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TMI Blog2016 (12) TMI 1545X X X X Extracts X X X X X X X X Extracts X X X X ..... 54,72,091/- as being not incurred for purpose of business. 2. The learned CIT(A) erred in not admitting the evidence in the form of Board resolution dated 31st July 2007, which approved the reimbursement of Rs. 54,72,091/- incurred for Mr. Samyak Veera, who was appointed as an advisor of the company on Corporate Property Development matters. 2. Rival contentions have been heard and record perused. 3. Facts in brief are that assessee is engaged in development and construction of Real Estate Properties. During the course of assessment proceedings, assessing officer stated that the assessee had incurred expenses of Rs. 56,04,604/- under the head travelling and conveyance viz. Travelling expenses of Rs. 1,32,513/- and Hotel expenses at Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imbursement of boarding and lodging expenses are in the nature of personal expenditure of Shri Samyak Veera and therefore, will not be treated as business expenses of the assessee. 6. Against the above order of CIT(A), assessee is in further appeal before us. 7. We have considered rival contentions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements relied on by learned AR in the case of CIT vs. Discovery Communication India (Delhi High Court) - 370 ITR 57. Delhi High Court in case of Yum Restaurants India Pvt. Ltd., - 371 ITR139 in support of the proposition that expenditure laid out and expended wholly and exclusively for the purpose of the business is to be allowed. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,125 + 12,71,97,953/-). We found from record that the project at Walkeshwar was surrounded by many in-adversities (like the tenants residing at the land were not ready to vacate the land and the appellant was not getting the approval from the statutory authorities etc.). Therefore, pending the approval from statutory authorities and getting the vacant land by removing the tenants, the amount so received from Shri Veera has been advanced by assessee company to various companies engaged in the business of real estate development at interest. 11. We also found that amount received from Mr. Samyak Veera was interest free. Mr. Samyak Veera is a non-resident Indian having no residence in India. Mr. Samayak Veera was interested in making substant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Development Properties matters vide board resolution dated 31st July, 2007 and it was also resolved that the assessee shall reimburse the lodging, boarding; travelling and conveyance expenses incurred by Mr.Veera during his stay in Mumbai. As mutually agreed between the assessee and Mr. Veera and decided by the assessee in board meeting, the assessee has reimbursed the hotel and travelling expenses of Mr. Veera and debited the same to the profit and loss A/c and claimed the same as business expenditure which is commercially justified in view of the facts stated herein above. 13. We had also carefully gone through the MOU entered by Samyak Veera for observing the project. 14. Mr. Veera was not "only" a purchaser of flat but also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectly or indirectly benefit the business in the form of increased turnover, better profit, growth, etc. As long as the expenditure incurred is "wholly and exclusively" for the purpose of business, the Assessing Officer cannot by applying of his own mind, disallow whole or a part of the expenditure. The Assessing Officer cannot question the reasonableness by putting himself in the arm-chair of the businessman and assume status or character of the assessee. However, exception can be created by a statutory provision like section 40A(2), when the Revenue as per the statutory mandate may have jurisdiction to examine the issue of price/consideration. For incurring advertisement expenditure, in the relevant years, there were no statutory stipulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. 17. Applying proposition of law discussed hereinabove to the facts of instant case, we found that the expenditure incurred being "wholly and exclusively does not mean that it has to be incurred necessarily. The expression "wholly and exclusively" used in section 37 of the IT. Act does not mean necessarily and the payments made voluntarily are not to be disallowed only on account of their voluntary character. So long as there is a reasonable nexus between the expenses incurred and the business of the assessee, the expenses will be regarded as having been incurred for the purposes of business. Thus, the test to find out whether a particular expenditure is wholly or partly justified or exclusively incurred for the purpose of business is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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