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2013 (1) TMI 591 - HC - Income TaxAddition on account of foreign travel expenses Revenue or personal expenditure - Foreign travel expense incurred by assessee and his wife which has been allowed to the extent of 50% by the CIT(A) and upheld by the Tribunal - Assessee was a heart patient and was looking after the business of the firm - His wife had to accompany for looking after him on visit to the foreign country Held that - Foreign visit resulted in increase in the business and after analyzing the factual matrix had allowed 50% expenses as revenue expenditure which was wholly and exclusively expended for business purposes. An effort was made by the revenue to submit that 50% had been allowed without any basis. He, however, could not substantiate the said plea - In favour of assessee Addition on account of late deposit of PF & ESI Held that - Following the decision in case of Alom Extrusions Limited (2009 (11) TMI 27 - SUPREME COURT) wherein it has been held that Second Proviso to Section 43B of the Act omitted by Finance Act, 2003 with effect from 1.4.2004 was clarificatory in nature and was to operate retrospectively. CIT(A) was right in deleting the addition made by the A.O. u/s 36(1)(va) and u/s 43B on account of late payment of employee s as well as employer s contribution to PF & ESI as the same had been deposited prior to the filing of the return u/s 139 (1) - In favour of assessee
Issues:
1. Admissibility of expenses on account of foreign travel incurred by Kamal Khanna and his wife. 2. Deletion of addition made by the Assessing Officer on account of late payment of PF & ESI contributions. Analysis: Issue 1: Admissibility of expenses on account of foreign travel incurred by Kamal Khanna and his wife: The appellant, the revenue, challenged the order of the Income Tax Appellate Tribunal (ITAT) regarding the deletion of an addition made by the Assessing Officer on account of foreign travel expenses. The Tribunal had confirmed the order of the Commissioner of Income Tax (Appeals) [CIT(A)] in deleting a portion of the total addition made. The CIT(A) had allowed a 50% deduction for expenses incurred on foreign travel by Kamal Khanna and his wife, stating that it was wholly and exclusively for business purposes. The Tribunal upheld this decision, emphasizing that the visit had resulted in increased business. The court noted that determining the reasonable amount of allowable expenses is a question of fact in each case. The appellant argued that the 50% deduction lacked a basis but failed to substantiate this claim. Consequently, the court ruled in favor of the assessee, upholding the decision of the Tribunal and CIT(A) regarding the admissibility of foreign travel expenses. Issue 2: Deletion of addition on account of late payment of PF & ESI contributions: The second issue pertained to the deletion of an addition made by the Assessing Officer under Section 36(1)(va) and Section 43B of the Income Tax Act, 1961, concerning late payment of employee's and employer's contributions to Provident Fund (PF) and Employee State Insurance (ESI). The appellant contended that the issue had been settled by a Supreme Court judgment and a decision of the High Court, clarifying that the relevant provision operated retrospectively. The CIT(A) had deleted the addition as the contributions were deposited before filing the return under Section 139(1) of the Act. The court agreed with the CIT(A)'s decision, citing the clarificatory nature of the provision and the retrospective operation as established by previous judgments. Consequently, the court ruled in favor of the assessee, dismissing the appeal by the revenue. In conclusion, the court found no merit in the revenue's appeal and dismissed it based on the analysis and rulings provided for both issues.
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