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TMI Blog2016 (4) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... confirming disallowance of the foreign tour expenses to the extent of 60% of the total expenses of Rs. 1,39,249/-. Such disallowance of Rs. 83,550/- made and confirmed by the Ld. CIT(A) need to be allowed, 3. That the assessee craves leave to add, alter amend or withdraw any ground or grounds of appeal before or at the time of hearing." 3. The brief facts of the case are that the assessee is an individual and proprietor of M/s. Oriental Leather Industries dealing with manufacturing and export of leather products. The assessee filed its return of income on 03.08.2008 showing a total income of Rs. 71,565/-. The notices under section 143(2) and 142(1) of the Act were issued under scrutiny. 4. During the assessment proceedings, the assessee has shown long term capital gain of Rs. 7,46,717/-. The AO found that the assessee has relinquished lease right on land and construction thereon and sold for a consideration of Rs. 1,20,00,000/- and also found assessee deposited only Rs. 5,00,000/-in Union Bank of India. The AO treated Rs. 1,25,00,000/- as value of consideration of relinquishment of lease right. The AO added Rs. 64,39,923/- as capital gain of assessee to the total income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by applying the provisions of Sec. 50 of the Act. It was contended that from the records it is apparent that in the assessee's books of account under the head "Land & Building a/c.", there were two types of assets, i.e. (i) Leasehold interest in the land and (ii) Building constructed on such leasehold land. According to provisions of Section 32 of the Act, no depreciation is allowable on land. The reliance is placed on the decision of Supreme Court in the case of CIT vs. Alps Theatre 65 ITR 377 (SC). That apart, no depreciation was allowable on leasehold interest in land as per Sec. 32 of the Act, it was noticed that the accountant of the assessee had charged depreciation erroneously on both land and building in the accounts of F.Y. ended on 31/3/2007, although no depreciation is allowable on land. It was further submitted by the assessee that there has been no income-tax assessment of the assessee in respect of A.Y. 2007-08 and hence the charging of depreciation in books of account of the assessee in respect of the preceding financial year cannot be automatically treated to have been allowed to the assessee in terms of provisions of Sec. 50 of the Act. Since, no assessment ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t had also received amount of Rs. 5 lakh on surrender of lease. Hence, the AO was justified in adopting the full value of consideration at Rs. 1,25,00,000/- instead of Rs. 1,20,00,000/-. With regard to claim of indexation also, I do not find any merit in the submission of the appellant. From the assessment records it is apparent that the; appellant has treated the land & building as his business assets of the proprietary concern M/s. Oriental Leather Industries and that he has also claimed the depreciation On that asset. Under the circumstances, the AO was justified in denying the Indexation and assessing the capital gain income as short-term capital gain by invoking provisions of section 50 of the I.T. Act. The action of the AO in this regard is upheld. In view of above, the ground no.1 and 2 are dismissed." 7. Aggrieved by first appellate order, the assessee has come before this Tribunal contending that the assessee surrendered lease right at Rs. 1,20,000/- and the same is clear and established in deed of conveyance and drew our attention to the page nos.59 and 60 of the paper book. The ld. DR relied on the orders of both the authorities below. 8. Heard both representatives an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to above. It is the case of the assessee-company that the wife of the chairman-cum-managing director of the company accompanied him on his business tour and that the accompaniment was for the purpose of enabling him to discharge his social-cum-business obligations in an effective manner. The Special Bench observed that in the modern age, and more so in the western countries, the senior executives are, as a matter of social custom, accompanied by their wives when the visit, though for business purposes, has necessarily some social aspects also. Neither the assessing authority nor the appellate authority has got a case that the foreign tour made by the chairman-cum-managing director is not for any business purposes or that the accompaniment of the wife is not for the purpose of fulfilling the social aspects aforementioned. The authorities below also do not have a case that the accompaniment of the wife of the chairmancum- managing director did not result in any advantage to the assessee. It is also relevant to note that the board of directors of the company, by resolution, have permitted the same. 48. We had occasion to consider almost a similar situation in IT Ref. No. 39 of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the wife accompanied the husband because of business considerations. In the modern age, and more so in the western countries, the senior executives are, as matter of social custom, accompanied by their wives when the visit, though for business purposes, has necessarily some social aspects also. Under these circumstances, we hold that the expenditure of Rs. 19,783 which includes air-fare of Rs. 15,656 and foreign exchange of Rs. 4,022 equivalent to GBP 210 is an allowable expenditure. 14. In the present case it was argued that the assessee was 60 years old at that point of time and he requires assistance of some one to look after him on daily basis including on health ground which he had to take medicines regularly and in those circumstances travelling to long distance to USA was not advisable and presence of his wife also required for his export business. The facts of the cases before the Madras and Gujarat High Courts were similar to the case on hand where in both the assesse's claimed foreign tour expenses for their spouses on health grounds. The Hon'ble Madras High Court held that the wife's travelling expenses were in the nature of personal expenses. The Hon'ble Guja ..... X X X X Extracts X X X X X X X X Extracts X X X X
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