9911796707
TMI Blog2017 (6) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) had erred on facts and under the law in confirming the addition of Rs. 3,00,000/- on account of unexplained expenditure incurred on foreign travels as made by the AO. 3. That without prejudice to Ground No. 1 & 2 above, the additions as made by the AO and confirmed Ld. CIT(A) are very excessive." 2. Briefly the facts of the case are that during assessment proceedings, the AO observed that in the relevant year the assessee had undertaken foreign travel tour to UAE, Singapore etc. however she could not furnish the reasons/ purpose for undertaking such visits. The assessee could not produce any correspondence/work contract or invitation letter from the countries which could justify her claim that these visits were undertaken for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) that she is Bachelor of Arts from Delhi University. She had become a partner of firm M/s. Design & Development in assessment year 2008- 09. The assessee was involved in the business activities of providing design and interior work services to its clients and used to travel for meeting and developing business relations. The firm was taken over by company by the name of M/s. Design & Development India Pvt. Ltd. in which assessee is a share holder / Director. The assessee continued to be involved in the business activities as were doing earlier. No travel expenses have been disallowed earlier. The foreign trip travel expenditure of the assessee were borne by M/s. Design & Development India Pvt. Ltd. and such expenditure have been accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pasari vs. ITO in ITA No. 3204/Del/2009 dated 14th December, 2011 in support of contention that provision of section 17(2)(iii) would not apply in the case of the assessee. Ld. Counsel for assessee further submitted that the AO accepted in the remand report that travelling of 1st July, 2012 is actually 1st July, 2011 which is part of the entire foreign travel undertaken by the assessee. Therefore, no separate addition of Rs. 3 lacs should have been made. On the other hand, Ld. DR relied upon orders of the authorities below and submitted that in the order of the company the facts have not been discussed and that travel of 1st July, 2011 do not match with foreign journey undertaken by the assessee. 7. I have considered rival submissions. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h she has been director. Section 17(2(iii) of the I.T. Act does not apply to the assessee as assessee was not an employee of M/s. Design & Development (P) Ltd.. The assessee claimed that she was only director and share holder whereas this section applies to an employee director. Ld. Counsel for assessee also explained that assessee has only 14% of the share holding in the aforesaid company which was also specifically submitted before the authorities below to show assessee has no substantial interest in company. Therefore, in my view provision of section 17(2)(iii) would not apply in the case of the assessee. Ld. Counsel for assessee relied upon order of the ITAT Delhi Bench in the case of Smt. Shilpa Pasari vs. ITO (supra) in which in para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see on 1st July, 2011. Ld. Counsel for assessee referred to PB 62 which is certificate of foreign visit issued by the company to show that assessee has visited foreign country from 30th June, 2012 to 1st July, 2011. Therefore, this visit was already part of the foreign visit of the assessee. Therefore, no separate addition should have been made on estimate in a sum of Rs. 3 lacs.
10. Considering the above discussion and in the light of the above provisions and material on record, I am of the view both the additions of Rs. 5 lacs and Rs. 3 lacs are wholly unjustified. I accordingly set aside the orders of the authorities below and delete both the additions.
11. In the result appeal of assessee is allowed.
Pronounced in the Open Court. X X X X Extracts X X X X X X X X Extracts X X X X
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