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TMI Blog2015 (2) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... remanded the issue back to the Assessing Officer for reconsideration, after full opportunity to the assessee as AO has not brought anything on record with respect to the treatment given by the assessee to the income received and on the disputed lease transactions. - Decided in favour of assessee for statistical purposes. Disallowance of foreign travelling expenses - AO disallowed the claim as the assessee failed to establish that the expenditure was incurred for the purpose of business - CIT(A) and Tribunal, merely referring to their earlier orders in the case of this very assessee, allowed the claim - Held that:- CIT(A) and Tribunal committed an error in allowing the expenditure without its full verification. Surely, the foreign travelling expenses, if incurred for the purpose of business, would be allowable as the business expenditure. However, the assessee has to establish that the travelling was undertaken for the purpose of business, and, therefore, the expenditure was "business expenditure". Merely because on the basis of the material for the earlier years, the Commissioner (Appeals) and the Tribunal allowed such expenditure would not by itself mean that in the later years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the decision of the Commissioner of Income-tax (Appeals) wherein the Commissioner of Income-tax (Appeals) deleted the addition on account of excess consumption of catalyst after relying upon his order in the case of the assessee for the assessment years 1994-95 and 1995-96 without appreciating that the facts and circumstances of these assessment years were different from the current assessment year ? (4) (i) Whether the Income-tax Appellate Tribunal has erred in law in not holding the lease transaction as financial lease transaction when the actual nature of transaction was lease finance and not an operating transaction ? (ii) Whether the hon'ble Income-tax Appellate Tribunal has erred in law and on facts in directing the Assessing Officer to follow the decision of the hon'ble Gujarat High Court in the case of CIT v. Gujarat Gas Co. Ltd. [2009] 308 ITR 243 (Guj) which cannot be considered a good law in respect of finance lease in view of the hon'ble Supreme Court decision in the case of Asea Brown Boveri Ltd. v. Industrial Finance Corporation of India [2005] 126 Comp Cas 332 (SC) ; [2006] 154 Taxman 512 (SC) ? (iii) Wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,43,855 as being the sales outside the books of account and added to the income. Aggrieved by the order of the Assessing Officer, the assessee carried the matter before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) deleted the addition by holding as under : 'The next two grounds of appeal relate to the addition on account of excess consumption of raw materials and excess consumption of the catalysts. The Assessing Officer has observed that the appellant's consumption of the raw material heptene during the year under con sideration has increased as compared to that of the immediately pre ceding year. The Assessing Officer further observed that had the consumption ratio of heptene remained constant, the production of Iso Octonol should have been more. The Assessing Officer, therefore, came to the conclusion that to the extent there is excess consumption, which led him to presume that the appellant has sold the said goods outside the books of account and, accordingly, made the addition of ₹ 96,43,855. On similar observations, the Assessing Officer also made the addition of ₹ 86,87,381 on account of excess consumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are deleted.' 15. Aggrieved by the order of the Commissioner of Income-tax (Appeals), the Revenue is now in appeal before us. 16. Before us, the learned Departmental representative relied on the order of the Assessing Officer whereas, on the other hand, the learned authorised representative submitted that the Assessing Officer has not rejected the book results nor found any defect in the books. He further submitted that the assessee has maintained complete quantity records as per the central excise laws and no defect was found therein. He further submitted that gross profit rate was better compared to earlier years. He thus supported the order of the Commissioner of Income-tax (Appeals). 17. We have heard the rival submissions and perused the material on record. It is seen that while deleting the addition, the Commissioner of Income-tax (Appeals) has held that the facts in the present group are identical to that the assessment year 1995-96 and he relying on his orders for the assessment years 1994-95 and 1995-96 deleted the addition. Before us, the assessee has submitted that it has maintained compete quantity records as per the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer for him to decide the issue de novo after a giving an adequate opportunity of hearing to the assessee. Thus, both these grounds of the Revenue is allowed for statistical purposes. In view of mere remand by the Tribunal, we do not see any reason to interfere. The Tribunal of course referred to the decision in the case of Gujarat Gas Ltd. (supra). Needless, however, to state that the Assessing Officer would consider the entire case law, as may be presented before him and applicable to the facts on hand. This brings us to the sole surviving question No. 1. We admit the following substantial question for our consideration : (1) Whether, on the facts and in the circumstances of the case and in law, the Tribunal was correct in upholding the decision of the Commissioner of Income-tax (Appeals), which was perverse on fact in so far as his finding that the assessee had furnished required information before the Assessing Officer was not supporting facts on record as held by Assessing Officer in assessment order ? We take up this question for hearing with the consent of learned advocates for the parties. In the return filed, the assessee had claimed a sum o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed the claim. In our view, the Commissioner of Income-tax (Appeals) as well as the Tribunal committed an error in allowing the expenditure without its full verification. Surely, the foreign travelling expenses, if incurred for the purpose of business, would be allowable as the business expenditure. However, the assessee has to establish that the travelling was undertaken for the purpose of business, and, therefore, the expenditure was business expenditure . Merely because on the basis of the material for the earlier years, the Commissioner (Appeals) and the Tribunal allowed such expenditure would not by itself mean that in the later years also, any expenditure under the same head must be automatically allowed. The assessee owed a duty to establish the basic facts to demonstrate, particularly when called upon by the Assessing Officer that the expenditure was in fact incurred for the purpose of business. In our opinion, the Commissioner of Income-tax (Appeals) and the Tribunal mechanically allowed the expenditure referring to their earlier decision in the case of the assessee. The issue must be examined on year-to- year basis on the basis of evidence on record. In the resul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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