2015 (7) TMI 334 - AT - Income Tax

Disallowance of foreign travel expenditure - FAA deleted the addition on the ground that the assessee has filed all the details of foreign travel expenses along with the purpose of visit before the A.O. - Held that - The assessee had also paid Fringe Benefit Tax on expenditure including on foreign travel. He observed that the A.O. after examining the details of vouchers and books, could not point out any specific expenditure, which in his opinion, is personal in nature. He relied on certain case laws and deleted the addition. We do not find any infirmity in this factual finding of the First Appellate Authority. The Ld.Sr.D.R. could not controvert the same. Thus this adhoc disallowance, in our view has been made by the A.O. on presumptions and surmises and is not based on any evidence. - Decided against revenue. Disallowance of freight and cartage expenses - CIT(A) deleted the addition - Held that - The First Appellate Authority in this case also recorded that all the payments were made through account payee cheques. Regarding the bill dated 31.3.2009 on Tulsi Impex Pvt.Ltd. amounting to ₹ 2,45,536/-, the First Appellate Authority observed that total payments during the year to M/s Tulsi Impex P.Ltd. was ₹ 30,45,050/- and this particular bill was produced before him. He relied on number of case laws and on the ground that the A.O. has not pointed out to any infirmity in the bills, vouchers and books of accounts, the disallowance of expenditure incurred for the purpose of business was held as allowable. We do not find any infirmity in this order. All the books are audited and details were produced before the A.O. No infirmity in the evidences produced has been pointed out. Under these circumstances the question of disallowance that the expenditure that too on adhoc basis cannot be allowed. Hence we uphold the detailed and speaking order of the First Appellate Authority on this issue - Decided against revenue. Disallowance on account of sample expenses - CIT(A) deleted the addition - Held that - These are no grounds to disallow the said expenditure. The expenditure incurred on marketing and advertisement and promotional activities may not result in immediate jump in sales. On a sale of ₹ 33 crores the expenditure incurred is only ₹ 10.74 lakhs. It is not the case of the A.O. that the assessee has not incurred this expenditure or that he failed to substantiate with evidence, its claim of having incurred this expenditure. There is no defects pointed out in the evidence by the A.O. Thus we uphold the contentions - Decided against revenue. Disallowance being employees contribution to P.F - CIT(A) deleted the addition - Held that - The undisputed fact is that the deposit was made after the due date prescribed in the Act, but well before the due date of filing of the return. The First Appellate Authority applied the decision of the Jurisdictional High Court in the case of CIT vs. PM Electronics P.Ltd. 2008 (11) TMI 3 - DELHI HIGH COURT and allowed this ground of the assessee. We find no infirmity in the same. In the result this ground is dismissed.- Decided against revenue. Disallowance of expenditure related to goods destroyed - Held that - In the bill of entry for ex-bond clearance for home consumption, the details have been mentioned, wherein expiry date of the product is also mentioned. Evidence has been filed on payment of excise duty and a stamp which reads as DEFACED . The Ld.Sr.D.R. could not convince us that this disallowance has to be made for lack of evidence. In view of the evidence lead before us, we agree with the submissions of the assessee and allow this ground of appeal of the assessee. - Decided in favour of assessee.

Summary

Issues:
Cross Appeals against order of Ld.CIT(A) for A.Y. 2009-10.

Analysis:
1. The Revenue's Appeal (ITA 277/Del/2013) raised various grounds, including the deletion of additions by the A.O. The first ground challenged the deletion of Rs. 5 lakhs addition for foreign travel expenses by the Ld.CIT(A). The A.O. disallowed the amount for lack of proof of business purposes. However, the Ld.CIT(A) found no personal nature expenses and upheld the deletion, supported by evidence and case laws. The Tribunal dismissed this ground, noting the A.O.'s presumptive disallowance without evidence.

2. The second ground in the Revenue's Appeal concerned the deletion of Rs. 10 lakhs for freight and cartage expenses. The A.O. questioned abnormal increase without proper support, but the Ld.CIT(A) allowed it based on audited accounts and bill evidence. The Tribunal upheld this decision, finding no infirmity in the evidence presented, dismissing the Revenue's ground.

3. The third ground disputed the deletion of Rs. 10.74 lakhs for sample expenses. The A.O. questioned the necessity of samples for popular brands, but the Ld.CIT(A) found the explanation valid. The Tribunal agreed, noting the lack of defects in evidence and upheld the deletion.

4. The final ground challenged the deletion of Rs. 10.74 lakhs for employees' P.F. contribution made late. The Ld.CIT(A) relied on a High Court decision and allowed the claim. The Tribunal found no issue with this decision and dismissed the Revenue's appeal.

5. The Assessee's Appeal (ITA 515/Del/2013) contested the disallowance of Rs. 95,807 for storage/damage expenses. The A.O. disallowed based on lack of evidence of goods destruction. The Ld.CIT(A) upheld the disallowance, but the Tribunal, after reviewing evidence of goods destruction due to shelf life expiration, allowed the appeal, finding the evidence sufficient.

6. In conclusion, the Tribunal dismissed the Revenue's appeal and allowed the Assessee's appeal, emphasizing the importance of evidence and proper substantiation in tax assessments.