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2015 (7) TMI 534 - AT - Income TaxDisallowance of lunch expenses to personnel on outdoor duty - Held that - In the assessment year 1992-93, the Tribunal following earlier order for AY 1991-92 has upheld the disallowance of lunch expenses to the extent of ₹ 2 lakhs. Whereas, in the assessment year 1995-96, the Tribunal has held that lunch expenses incurred for the employees during the course of outdoor duties is to be allowed u/s 37(3) and accordingly, following the same, we direct the AO to allow the lunch expenses of the employees incurred on the outdoor duty. Thus, this issue is decided in favour of the assessee. Disallowance of Foreign Travel expenses - Held that - this issue has been decided by the Tribunal not only in the earlier years but also in the assessment year 1995-96 wherein, the Tribunal vide para No. 37 has deleted the said addition after following the earlier years orders of the Tribunal. Thus, respectfully following the earlier years precedence and also the order for the assessment year 1995-96, we direct the AO to delete the said addition. - Decided in favour of the assessee. Disallowance for total expenses and air fares of foreign visitors in India - Held that - A mistake has been crept in the order of the Tribunal, wherein, it has been noted that the said ground is not pressed, which fact is not correct. Accordingly, we rectify the same and hold that such expenses are to be allowed as similar disallowances have been deleted by the Tribunal not only in the assessment years 1992-93 and 1993-94 but also in the assessment year 1995-96 - Decided in favour of the assessee. Excess and short provision of expenditure - assessee had mainly challenged the adding back of the amount of provisions of expenses as on year end based on estimates for which actual bills were not received - Held that - The assessee has been making the provisions for expenses in respect of services and goods received during the previous year for which bill is not received till the time of the provision is made and payment is made on later date upon the receipt of the bill. Such a claim of provision has been made as assessee was following mercantile method of accounting. If there was some excess provision as compared to the actual payment made to the assessee in the later year then same needs to be added back. The Ld. CIT(A) after confirming the said addition had directed the AO to consider this aspect in the subsequent year by reducing the income offered by the assessee in that year to the amount of the excess provision written back to avoid double taxation. So far as addition on this account is concerned, the finding of the Tribunal in para 5 & 6 cannot be disturbed, because if such an excess provision has been added back and directions have been given to the AO that he should reduce the income offered by the assessee on such a provision written back by the assessee, there is no merits in allowing such excess provision in this year, as direction has been already given for consequential relief in the next year. This year, no different stand can be taken. Disallowance on account of expenses pertaining to the assessment year 1993-94, which were actually incurred in the year under consideration and there was short provision made in the earlier year - Held that - We feel persuaded to agree with the contention of the Ld. Sr. Counsel that, if the excess provision is being disallowed on the ground that actual bills for which payment has been made is less than the provision and same should be added in the year of excess provision, then on same logic it has to be held that if the assessee s actual payment is more than the provisions made, then assessee should be granted deduction in respect of short provision made, because, it would lead to jeopardy to the assessee. However, we find it difficult to take a contrary view, within the limited scope of section 254(2), as it will amount to review of the earlier order, which is not permissible. More so, in the wake of the fact that in AY 1993-94, the Tribunal has dismissed this point raised by the assessee in Miscellaneous Application, as fairly pointed out by the Ld. Sr. Counsel. Accordingly, we decline to interfere with the conclusion of the Tribunal VRS expenses in respect of Bhandup unit works and Head office employees - Held that - In this year the only issue was that of incremental liability towards payment of pension under VRS Scheme. There was no need for any actuarial valuation certificate or examination of agreements. Moreover, in this year, the Ld. CIT(A) has already verified the same. Therefore, there was no need for the Tribunal to set aside the issue to the file of the AO for re-examination and this fact seems to be omitted by the Tribunal while giving the finding that same is covered by the earlier order of the Tribunal. Accordingly, we hold that there is no need for verification either of the agreement or actuarial valuation certificate; as firstly, this has already been examined by the Ld. CIT(A); secondly, in this year it has incurred only incremental liability; and lastly, the Tribunal in AY 1995-96has already modified the similar finding. Accordingly, the present Miscellaneous Application filed by the assessee is allowed.
Issues Involved:
1. Non-disposal of grounds relating to disallowance of lunch expenses. 2. Disallowance of foreign travel expenses. 3. Disallowance of hotel expenses and air fares for foreign visitors. 4. Excess and short provision of expenditure. 5. Depreciation in respect of Kandla plant. 6. VRS expenses for Bhandup unit and Head office employees. Detailed Analysis: Issue No. 1: Non-disposal of grounds relating to disallowance of lunch expenses The assessee contended that the Tribunal omitted to adjudicate on the disallowance of lunch expenses for personnel on outdoor duty amounting to Rs. 6,34,988/-. The Tribunal acknowledged this omission and referenced its previous decisions where such expenses were allowed. Consequently, the Tribunal directed the AO to allow the lunch expenses incurred for outdoor duties, deciding this issue in favor of the assessee. Issue No. 2: Disallowance of foreign travel expenses The assessee argued that the Tribunal mistakenly recorded that the ground regarding foreign travel expenses was not pressed. The Tribunal recognized this error, noting that the issue was indeed pressed and covered by earlier decisions favoring the assessee. Following precedent, the Tribunal directed the AO to delete the disallowance of Rs. 19,94,623/-, allowing Ground No. 3(a). Issue No. 3: Disallowance of hotel expenses and air fares for foreign visitors The Tribunal acknowledged a mistake in its order where it incorrectly noted that the ground regarding disallowance of Rs. 14,64,642/- for hotel expenses and air fares of foreign visitors was not pressed. This issue was previously decided in favor of the assessee for earlier assessment years. The Tribunal rectified the mistake and allowed Ground No. 4(a), directing the AO to allow these expenses. Issue No. 4: Excess and short provision of expenditure The Tribunal reviewed the disallowance of provisions made for expenses, which were adjusted in subsequent years. The assessee argued that under the mercantile system, provisions for expenses based on estimates should be allowed, even if there are discrepancies between provisions and actual payments. The Tribunal upheld its earlier decision, denying the deduction for short provisions, as it would amount to reviewing its prior order, which is not permissible under section 254(2). The Tribunal followed judicial discipline, referencing its decision for the assessment year 1993-94, and dismissed the assessee's appeal on this issue. Issue No. 5: Depreciation in respect of Kandla plant The assessee did not press this issue as the AO had already allowed the depreciation while giving appeal effect. Consequently, the Tribunal dismissed this point. Issue No. 6: VRS expenses for Bhandup unit and Head office employees The Tribunal initially restored the matter to the AO to verify the actuarial valuation certificate and agreements. However, the assessee argued that the CIT(A) had already reviewed these documents and allowed the deduction. The Tribunal acknowledged that for the assessment year 1994-95, the issue was only of incremental liability, which did not require further verification. The Tribunal modified its earlier order, stating that there was no need for additional verification, and allowed the assessee's application. Conclusion: The Tribunal partly allowed Miscellaneous Application No. 132/Mum/2013 and fully allowed Miscellaneous Application No. 133/Mum/2013. The order was pronounced on 10th July, 2015.
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