2009 (3) TMI 1048 - AT - Income Tax

Summary

Issues involved: Disallowance of expenditure on foreign tour and traveling expenses u/s assessment year 2004-05.

Dispute Details:
The appeal by the Revenue challenges the disallowance of expenditure on foreign tour and traveling expenses amounting to Rs. 18,89,812 in relation to employees and partners in the course of the assessee's business. The AO and CIT(A) raised concerns regarding the lack of full details and supporting vouchers, leading to the disallowance. The assessee provided detailed explanations and justifications for the expenses, emphasizing the business nature of the tours and the necessity of the expenditures.

Arguments and Decision:
The assessee presented full details of the disallowance and foreign traveling expenses, highlighting the business connections and purposes of the tours to Hong Kong, Dubai, and Singapore. The Revenue contended that the initial onus to justify the expenses was not met, supporting the disallowance. However, considering the substantial export turnover of the assessee and the business requirements, the Tribunal found the claim of expenditure reasonable. The Tribunal noted that the expenses were incurred for business purposes and had a clear business nexus, warranting acceptance. Referring to a similar case before the ITAT, the Tribunal concluded that the disallowance was unjustified and deleted the addition made by the AO and upheld by the CIT(A).

Conclusion:
The Tribunal allowed the assessee's appeal, emphasizing the reasonableness of the claimed expenses in relation to the business activities and overturning the disallowance made by the Revenue authorities.