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DCIT, Circle 11(1), New Delhi C.R. Bldg., New Delhi 110 092 vs. M/s Filatex (India) Ltd., 42, Community Centre, New Friends Colony, New Delhi
February, 08th 2013
                                                               ITA NO. 1931/Del/2010


                   IN THE INCOME TAX APPELLATE TRIBUNAL
                        DELHI BENCH "B", NEW DELHI
                 BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER
                                     AND
                 SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
                            I.T.A. No. 1931/Del/2010

                                 A.Y. : 2003-04
DCIT, Circle 11(1),                    vs. M/s Filatex (India) Ltd.,
New Delhi                                  42, Community Centre,
C.R. Bldg.,                                New Friends Colony,
New Delhi ­ 110 092                        New Delhi
                                           (PAN/GIR NO. : AAACF0027B)
(Appellant )                               (Respondent )

             Assessee by                :   Sh. Ashwani Kumar, CA
            Department by               :   Sh. Ajit Kr. Singh, Sr. D.R.


                               ORDER
PER SHAMIM YAHYA: AM
      This appeal by the Revenue is directed against the order of the
Ld. Commissioner of Income Tax (Appeals)-XIII, New Delhi dated
22.2.2010 pertaining to assessment year 2003-04.




2.    The      grounds raised read as under:-

      i)           On the facts and circumstances of the case and in law,
                   the Ld. Commissioner of Income Tax (A) has erred in
                   deleting   the addition of ` 8,73,571/- on account of
                   foreign travel expenses.

      ii)          On the facts and circumstance of the case and in law,
                   the Ld. Commissioner of Income Tax (A) has erred in
                   deleting the addition of ` 64,09,609/- made on account
                   prior period expenses.

                                       1
                                                          ITA NO. 1931/Del/2010


     iii)          The appellant craves leave to add, alter or amend any
                   ground of appeal raised above at the time of hearing.

Apropos ground no. 1:-

3.   During the year assessee company incurred expenditure of `
17,47,142/- on foreign travel.        The assessee was asked proof of
business purpose. Assessee filed detail of foreign travel expenditure.
Assessing Officer opined that no documentary evidence certifying that
these       travels are expedient to obtain business has been filed.
Assessing Officer further observed that the assessee company has not
been able to link up the       visits to other countries with the results
achieved in the subsequent assessment years also.        Assessing Officer
held that since all these details are not available, the entire expenses
on foreign travelling cannot be allowed to the assessee on account of
business consideration.      Assessing Officer further opined that there is
an element of personal tour involved by the Directors in these visits.
Hence, the expenditure of ` 8,73,571/- (being 50% of ` 17,47,142/-)
incurred on foreign travelling was disallowed and added back to the
assessee's total income.

4.   Before the Ld. Commissioner of Income Tax (A) assessee
submitted additional details.      It was submitted by the assessee that
assessee has provided complete details of foreign travel giving therein
names and designation of the persons who travelled, period of travel,
country visited and amount spent and purpose of tour.             Assessee
company further submitted that the assessee was not asked to furnish
any further details. After going through the assessee's submissions,
assessment order       and    the written submissions of the assessee
company, Ld. Commissioner of Income Tax (A) found that Assessing

                                      2
                                                         ITA NO. 1931/Del/2010


Officer    has not been able to identify any case where the business
expediency or genuineness of the foreign travel expenditure was not
proved.      Moreover, he found that complete details of foreign travel
expenses     were   furnished   during   the    course   of   assessment
proceedings.     Hence, Ld. Commissioner of Income Tax (A) held that
there was no laxity on the part of the assessee company in filing the
relevant details.    Furthermore, Ld. Commissioner of Income Tax (A)
gave a finding that from the perusal of the details of traveling
expenditure, it is clear that these are entirely related to the purposes
of the business and as such there is no ground for the disallowance
thereof.

5.   Against the above order the Revenue is in appeal before us.

6.   We have heard the rival contentions in light of the material

produced and precedent relied upon.         We find that assessee has

submitted complete details of foreign travelling before the authorities

below. Furthermore, Ld. Commissioner of Income Tax (A) has given a

finding from the details    that it is quite clear that expenditure was

entirely related to the purpose of business and as such there was no

ground      for the disallowance thereof.      Assessing Officer has not

been able to identify any case where the         business expediency or

genuineness of the foreign travel expenditure was not proved.         Under

the circumstances, we do not find any infirmity in the order of the Ld.

Commissioner of Income Tax (A) on this issue.      Hence, we uphold the






                                    3
                                                       ITA NO. 1931/Del/2010


order of the Ld. Commissioner of Income Tax (A) and decide the issue

against the Revenue.


Apropos ground no. 2

7.   On this   issue Assessing Officer   made the addition holding as
under:-

          "The assessee has debited       an amount of ` 65,49,610/-
          being prior period expense.      This expenditure has been
          certified to be related to prior period as per the Tax Audit
          Report. The assessee was asked to explain as to why the
          same should not be disallowed. The assessee vide his letter
          dated 18.8.2005 merely submitted as under:-

                           Details of prior period expenses

     PARTICULARS                           EXPENSES           INCOME
REPAIR TO PLANT & MACH.                    80584
REPAIR TO PLANT & MACH.                                       62624
LEGAL & PROFESSIONAL EXP.                                     14250
ELECTIRCITY EXP.                           34929
TELEPHONE EXP.                             37332
PRITNING & STATIONERY                      2091
REPAIR AND MAINTENANCE                     25270
 INTEREST ON RUPEE LOAN                    6409609
STAFF WELFARE                              1550
REPAIR AND MAIN. (BLG.)                    27119
CARRIAGE OUTWARD                           8000
TOTAL                                      6626484
NET OF EXPENSES OVER INCOME (RS.)          6549610

          When asked to substantiate as to why the same should not

          be disallowed, the assessee merely stated that all the prior

                                  4
                                                            ITA NO. 1931/Del/2010


           period expenses, debited to profit and loss account has

           already been added back while computing the taxable

           income of the company of this year. While going through

           the computation of income filed with the return of income, it

           reveals   that    prior   period    expenses   amounting       to   `

           1,40,001/- only has been added back. Further, as the said

           amount of        expenses has been qualified by the auditor

           himself and as per provisions of section 37(1) of the Act, no

           prior period expense were allowable. Thus, the prior period

           claimed amounting to ` 64,09,609/- (` 65,49,610 (-)

           1,40,001) is hereby disallowed and added back to the

           income of the assessee company."

8.   During the appellate proceedings, assessee submitted that

expenses pertaining to prior period            amounting to ` 65,49,610/-.

However, out of the same, ` 1,40,000/- had already been added back

in the computation of income.              As regards ` 6,409,609/-     it was

submitted that the same represented interest on rupee loan paid by

the company to IDBI as per the restructuring package intimated to the

company.       In this respect,      necessary correspondence were filed

before the Assessing Officer.        The said payment of interest on term

loan has duly been certified and mentioned by the Auditors in their Tax


                                       5
                                                          ITA NO. 1931/Del/2010


Audit Report at Annexure VI-A wherein a sum of ` 64,09,609/- has been

shown as incurred and paid during the year.        Furthermore, assessee

submitted that the above Debt Restructuring Scheme was approved

only   in   the   instant   assessment   year   under   appeal    and    was

communicated vide IDBI's letter dated 10.12.2012, hence, the liability

to pay interest has crystallized and been ascertained only in this year

and as such is allowable during this year.      Considering the above, Ld.

Commissioner of Income Tax (A) deleted the disallowance in this

regard.


9.     Against the above order the Revenue is in appeal before us.

10.    We have heard the rival contentions in light of the material

produced and precedent relied upon.             We find that disallowed

expenditure in this regard related to interest on Rupee Loan paid by

the assessee to IDBI as per the Restructuring package intimated by

the IDBI vide letter dated 10.12.2012. The said letter was duly

produced before the Assessing Officer as well as Ld. Commissioner of

Income Tax (A).      The Tax Auditors have also reported the fact of the

payment in this regard.        Further, we find that the above          Debt

Restructuring     Scheme was approved and          communicated to the

assessee vide letter dated 10.12.2012. Hence, assessee's submission

that ascertained liability to pay interest has crystallized and has been

                                     6
                                                         ITA NO. 1931/Del/2010


ascertained only in this year     is quite cogent one.          Under the

circumstances, we uphold the order of the Ld. Commissioner of Income

Tax (A) on this issue and decide the issue against the Revenue.


11.   In the result, the appeal filed by the Revenue stands dismissed.

      Order pronounced in the open court on 08/2/2013.

      Sd/-                                        Sd/-

       TOLANI]
 [R.P. TOLANI]                              [SHAMIM YAHYA]
JUDICIAL MEMBER                             ACCOUNTANT MEMBER

Date 08/2/2013
"SRBHATNAGAR"
Copy forwarded to: -
1.    Appellant 2.     Respondent           3.    CIT    4.    CIT (A)
5.    DR, ITAT


                            TRUE COPY
                                                  By Order,


                                                    Assistant Registrar,
                                                    ITAT, Delhi Benches




                                    7
    ITA NO. 1931/Del/2010




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