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TMI Blog2014 (4) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of other tours – but, in assessment year 2009-10, he has disallowed 20% of the total expenditure incurred on foreign tours - Since the AO, in assessment year 2009-10, has taken the view that the business purpose involved in foreign tours cannot be altogether ruled out, the same position should be extended to the assessment year 2008-09 also - the involvement of personal purpose and incurring of personal expenses during foreign travels undertaken by the key personnel cannot be altogether ruled out - The absence of details of expenses incurred out of foreign exchange coupled with the fact that the key personnels are covered by sec. 40A(2) of the Act - the disallowance of 20% of the foreign tour expenses made by the AO in assessment year 2009-10 is quiet reasonable – thus, the order of the CIT(A) set aside and the order of the AO restored – also, the disallowance of foreign travel expenses should be maintained at the same level in assessment year 2008-09 also – the AO is directed to restrict the disallowance to 20% of the claim – Decided partly in favour of Revenue. - ITA Nos. 26 & 27/Coch/2014 - - - Dated:- 4-4-2014 - Shri N. R. S. Ganesan, JM And B. R. Baskaran, AM,JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Executive Fashion and design Singapore-Life style shows and meet fashion people 2,31,398 Rs.36,780 air ticket; Rs. 34,098 forex; Rs.160,520 forex 6 Ammu Mathew Sub Editor, Vanitha Editor s Forum of WAN 1,92,732 Rs 5326 overseas medical insurance; Rs. 10,230 air ticket; Rs. 177,182 air ticket 7 Keya Tharakan Executive fashion and design Dubai-Vanitha Pookalam context 3,54,825 Rs. 64,870 air ticket; Rs 245400 forex;Rs 44,555 air ticket 8 Bina Mathew Assistant Editor-Children s dvn Dubai-Vanitha payasamela Gulf cookbook publication meeting with integrated advertising 8,09,997 Rs.714,525 forex; Rs 93,472 air ticket 9 Bina Mathew Assistant Editor-Children s dvn 9,78,930 Rs.7,26,075 forex; Rs. 64,870 air tiecket; Rs 187,985 air tie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew, Executive Editor of Malayala Manorama. Thus, the AO noticed that Smt Prema Mamman Mathew, Smt Bina Mathew, Smt Keya Tharakan and Smt Ammu Mathew have only accompanied their respective spouses in the foreign tour. Since the above said persons are related to each other and also shareholders of the assessee company, the AO held that the provisions of sec. 40A(2) of the Act shall be applicable to the impugned expenditure. Accordingly, the AO took the view that the above said persons in most of the trips have accompanied their respective spouses and hence the business exigency is not proved. 3.2. The AO noticed that the objective of the foreign visit stated by these persons were very much general in nature and even pleasure trips can be covered by it. Some of the foreign trips were claimed to have been undertaken to attend conferences. However, the AO noticed that these persons were not the delegates of such conference and only their respective spouses have attended the conference. Further, the AO noticed that the assessee has not provided any details about the particulars of the expenses in respect of foreign exchange purchased by them. Accordingly the AO took the view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be ruled out. Accordingly, the AO disallowed 1/5th of the foreign expenses as apparently related to personal purposes as against 100% disallowance made in the preceding year. 5. In the appellate proceedings, the ld CIT(A) the Tribunal had deleted the identical disallowance made in 2005-06 to 2007-08. By following the decision rendered by the Tribunal, the Ld CIT(A) deleted the disallowances made in both the years. Aggrieved, the revenue has filed the present appeals for both the years. 6. The Ld D.R placed strong reliance on the assessment orders and submitted that the assessee has failed to show the business necessity and expediency in undertaking foreign trips. The Ld D.R further submitted that the foreign trips have been mostly undertaken for pleasure trip purposes, which is evidenced by the fact that foreign trips have been undertaken with family members that too tourist attractions. 7. On the contrary, the Ld A.R submitted that the assessee is in the business of publishing various types of magazines and hence it is imperative for the staffs and directors to undertake travel to foreign countries. The business expediency and necessity of foreign travel has been cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , cookery, factors affecting human life, etc. All these publications have a wide readership outside India is also not disputed. Foreign travel undertook by the staff who were Chief Editor, Asst. Editors, etc. and their designations are not disputed. It is a clear cut case of the assessee that they have nothing to do with the management and they are staff. In some cases, they accompanied their husband whereas husband are the employees of the other group concerns of the assessee, viz. Malayala Manorama. This fact also made clear by the ld.counsel that those foreign travel expenditure of the husbands of the staff were taken care by their employer, Malayala Manoramma. The staff of the assessee company visited various places in various countries to attend international press meeting, to explore the possibilities to bring out advertisement income and to explore the possibilities for bringing out an International Edition of its magazines which was necessitated to make the staff to travel abroad. This is for the purpose of business of the assessee. 11. The ld. CIT(Appeals), however, found that some element of personal nature is there, some pleasure trip was undertaken. As rightly conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director, Press Association Ltd. We discussed the digital revolution on traditional news. Further we exchanged the skills and strategies needed to sustain and improve journalism in the context of changing technological and business environment. English cuisine has distinctive attributes of its own, but also share much with wider British cuisine, largely due to the importation of ingredients and ideas from places such as North America, china and India during the time of the British Empire and as a result of postwar immigration. The popular British cuisine consists of fish chips, jellied eels, pie mash with parsley liquor, boiled beef carrots with pease pudding, tripe onions. Roly-poly pudding with custard for afters. Roys joseph pothen Head chef, Raj Malabar, Cambridge UK, narrates some of these. The trips was very informative and useful Sd/ Prema Memen Mathew May 15, 2007 Report on travel to Turkey from 06.05.2007 to 17.05.2007 56th General assembly of the International Press Institute was being held in Istanbul, Turkey during May 2007. I have been delegated by the company to attend the World congress and General assembly. The conference provided a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence the tour itinerary shall be prepared meticulously with predetermined program for each day of the tour, viz., the places of stay, the people to be met, purpose of visit, topic to be discussed etc. Further foreign tours shall be finalized after fixing appointment with the foreigners or upon their invitation. We notice the tour reports furnished by these persons are general in nature and do not contain such details. 10. The assessing officer, in assessment year 2008-09, has observed that the foreign travel expenses have been accounted for in the books of the assessee company on the basis of debit note raised by the group concern, viz., M/s Malayala Manorama. In this regard it was submitted that there is commercial advantage in following the said procedure, as the bulk booking would, on some occasions, result in savings. Accordingly, it was submitted that this kind of procedure is followed through out. In our view, the said procedure followed by the group concern and the assessee company may not be found fault with in view of the claim of commercial advantage. 11. We notice that Tribunal has deleted the ad-hoc disallowance made in assessment year 2005-06 and 2006-07 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every year that too, to the places of tourist attraction, the absence of details of expenditure incurred by using the foreign currency purchased, absence of detailed tour report with supporting materials etc., would, in our view, warrant disallowance as held by the Hon ble Madras High Court in the case of Seshasayee Brothers Ltd Vs. CIT (1961)(42 ITR 568). 14. However, as noticed by us earlier, the AO has taken contradictory stand with regard to the quantum of disallowance. In assessment year 2008-09, the AO has disallowed 100% of expenditure relating to certain tours and 50% of the expenditure of other tours. However, in assessment year 2009-10, he has disallowed 20% of the total expenditure incurred on foreign tours. Since the assessing officer, in assessment year 2009-10, has taken the view that the business purpose involved in foreign tours cannot be altogether ruled out, we are of the view that the same position should be extended to the assessment year 2008-09 also. 15. In view of the foregoing discussions, we are of the view that the involvement of personal purpose and incurring of personal expenses during foreign travels undertaken by the key personnel cannot be alto ..... X X X X Extracts X X X X X X X X Extracts X X X X
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