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TMI Blog2006 (11) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... n business of trading of non-woven fabrics of polyester, knitted fabrics used in the manufacture of travelling bags. The AO noted that Shri Sa chin Jain and Smt. Shruti Jain, who are son and daughter-in-law of the appellant are shown as employees. They visited China, Taiwan and Thailand together. Shri Sachin Jain also visited Hong Kong and Thailand alone. The AO required the presence of Smt. Shruti Jain. Since she was not presented for examination before AO, the expenses in respect of her visit were not allowed. The AO concluded that her visit abroad with her husband was for just a company sake and was not commercially dominated. It was purely a pleasure trip. Accordingly, the expenses in relation to her visit amounting to Rs. 5,41,175 were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in just four months she was in a position to negotiate with foreign suppliers. He accordingly concluded that the visit was a pleasure trip. He also held that foreign currency purchased was not utilised for the purpose of business. He accordingly confirmed the disallowance. The assessee is in further appeal before us. 5. The learned counsel for the assessee submitted that the assessee has claimed Rs. 10,82,350 on account of foreign tour (China, Thailand and Taiwan) between 15th May, 2000 to 20th May, 2000 by its two employees, namely, Mr. Sa chin Jain, manager (marketing) and Mrs. Shruti Jain, manager (imports). The assessee is engaged in manufacturing and sale of travel bags, etc. for which raw material is being imported from foreign co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one year intensive advance diploma in Chinese language at Department of East Asian Studies, University of Delhi. Relevant certificate was also produced before the AO which is at p. 42 of the paper book. The complete details of purchases made from the parties who were visited during foreign tour were also filed. The details are at p. 54 of the paper book. From the details, it can be appreciated, that names of many new parties appeared in the supplier's list which were not suppliers on earlier occasions. The purchases are also substantial. It is over Rs. 3,25,00,000, The assessment procedure started on 17th Jan., 2002. On 17th Jan., 2003, the assessee filed details of foreign travel expenses. The books of account were also produced along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rollary that the expenses were to be borne by the person staying and nobody else. Thus, on such a flimsy ground, the amount has been disallowed. The visit of Shri Sachin Jain and Shruti Jain was for the purpose of attracting the suppliers and was backed by commercial expediency. The corroborated fact that there is huge supply by various suppliers from China and Taiwan after the visit and that too by the new suppliers evidences consultation with these suppliers which were only as a result of foreign tour undertaken by Sachin Jain and Shruti Jain. Thus, it is incorrect to say that the trip of Shruti Jain was a pleasure trip. It is also incorrect to say that the details of utilization of foreign exchange purchases are not furnished. It is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence. She accordingly submitted that the order of learned CIT(A) be upheld. 7. We have considered rival submissions and relevant facts. The AO has noted in order sheet dt. 17th Jan., 2003 that the details of foreign travelling expenses were filed. It is also noted that books of account along with vouchers were produced and test checked. No further query relating to foreign travelling expenditure was put after such details were filed. Once again on 24th March, 2003, the nature of work undertaken by Sachin Jain and Shruti Jain was asked to be explained. On 28th March, 2003, the assessee filed details as called for. On 12th Dec., 2003, once again the assessee was requested to file details of foreign travelling expenses with regard to nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old that it amounts to additional evidence. The details of utilization of foreign currency are demonstrated by the details thereof along with necessary vouchers in support thereof. It is incorrect on the part of learned CIT(A) to hold that the evidences produced do not reflect negotiation or discussion with foreign suppliers. The details of purchases from various parties of China and Taiwan are a testimony that there were negotiations with these persons and only thereafter huge purchases amounting to Rs. 3,25,00,000 have been made. It is an accepted fact that when there is a visit abroad, incidental expenses like lodging, boarding, local transport, telephone, etc. are bound to happen. These are also supported by various bills which are at p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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