9911796707
TMI Blog2022 (11) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... compute the disallowance. Accordingly, the ground of assessee allowed for statistical purposes. Disallowance of foreign travel expenses - Allowable business expenditure - HELD THAT:- We find that the grievance of the Revenue seems to be that wife of Director had accompanied Director to the foreign country and her expenditure is also debited in the books of the company. This is factually incorrect as is evident from the perusal of the ledger account of travelling expenses (International), wherein the travel expenditure of Director's wife has been reimbursed by her to the assessee company and the expenditure of the assessee is duly credited to that extent. This categorically goes to prove that no expenditure pertaining to Director's wife has been debited in the books of the assessee company. Hence, there cannot be any personal element of expenditure debited in the assessee company s books. These details were duly furnished before the lower authorities which had been ignored by the lower authorities. Hence, we have no hesitation in directing the ld. AO to delete the disallowances made on account of foreign travel expenses - ground raised by the assessee is allowed. Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted accordingly. Office maintenance charges - We are unable to persuade ourselves to the stand taken by the Revenue as the premises in which these expenses were incurred where the business of the assessee is being carried on. It is duty bound on the part of the assessee to pay maintenance charges to the housing society and house keeping charges to a contractor outsourced by the housing societies. Hence, we hold that the said expenditure is wholly and exclusively incurred for the purpose of the business of the assessee and accordingly allowable as deduction. The ld. AO is directed accordingly. Staff welfare expenses - We find that assessee has incurred expenses towards milk, tea, water, medicines, vegetables kept at guest house. We have already held that assessee is maintaining guest houses at various locations to house its employees on their official visits. Accordingly, these expenses are to be mandatorily incurred to maintain the said guest house for providing basic amenities to its employees. Hence, we hold that these are wholly and exclusively incurred for the purpose of business and accordingly, the ld. AO is directed to allow deduction for the same in toto. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which is evident from the balance sheet in page 3 of the paper book and hence, it could be reasonably presumed that the investments which had yielded exempt income to the assessee had been made out of interest free funds available with the assessee by placing reliance on the decision of the Hon ble Supreme Court in the case of South Indian Bank Ltd reported in 438 ITR 1 (SC). We direct that there could be no disallowance of interest in terms of Rule 8D(2)(ii) of the Rules. The ld. AO is directed accordingly to delete the same. 3.2. With regard to disallowance made under Rule 8D(2)(iii) of the rules is concerned, we direct the ld.AO to consider only those investments which had actually yielded exempt income to the assessee during the year under consideration and recompute the disallowance accordingly. The workings for the same are given by the assessee in page 43 of the paper book. The ld. AO is directed to verify the same and re-compute the disallowance. Accordingly, the ground Nos. 1 2 raised by the assessee are allowed for statistical purposes. 4. The ground No.3 raised by the assessee is challenging the disallowance of foreign travel expenses. 4.1. We have heard riv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 5% as against 20% made by the ld. AO in respect of travelling expenses, sales promotion, office maintenance and staff welfare expenses. 5.1. We have heard rival submissions and perused the materials available on record. We find that the ld. AO had disallowed the following expenses on an adhoc basis @20% or 10% , as the case may be, which was reduced to 5% by the ld. CIT(A) as under:- Nature of Expenditure Adhoc Disallowance by AO Adhoc sustenance by CIT(A) at 5% a) Travelling Expenses 11,73,953 2,93,488 b) Sales Promotion 5,28,287 1,32,072 c) Office Maintenance 1,13,106 28,276 d) Staff Welfare 33,659 16,829 5.2. During the course of assessment proceedings, the assessee furnished the entire books of accounts along with bills and vouchers for verification of the ld. AO. It is not in dispute that assessee company has its head office in Mumbai and other offices at various locations in India at Shillong, Gau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustry, it had to give these gold coins as gifts to its customers and suppliers during auspicious occasions like Diwali, Christmas, Marriage etc., It was pointed out that these gifts are customary in nature and had to be considered only as wholly and exclusively for the purpose of business. The bills of the same were duly furnished before the lower authorities. The assessee also pointed out that a sum of Rs.8,48,000/- was incurred as conference expenses wherein the same was paid to M/s. Thackers Caterers for providing food in the conference meeting to the customers of the assessee who attended conference. These expenses are to be construed only as expenditure incurred in the normal course of business of the assessee company. We hold there cannot be any adhoc disallowance of the same without finding any defect in the books or in the bills and vouchers produced by the assessee before the lower authorities. The ld. AO is directed accordingly. 5.5. With regard to office maintenance charges, it is not in dispute that assessee owns 14th Floor, C Wing of Mittal Tower and operates its business from the said premises. Accordingly, the assessee is bound to make payment of society maintenan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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