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TMI Blog2018 (12) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... ls of travel agent and bills of foreign exchange purchased. No evidence to prove the visit of the MD to breweries in Edinburgh had been filed, nor any other evidence to prove that the trips were undertaken for business purpose. Therefore, we uphold the order of the Ld.CIT(A) in disallowing the claim of foreign travelling expenses incurred on the trip undertaken by the MD of the assessee company to UK. There is no justification for holding the expenses incurred on the MD as excessive. Surely the stature of an MD if far above that of the other employees of the company and therefore the expenses cannot be said to be excessive by comparing with the quantum incurred on other employees.Even while disallowing expenses for personal usage, only general statements have been made that some personal element must be involved in the trip to Germany. There is therefore we find no basis either for holding the expenses incurred on the MD’s trip to Germany excessive or personal. The Revenue cannot deny the claim of expenditure on whims and fancies. The same is, therefore, not acceptable. In view of the same, we hold that the denial of claim of expenditure incurred on the trip of the MD of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowable @ 100%. But the assessee had claimed depreciation @ 50% only, having used it for less than 180 days. Thus depreciation of ₹ 20,80,484/- was claimed by the assessee on the ETP installed. It was thereafter pointed out that the A.O. had denied the said claim of the assessee by stating that the invoices of the purchases of the plant revealed that the purchases were made from November 2008 to March 2009 for the said ETP, which meant that the assessee was in the process of designing and installing the plant and, therefore, could not have put to use in the year. The matter was carried in appeal before the CIT(A) who upheld the addition. Thereafter drawing our attention to para 11 of the order the Ld. counsel for assessee pointed out that various purchase bills of the plant were placed before the I.T.A.T. and also clearance certificate issued by Punjab Pollution Control Board dated 20.2.2009 to prove that the assessee had already put the ETP to use. It was pointed out that after going through the certificate, the I.T.A.T. held that the said certificate was only a No Objection Certificate for release of additional power and the assessee must have approached the electricity a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame reason. Our attention was drawn to the findings of the Ld.CIT(A) at para 3.3 of his order as under: 3.3 I have considered the facts of the issue. The appellant had produced certain documents before the Assessing Officer, which have rightly been rejected by the Assessing Officer, since these were not relevant to decide as to when the Effluent Treatment Plant was put to use. The certificate issued by the Brewer and Engineer of appellant company has rightly been rejected by the Assessing Officer, since it has been signed by the appellant's own employee. The office of Additional Superintendent Engineer has confirmed that the additional power load was granted to the appellant only on 20.05.2009 and the Effluent Treatment Plant could not have been put into operation without the additional power load. The contention of the appellant is that the said plant was run on the existing power load, but it is not possible to run such a heavy plant without additional power load and the electricity department would not permit the same. Moreover, this argument was never taken in the original assessment proceedings or in the appellate proceedings. Therefore, it is held that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plant. The increase in power load from 1164.844KW by 350.064 KW was made available on dated 27.05.2009, after receipt of sanction from PSEB. 4. That the unit has only one ETP, of which capacity was enhanced from 100 KLD to 156 KLD. (Kilo liters per Day.) 5. That this ETP was purchased from M/s Lars Enviro Pvt. Ltd. had been installed commissioned at Mount Shivalik Breweries Ltd, Bhankarpur and put to use on 27th January,2009. No trial run was required for this type of plant. That the average time required to install this plant around 5-6 months 6. Effluent Treatment Plant or ETP is one type of waste water treatment method which is particularly designed to purify industrial waste water. Its aim is to release safe water to environment from the harmful effect caused by the effluent The quantity quality of waste water generation fluctuates depending on operation like raw material handling, wort preparation, fermentation, water consumption, solid liquid separation, packaging etc. The effluent discharged is highly organic acidic in nature with high COD, BOD, consisting of easily biodegradable sugars, soluble starch, ethanol, volatile, fatty acid, suspend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was able to establish that its ETP was installed and put to use during the year, enabling it to claim depreciation on the same. The facts which are not disputed are that all the purchase bills relating to various components necessary for construction of ETP relate to the period up to March, 2009 of the impugned year and none of the bills pertain to the succeeding year. Also the assessee had obtained no objection certificate from the Punjab Pollution Control Board for release of additional power load of 350.064 KW to the assessee and had also obtained sanction from the said Board for discharge of effluent out of the premises of the assessee breweries by end of February, 2009 in the form of clearance certificate issued by the Board dated 20.2.2009 and consent letter given by the Board for discharge of effluent dated 26.2.2009. Further the Chief Engineer and Chief Brewer of the assessee company had certified ETP having been installed and commissioned and thus put to use on 27.02.2009. Thus the above facts undeniably prove that the plant was installed before the close of the year and only reason for restoring the issue back to the A.O. in the first round by the I.T.A.T. was that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the facts on which it is based and have nothing to do with the point of time with which they are raised. The fact that this was the lean period of the beer industry and, therefore, the brewery was capable of being run on far less than normal electricity load having not been disputed, there was merit in the claim of the assessee that the addition made to the capacity of the existing ETP plant in the impugned year was capable of running on the available power load and without pointing any falsity in the contention raised by the assessee the same cannot be rejected merely for the reason that it was not raised earlier by the assessee. Moreover we also find merit in the contention of the assessee that the entire exercise of disallowance of depreciation is a tax neutral exercise since the depreciation disallowed in the impugned year is eligible for allowance in the succeeding year since the assessee as per the revenue authorities had put to use the ETP in the succeeding year and rate of depreciation on the same @ 100% is not disputed. Further the assessee has contended that it had returned sufficient profits in both the years and, therefore, the tax demand raised in the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business of the assessee stating that they only gave the details of the expenses incurred and only proved the factum of expenditure having been incurred without establishing that they were incurred for the purpose business of the assessee. The A.O., however, allowed the expenditure to the extent of ₹ 2,17,195/- incurred by the Managing Director (in short MD ) on his trip to Germany on finding that expenses of the employees of the assessee company on the trip undertaken to Germany had been allowed by the A.O. and on holding that the said amount was sufficient for incurring on MD of the company while the remaining was disallowed holding the same to be extravagant and holding that the some personal element could have also been involved in the same. The Ld.CIT(A) upheld the order of the A.O. 12. Before us, the Ld. counsel for assessee reiterated the contentions made before the lower authorities stating that the MD of the company had undertaken two trips one to U.K. and the other to Germany. It was contended that in U.K. the MD had visited the breweries in Edinburgh, UK, namely Heineken, which had acquired the UK business of Scottish New Castle and Scottish Courage Br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the MD of the assessee company to Germany, we find merit in the contention of the assessee. Admittedly, the business purpose of the trip to Germany stands established and accepted by the A.O. while allowing expenses incurred on other employees of the assessee company who had accompanied the MD on the said trip. Having accepted the same, he has allowed the expenses incurred on the MD but has restricted it to the extent of ₹ 2,17,195/- disallowing expenditure to the extent of ₹ 3,27,030/- for the reason that he found the same to be excessive as compared to other employees and personal use could not be ruled out for the same. We cannot agree with this contention of the Revenue. There is no justification for holding the expenses incurred on the MD as excessive. Surely the stature of an MD if far above that of the other employees of the company and therefore the expenses cannot be said to be excessive by comparing with the quantum incurred on other employees.Even while disallowing expenses for personal usage, only general statements have been made that some personal element must be involved in the trip to Germany. There is therefore we find no basis either for holding the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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