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TMI Blog2015 (1) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... ts grievance revolves around two issues namely: a) Disallowance of Rs. 8,71,524 out of travelling expenditure. b) Disallowance of Rs. 4,84,147 out of sale promotion expenses. 2. The brief facts of the case are that the assessee is a company engaged in the business of dealing farm equipments, machinery, spares, wind power generation etc., It has filed its return of income on 18.10.2007 declaring total income of Rs. 42,82,050/-. The case of the assessee was selected for scrutiny assessment and notice u/s 143(2) was issued and served upon the assessee. According to the Assessing Officer, twelve opportunities of hearing were granted to the assessee. On an analysis of the accounts, it revealed to the Assessing Officer that the assessee had de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n estimated basis by recording the following findings: "6.2 On an examination of the ledger account, I find hat in respect of the foreign tours, while the hotel bills and ticket expenses are reflected in the vouchers, the purpose of the tours and the expediency thereof are not established on a tour-wise basis. For example, Sri Vasudeva Murthy traveled extensively in Europe and UK for 15 days from 6.9.07 - 21.9.07 and likewise the ledger account reveal extensive payments made to the Directors in cash and in the form of air tickets. However, I have to note that the expediency of these trips is not established before me, apart from submission of some copies of bills from foreign hotels. The appellant's only general defense is that it impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of the business or not?, the supporting evidence was not produced. The learned CIT (A) has observed that it cannot be construed that total expenses were not incurred for the purpose of business. Therefore, on an estimate basis, she has upheld disallowance up to 50% of the claim. 6. On due consideration of these facts, we are of the view that import of machinery was not disputed by the Assessing Officer. The visits of the Directors were also not disputed. The dispute is whether these visits were exclusively for the purpose of business or they were pleasure trips. Therefore, possibility of involvement of personal expenditure in the traveling expenses cannot be ruled out. However, the involvement of personal expenditure could not be to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue was brought to the notice of A.R the A.R. could not substantiate the reason fro the same. 12.5 Therefore, an amount of Rs. 4,84,147/- is added back to the total income of the assessee company. Thus, the addition under this head is Rs. 4,84,147/-". 8. On appeal, the learned CIT (A) did not give any relief to the assessee. The learned Counsel for the assessee submitted that the assessee has not availed services of any event organizer. It simply booked the hotel and also arranged other items food etc., from outside. On the other hand, the learned DR submitted that TDS ought to have been deducted by the assessee. 9. We have duly considered the rival contentions and gone through the record carefully. Section 194C of the I.T. Act provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 194 C is not applicable for payments made by the customer to the hotel. The first and last three paragraphs of the judgment read as under: "1. The said circular provides that all service contracts are covered under section 194C of the Income Tax Act, 1961 ('Act' for short). As a result whereof, every customer of the petitioner No.1 hotel, while making payment to the hotel for occupying its room and availing other facilities /amenities provided by the hotel is required to deduct income tax at the rate specified in section 194C of the Act." 22. In the present case, we are concerned with the question as to whether the services rendered by the petitioner hotel to its customers is covered under section 194C of the Act ? 23. As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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