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TMI Blog2024 (8) TMI 1429X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. From the plain reading of Rule 46A of the Rules, we find that there is no provision which requires the learned CIT(A) to insist on the comments of the AO. Therefore, we find no merits in the contention of the Revenue raised in grounds no. A and B of the present appeal, and accordingly the said grounds are dismissed. Addition on account of sampling/design expenses - CIT(A) deleted addition - It is the submission of the assessee that these expenses were incurred for the purpose of the business of the assessee and form an integral part of its operations as a marketing support service provider. In support of its claim, the assessee has also furnished various evidence of sampling/designing expenditure, such as bank statements, payment vouchers, sample reimbursement statements, purchase bills of fabrics, etc., which forms part of the paper book. Revenue apart from harping that opportunity was not granted to the AO to comment on the evidence produced by the assessee before the learned CIT(A), did not bring any material on record to controvert the detailed submissions of the assessee supported by documentary evidence. Accordingly, we are of the view that considering the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the salary paid to the directors is commensurate with their services. It is evident from the record that the AO has merely compared the salary of the directors, without examining the services rendered by them to the assessee company. Therefore, considering the experience and magnitude of operations handled by the aforenoted directors, we are of the considered view that the learned CIT(A) has rightly deleted the disallowance of salary made by the AO. Appeal by the Revenue is dismissed. - Shri B.R. Baskaran, Accountant Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Ramankumar Goyal For the Revenue : Shri Ankush Kapoor, CIT DR ORDER PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the Revenue challenging the impugned order dated 21/01/2024, passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [ learned CIT(A) ], for the assessment year 2011 12. 2. The brief facts of the case are that the assessee is incorporated under the Companies Act, 1956 and is engaged in the business of providing marketing support services to Indian ready-m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law, the Ld. CIT(A) has erred in deleting the addition made by the AO on account of Foreign Travel Expenses of Shri Rajkumar Lanka amounting to Rs. 1,91,438/- without insisting on the comments of the AO through remand report. E. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by AO on account of Website Designing Expenses of Rs. 5,28,000/-, without insisting on the comments of the AO through remand report. F. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made by AO on account of Excess Salary paid to Director their relatives of Rs. 1,32,58,315/-, without insisting on the comments of the AO through remand report. 3. In the present appeal, the primary grievance of the Revenue is that the learned CIT(A) did not insist on the comments of the AO through the remand report under Rule 46A of the Income Tax Rules, 1962 ( the Rules ), and allowed the appeal filed by the assessee by relying upon the submissions/evidence submitted by the assessee. 4. In this regard, we have considered the submissions of both sides and perused the material avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facturers with whom the assessee has a tie-up. Thereafter, the Indian manufacturers commenced production of garments based on orders procured by the assessee. As per the assessee, in the entire process, it oversees and monitors the quality of the exported goods and ensures the foreign customers regarding the quality level of the manufacturers. For the aforesaid scope of work, the assessee earns commission income from the Indian clothing exporters and manufacturers for passing on orders from foreign buyers, whereas the major cost incurred by the assessee is the cost of procuring/developing designs and samples. In the present case, it is evident from the record that there is no dispute regarding the aforesaid profile of the assessee. 7. During the year under consideration, the assessee debited an expenditure amounting to Rs. 89,98,290 in the profit and loss account on account of sampling/design expenses. During the assessment proceedings, the assessee vide letter dated 29/11/2013 submitted details of sampling and design expenses. These expenses include expenses on account of Sample Ayushi, Sample Jhalak, Sample Megha Agarwal, and Sample Bikram Oberoi. As per the assessee, it has team ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Revenue s appeal, pertains to the deletion of addition on account of foreign travel expenses. 11. We have considered the submissions of both sides and perused the material available on record. During the year under consideration, the assessee debited foreign travel expenses amounting to Rs. 1,91,438 incurred by one of its employees, namely Mr. Lanka Rajkumar. In the absence of any explanation by the assessee regarding the business exigency of the expenditure, the AO disallowed the foreign travel expenses and added the same to the total income of the assessee. 12. As per the assessee, Mr. Lanka Rajkumar used to work with the company from October 1996 till August 2013 as a Senior Merchandiser and used to travel on behalf of the assessee to the UK for business trips. It is further the submission of the assessee that the said employee was assigned by the management of the company to do the business marketing and sales activities and overseas cities like Cardiff and Reading in UK to meet the management of the company s major clientele, namely Peacock. It was submitted that Mr. Lanka Rajkumar finalised the price of the products and gathered further orders during the said meeting whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to various employees and key persons, content marketing and SEO optimisation, and e-commerce integration or API integrations. Thus, as per the assessee, it has fully outsourced the entire functioning of running and maintaining the said website to an independent consultant. In support of its claim of the expenditure, the assessee has placed on record the invoice issued in respect of charges for designing content material for the official website of the assessee, forming part of the paper book on page 446. 16. It cannot be disputed that in today s corporate world having a website and digital presence has become essential for increasing the digital footprint of the company. Considering the business profile of the assessee, wherein it acts as an intermediary between foreign customers and Indian manufacturers, having a fully functional and updated website is a necessity not only for having a digital presence but also for the efficient working of its business. Thus, we are of the considered view that any expenditure for keeping the website operational and updated with the latest product catalogues cannot be said to be providing enduring benefit to the assessee, and therefore, is not capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of Rs. 11,68,000. 20. As per the assessee, Ms. Manjul Uberoi is one of the promoters and founding directors of the assessee company, who envisioned the entire business framework and roadmap of the assessee company. Further, Ms. Manjul Uberoi has been wholeheartedly running the entire functioning and business of the assessee since its inception. The assessee submitted that Ms. Manjul Uberoi has over 25 years of experience in the garment business and worked in buying agencies and export houses for large corporate houses. In his submission before the learned CIT(A), the assessee provided a detailed profile of Ms. Manjul Uberoi along with her major achievements. Accordingly, the assessee claimed that the work and responsibility of Ms. Manjul Uberoi cannot be compared with Ms. Kiran Sharan, despite the fact that Ms. Kiran Sharan is also one of the founders and directors of the company. 21. As regards Mr. Nishikant Sharan, the assessee submitted that he is handling the overall day-to-day operation of the company and has 10 years of experience as a Manager Human Resource Management with the Tata Group of companies. Further, it is the submission of the assessee that since the year of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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