction work undertaken. The Tribunal disagreed, stating that the expenses on civil works and protective items did not provide enduring benefits and were akin to current repairs. Consequently, the disallowance was overturned, and the expenditure was deemed as revenue in nature.

In conclusion, the Appellate Tribunal ITAT Ahmedabad ruled in favor of the assessee, allowing both the appeals related to foreign tour expenditure and repair expenditure.