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2024 (7) TMI 1011 - AT - Income TaxAllowable business expenditure- Foreign Travel Expenses - lower authorities restricting the foreign travel allowances to 50% - HELD THAT - We are not able to draw an inference that the expenditure incurred by the assessee has co-relation with the professional activities of the assessee, for example, the assessee had claimed towards the foreign currency purchased for US Travel for 4500 USD. The said amount spent by the assessee was merely for converting Indian currency into foreign currency. However, what is required to be demonstrated by the assessee before was for what purposes, the US Dollars were spent by the assessee in U.S. but nothing was brought on record to show for what purposes the amount was spent. Similarly, the assessee had claimed another foreign currency of Rs. 1,49,578/- towards purchase of foreign currency for USA Travel Trip. However, against the nature of foreign travel, it was mentioned that the amount was spent towards fitness program but no evidence was produced by the assessee to show that amount spent towards fitness program. However, what was required to be produced by the assessee was that he had joined in fitness program of any club or at any fitness coach and had paid the said amount for that purposes. Since no evidence was brought on record by the assessee to substantiate his claim, therefore, lower authorities have rightly restricted the claim of the assessee to an extent of 50% thus making the addition. Physical Fitness Expenses - Though the physical fitness was a part and parcel of assessee s profession but it cannot be held to be incurred wholly and exclusively for the profession of the assessee. Even the assessee has not filed any evidence to show that he underwent any weight loss program to fulfill his professional commitment. Hence, we do not find any reason to interfere with the finding of ld.CIT(A) on this issue. Thus, this ground of the assessee dismissed. 20% of other expenses considered as personal expenses - No fault can be found in the reasoning of Assessing Officer / ld.CIT(A) as nature of expenses claimed by assessee comes under mixed basket of profession and personal expenses and it is not possible to segregate preciously professional with personal expenses. Hence, we do not find any reason to interfere with the decision of learned lower authorities. Thus, this ground is dismissed. Security Charges - Disallowing / upholding of 10% of security charges stating that there is personal element - As assessee has not filed any evidence to prove that these expenses are wholly and exclusively incurred for his profession. Hence, we confirm the action of AO in disallowing 10% security charges. Thus, this ground of the assessee is dismissed. 50% Swimming Pool Charges - contentions of the assessee are that he assessee has constructed swimming pool exclusively for his use on the land belonging to his sister to whom he was paying rent @ Rs.60,000/- p.m and that being a film star, he cannot use public swimming pool - If assessee constructed the pool on the land belonging to his sister itself, then obviously, there will be a probability of using the facility by his family members also. Hence, we cannot deny the involvement of personal element in this aspect. In view of the above, we do not find any reason for disagreeing with the findings of the ld.CIT(A) on this issue. Thus, this ground of the assessee is dismissed. Disallowance u/s 14A - As mentioned disallowing amount u/s 14A of the Act is fair and reasonable to cover up any expenses as such with regard to exempt income and granted part relief to the assessee. We do not find any reason for disagreeing with the findings of the ld.CIT(A) on this issue. Hence, we dismiss this ground also. Appeal of the assessee is dismissed.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Disallowance of foreign travel expenses. 3. Disallowance of physical fitness expenses. 4. Disallowance of other expenses. 5. Disallowance of security charges. 6. Disallowance of swimming pool charges. 7. Disallowance under Section 14A. 8. General grounds and interest under Section 234D. Issue-wise Detailed Analysis: 1. Condonation of Delay: The appeal was filed by the assessee with a delay of 122 days. The assessee submitted a condonation petition explaining the reasons for the delay. After hearing both parties, the tribunal condoned the delay and admitted the appeal for hearing. 2. Disallowance of Foreign Travel Expenses: The assessee claimed Rs. 5,28,703/- as foreign travel expenses for professional purposes. The Assessing Officer (AO) disallowed 50% of these expenses, stating they were not incurred wholly and exclusively for the profession. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this disallowance, noting the lack of evidence to substantiate the professional nexus of the expenses. The tribunal agreed with the lower authorities, emphasizing that the assessee failed to provide sufficient evidence to demonstrate the professional nature of the expenses, thus dismissing this ground. 3. Disallowance of Physical Fitness Expenses: The assessee claimed Rs. 1,75,188/- towards physical fitness expenses. The AO disallowed 20% of the difference amount, considering it personal in nature. The CIT(A) directed the AO to disallow 25% of the total expenses, granting partial relief. The tribunal upheld this decision, noting that while physical fitness is crucial for the assessee's profession, it cannot be considered wholly and exclusively professional. 4. Disallowance of Other Expenses: The AO disallowed 20% of other expenses (costume expenses, telephone bills, water charges, and club fees) amounting to Rs. 41,298/-, citing a personal element. The CIT(A) upheld this disallowance. The tribunal agreed, noting the mixed nature of these expenses and the difficulty in segregating personal from professional expenses. 5. Disallowance of Security Charges: The AO disallowed 10% of security charges amounting to Rs. 32,738/-, considering the personal use of the premises. The CIT(A) upheld this disallowance. The tribunal confirmed the lower authorities' decision, as the assessee failed to prove that the security expenses were wholly and exclusively for professional purposes. 6. Disallowance of Swimming Pool Charges: The AO disallowed 50% of the rent paid for land on which a swimming pool was constructed, amounting to Rs. 30,000/-, citing probable personal use by family members. The CIT(A) upheld this disallowance. The tribunal agreed, noting the likelihood of personal use and the involvement of personal elements in the expenses. 7. Disallowance under Section 14A: The AO disallowed Rs. 3,30,506/- under Section 14A, which the CIT(A) reduced to Rs. 1,65,253/-. Additionally, the CIT(A) allowed an ad-hoc disallowance of Rs. 50,000/- to cover any expenses related to exempt income. The tribunal upheld this decision, finding the disallowance fair and reasonable. 8. General Grounds and Interest under Section 234D: The tribunal found that general grounds (Ground Nos. 1, 8, 9, 11, and 12) required no adjudication. The ground related to interest under Section 234D was dismissed as it was not specifically addressed. Conclusion: The tribunal dismissed the appeal, upholding the disallowances made by the lower authorities. The order was pronounced in the open court on 8th November 2023.
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