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TMI Blog2022 (3) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case and in law, the ITAT erred in confirming the action of the AO and the CIT (A) in disallowing expenditure incurred on foreign travel of Directors of the Appellant without appreciating that the same has been undertaken wholly and exclusively for the business of Appellant Company? Background facts 3. The background facts are that the Appellant is a company engaged in the business of manufacture and sale of ferro alloys like ferro silicon and charge chrome. For the AY in question, the Assessee filed its return of income on 30th September 2009 declaring a total income of Rs. 1,91,79,42,344/-. Subsequently, return of income was revised on 24th September 2010 declaring the same total income. 4. The Assessee paid electricity duty to the Government of Odisha at the rate of 6 paise per unit. This was enhanced to 20 paise per unit by the Government of Odisha and a demand was raised on that basis. Challenging the increase in the rate of the electricity duty and the consequent demand, the Assessee filed W.P.(C) No.5413 of 2005 in this Court. By an interim order dated 21st April 2005 passed in the said writ petition, this Court directed the Assessee to continue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggrieved by the above two additions, the Assessee appealed to the Commissioner of Income Tax (Appeals) [(CIT (A)] who by an order dated 26th June 2013 confirmed the order of the AO. The Assessee then went in further appeal to the ITAT which, by the impugned order dated 13th June 2014, concurred with the AO as well as the CIT (A). Submissions of counsel for the Appellant 10. Mr. Sachit Jolly, learned counsel appearing for the Appellant-Assessee, submits that the requirement of Section 43B (1) of the Act was only that the Assessee should have "actually paid" the electricity duty amount and not that the amount should have been received by the Government of Odisha. He accordingly submits that the AO was in error in disallowing deduction in respect of Rs. 6,29,11,949/- which had been deposited by the Assessee in a no-lien/escrow account in compliance with the interim direction of this Court, to begin with, and then the Supreme Court. Mr. Jolly emphasizes that as far as the Assessee is concerned, it had no control over the said sum after it had parted with it. If in the future the Assessee succeeded in the appeal before the Supreme Court of India, then in the event of the amount being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he names of the Directors who travelled and the amount spent on each of their travel, or even just the cities to which they travelled, without giving a break-up of the expenses on travel, stay, entertainment and so on. He accordingly submits that disallowing 20% of the expenses claimed on this account was not unreasonable. Decision on Question (i) 14. The above submissions have been considered. The relevant portion of Section 43 B of the Act reads as under: "43-B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of - (a) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or (b) - (f)............. shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him : Provided that nothing contained in this section shall apply in relation to any sum which is actually paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be claimed as deduction only if the Assessee has actually parted with the sum without any recourse to it thereafter. In the present case, the interim stay granted in favour of the Assessee was only to ensure that the disputed amount of electricity duty did not go to the State Government. Short of such 'actual' payment, the Assessee was permitted, first by the High Court and then by the Supreme Court, to deposit the disputed amount of duty in a 'no-lien'/escrow account. The very nature of the stay was to prevent the State Government from having access to the amount placed in such no-lien/escrow account. Therefore, while it may be correct to say that the Assessee 'paid' the amount in dispute, it paid it only into an account from which the State Government could not withdraw the amount. In other words, under the orders of this Court as well as the Supreme Court, the State Government was prevented from having access to the sum in the said account. 17. The question then arises is whether the above kind of payment will satisfy the requirement that the Assessee should have 'actually paid' the electricity duty amount. In interpreting the provision, emphasis has to be placed on the expre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account was only to ensure that during the pendency of the litigation the said disputed amount is not in fact paid directly to the State Government. Therefore, the net result is no different from the kind of payment made by the Assessee in the aforementioned two cases by furnishing bank guarantees in lieu of such disputed payment of duty. In all three instances, therefore, the requirement of Section 43 B of the Act is not satisfied. 21. Accordingly, question (i) framed by this Court is answered in the affirmative i.e. in favour of the Department and against the Assessee. Decision on Question (ii) 22. The admitted facts are that a claim of Rs. 1,55,80,882/- was made by the Assessee as deduction under the head 'Export Promotion Expenses'. The sum pertained to the travel of its Chairman, Vice-Chairman, Managing Director and Director (Corporate) to various cities in the world. While the names of the cities, the names of the Directors and the amount spent on each of them were specified there were no further details furnished to indicate that the expense was for purely business purposes. The AO was not, in the considered view of this Court, acting unreasonably in concluding that in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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