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TMI Blog2023 (7) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... y assessee. Addition of 25% of credit card expenses by CIT(A) - CIT(A) concluded that the perusal of the credit card statement shows that most of the expenses were purely personal in nature, being items like apparels, electronic items shoes, sun glasses etc. We are unable to find any fault in the conclusion derived by the CIT(A) in this regard as the ld. counsel of assessee could not substantiate that the expenses incurred by the assessee through credit card was for the purpose of business of assessee and there was no element of personal purpose or non business purpose. Therefore disallowance being 25% of total claim is quite correct and justified. CIT(A) confirmed disallowance holding that it was incurred for personal purpose and not for business purposes as the assessee did not furnish the guest list and not even furnish the photographs or any other evidences substantiating that the said expenditure was incurred on get together party at factory premises on 31.12.2013 with a view to promote business of assessee. Even before us there is no evidence before us substantiating the claim of assessee therefore the disallowance made by the ld. CIT(A) does not require any interfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciate that the Credit Card always issued in individual name of the director which is being commonly used and if any expenditure of personnel in nature, the same has been separately accounted for and not been claimed as business expenses applying business prudence. 3. The ld. counsel of assessee submitted that the addition relating to Advertisement Marketing Expenses from Rs 3,00,000/- to Rs 18,18,624/- Primarily on adhoc basis without appreciating the business exigencies and further without appreciating that the expenses were incurred wholly and exclusively for the purpose of business and the disallowance is against the commercial expediency. He further submitted that the disallowance relating to Advertisement Marketing expenses erred by not appreciating that the expenses incurred through credit card by JMD of the Company during his Foreign Visit on Purchase of Gifts, Dinner etc with Clients are Customary in nature and with a view to Promote Export Business of the assessee company and it has no any personal element. He also submitted that the disallowance to Rs 18,18,624/- without appreciating that the account of the assessee is audited and the disallowance is completely ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... designing services received in respect of new corporate office of the appellant company at Faridabad. No adverse view is attracted on this point. 6.10.1 As regard payment to non-resident amounting to Rs 26,78,272/-, it has been submitted that the same was made to Messe Dusseldorf and Klaus Harren GMBH in Germany towards their services rendered in Dusseldorf K-Show, the exhibition in which the appellant company participated. In the absence of any PE in India and referring to Art 7 of DTAA between India and Germany and correspondence from Klaus Harren GMBH stating that tax is to be paid in Germany and producing Form 15CB for non-deduction of TDS, the appellant has substantiated that TDS was not required to be deducted in respect of these transactions. The appellant's explanation is accepted. a) Credit Card expenses under the head 'Advertisement Marketing amounting to Rs 55,42,668/-. 6.10.2 Before me, the assessee submitted that an amount of Rs. 55,42,668/- of credit card expenses has been incurred for business purposes, out of which substantial amount of Rs. 47,04,118/- has been incurred in foreign countries in the USA, France, Germany, Dubai etc. and balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export and to strengthen its business ties and to explore further business, it has to spend money in entertaining customers and giving them gifts. If that is so, it must be established by leading evidences. It was argued that credit card expenses have both personal and business expenses and the appellant has segregated the two and claimed only those related to business on the basis of its business prudence. However, no such basis was divulged when there is such queer mixing of business and non-business expenses. The appellant must come out with clean hands segregating the two to claim only those expenses which have been incurred wholly and exclusively for business purposes. In the present case, the appellant has no reliable evidences or explanation in respect of such expenses. 6.10.7 The limited information filed is only self-generated without any corroborative proof from independent source. The break-up of expenses totaling to Rs 1,64,10,846/- including credit card expenses has been broadly filed vide letter dated 10.04.2019 and that too only for amount exceeding Rs 40,000/-. For expenses below Rs 40,000/- totaling to Rs 23,97,552/-, no details have been furnished. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustomers without identifying the guests which make it clear that these are expenses of personal nature only and as the items purchased were not the items which can be given to an organisation or customer and the same were purchased as per personal choice and consumption. These facts factual finding have not been negatived by the ld. counsel of assessee. 7. The ld. CIT(A) disallowed 25% of credit card expenses that is Rs. 13,85,670/- by considering the entire explanation of assessee and by observing that the genuineness of expenses on dinner meeting with domestic and international customer as having been incurred wholly and exclusively for the purpose of business has not been established as the assessee has not produced supporting bills and vouchers, it has failed to establish identity of customer for whom such huge expenditure has been incurred in India Abroad and also failed to establish identity of the person on whom expenses have been incurred through credit card and the assessee failed to segregate the expenditure for the purpose of business and for personal purpose. Thereafter the ld. CIT(A) concluded that the perusal of the credit card statement shows that most of the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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