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TMI Blog1994 (4) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed the same. The judgments relied upon by the assessee in the cases of CIT vs. Himalaya Rosin Turpentine Mfg. Co. (1953) 24 ITR 132 (Punj) and Cinemas vs. CIT 1977 CTR (P H) 145 : (1977) 110 ITR 762 (P H) were distinguished on the facts as available in those cases. After placing reliance on the decision of Madras High Court in the case of Mask Co. vs. CIT (1943) 11 ITR 454 (Mad) and IRC vs. E.C. Warners Co. 12 PC 227, the assessee's claim was not accepted. 6. The learned CIT(A) after discussing the case laws as relied upon by the assessee as well the Assessing Officer, allowed relief mainly following the decision of the Tribunal, Chandigarh Bench in ITA No. 493 of 1987 in the case of ITO vs. S.A. Builders Pvt. Ltd. dt.14th Sept., 1988wherein in the similar facts and circumstances of the case, the forfeiture of security deposit was held to be allowable. 7. We have considered the rival submissions and have also gone through the material placed on the record. In order to appreciate the issue in its right perspective, it would be better to add a word about the circumstances in which the security came to be forfeited. The assessee contracted to supply 25,000 MTs. of rice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 185 : (1986) 160 ITR 493 (Pat) In view of above, we are of the considered opinion that the loss has been rightly allowed by the CIT(A) whose order we uphold. 8. The second contention is regarding commission claimed at Rs. 1,50,000 paid to one Shri O.P. Gupta, disallowed by the Assessing Officer and allowed by the CIT(A) to the extent of Rs. 75,000. Shri O.P. Gupta is the father of two directors of the company namely S/Shri Surendra Gupta and Virendra Gupta. For alleged liaison work in procuring a contract for supply of 15,000 MTs of Parimal boiled rice to M/s Kerala State Civil Supplies Corporation Ltd., the amount was stated to have been paid as a commission. Reiterating the arguments of the Assessing Officer, the learned Departmental Representative stated that the Assessing Officer had rightly addressed itself to the question whether the payments made were for the services rendered by Shri O.P. Gupta and if so, were they reasonable. For this, the enquiries were instituted from M/s Kerala State Civil Supplies Corporation Ltd. and statement of Shri O.P. Gupta was also recorded. Certain discrepancies were found. M/s Kerala State Civil Supplies Corporation Ltd. denied having deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% of the claim. 10. We have carefully considered the rival submissions. As mentioned in para 2(iii) of the CIT(A)'s order Shri O.P. Gupta had been carrying on liaison activities for various companies from time to time. The instances given were as under: Asst. yr. Name of company Amount of commission . . Rs. 81-82 Regent International,Bombay 16,50,000 81-82 M/s Survir Enterprises (Firm),New Delhi 37,078 83-84 M/s Krupa Co.,Bombay 15,000 84-85 M/s J. Inderlal,Bombay 52,000 85-86 M/s Survir Enterprises Pvt. Ltd.,New Delhi 1,50,000 86-87 M/s Reliance Industries Ltd.,Bombay 1,50,000 As admitted, Shri O.P. Gupta had also been in receipt of Rs. 37,078 from M/s Survir Enterprises for his liaison work done in the year relevant for asst. yr. 1981-82. This was not denied by the Department. In his statement dt.22nd March, 1988Shri O.P. Gupta also listed certain activities on which advice was given by him to the company. They are 1. Competitive nature of the contracts. 2. Current market trend in the field ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed on account of addition made under s. 40(c) of the Act. The assessee claimed Rs. 1,23,879 as expenditure incurred on 5 telephones, telex and telephone expenses incurred by the directors while on tour. Two of the five telephones are installed at the residence of the directors. The expenditure pertaining to these telephones amounted to Rs. 30,795. As the expenditure contained the private calls of the assessee, for this 1/5th of the expenditure was disallowed by the Assessing Officer. The learned CIT(A) reduced the disallowance to 1/8th instead of 1/5th. Before us, no arguments were advanced by the learned Departmental Representative to prove that the relief allowed by the learned CIT(A) was in any way excessive. Accordingly, the same is upheld. 13. The next contention pertains to deletion of Rs. 9,778 added on account of foreign tour expenses. The amount pertained to air ticket of one of the directors toLondon. Before the Assessing Officer copy of resolution of the Board of Directors dt.22nd July, 1983was furnished to show that the trip toLondonwas undertaken for exploring the possibility to export Indian basmati rice toU.K.The explanation was not accepted on the ground that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention raised pertains to reduction of disallowance made from Rs. 14,666 to Rs. 4,324 on account of travelling. The assessee claimed travelling expenses at Rs. 1,02, 349, out of which Rs. 5,590 was added under r. 6D of the IT Rules. The Assessing Officer raised it to Rs. 10,342 after holding that the limit prescribed under r. 6D is to be applied to individual trip and not to total trips undertaken by a particular employee. The CIT(A) agreed with the assessee's contention that while determining the admissible amount under r. 6D, all the tours made by the person have to be taken into consideration. Thus, while Rs. 10,342 was deleted, a further disallowance on account of lodging at Rs. 4,324 was stated to be called for. Accordingly, effective addition was reduced to Rs. 4,324. 18. The learned Departmental Representative submitted that the relief allowed at Rs. 10,342 was not called for as prescribed limit applies to each individual tour and not to all tours undertaken together. The learned counsel for the assessee on the other hand relying on the Tribunal's decision in the case of S.V. Ghatalia vs. Second ITO (1983) 4 ITD 583 (Bom), pleaded that the CIT(A)'s order on the same may b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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