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Income Tax Officer, Ward 13(4), New Delhi Ltd.,R.No. 219, CR Building, New Delhi vs. M/s Optimum Marketing Metrics P B-44, GT Karnal Road Industrial Area, Delhi 33
May, 28th 2012
                                                                   ITA NO. 2927/Del/2011


                      IN THE INCOME TAX APPELLATE TRIBUNAL
                            DELHI BENCH "E", NEW DELHI
                      BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER
                                       AND
                     SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
                              I.T.A. No. 2927/Del/2011

                                   A.Y. : 2005-06


Income Tax Officer,                        vs. M/s Optimum Marketing Metrics P
Ward 13(4), New Delhi                          Ltd.,
R.No. 219, CR Building,                        B-44, GT Karnal Road Industrial
New Delhi                                      Area,
                                               Delhi ­ 33
                                               (PAN/GIR NO. : AACO 3928J)
(Appellant )                                   (Respondent )

            Assessee by                    :     Sh. Sanjiv Sapra, FCA
           Department by                   :     Sh. R.S. Negi, 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)-XVIII, New Delhi                       dated

25.2.2011 pertaining to assessment year 2005-06.


2.    The grounds raised read as under:-


               "1.     On the facts and        circumstances of the case and in

                       law the Ld. Commissioner of Income Tax (Appeals)

                       erred in deleting       the disallowance of ` 8,00,000/-

                       made out of travelling and conveyance expenses


                                           1
                                                      ITA NO. 2927/Del/2011


               including the    foreign travelling expenses of ` 19.95

               lacs.


          2.   On the facts and circumstances of the case and in law

               the Ld. Commissioner of Income Tax (Appeals) failed

               to appreciate the facts discussed in      detail in the

               remand report.


          3.   On the facts and circumstances of the case and in law

               the Ld. Commissioner of Income Tax (Appeals) erred in

               deleting the disallowance of ` 1,80,000/- made out of

               business promotion expenses.


          4.   The appellant craves to be allowed to add any fresh

               grounds of appeal and / or delete or amend any of the

               grounds of appeal."


3.   Apropos disallowance of ` 8,00,000/-      towards travelling and
conveyance expenses.

     On this issue Assessing Officer      noted that out of sum of

26,05,132/- as claimed under the head `travelling and conveyance' of

` 19,97,452/- was incurred on foreign travelling and most of it was

towards reimbursement of expenses incurred by Mr. Prem Arjandas

Bhawnani who is neither an employee of the company nor its Director





                                   2
                                                                ITA NO. 2927/Del/2011


but happens to be a 51% share holder of the company and is based in

Singapore.        Assessing Officer     further observed that though the

purchases /imports have been made from Singapore and USA only but

the foreign trips of Mr. Prem A. Bhawnani are to other destination also.

Assessing Officer summarized the reasons as under for making the

disallowance.


             a) Sh. Prem A. Bhawanani is neither an employee nor a

                Director of the assessee company.

             b) Assessee      company       has   failed   to   establish      that

                expenditure of more than ` 19 lacs reimbursed to Mr.

                Prem A. Bhawani for foreign travelling was incurred

                wholly and exclusively for the business of the assessee.

             c) That it failed to produce even bills and vouchers of

                travelling and conveyance expenses, amounting to `

                4,50,000/-.


4.   Before the Ld. Commissioner of Income Tax (Appeals) assessee

submitted       that complete details of travelling and conveyance

expenses and bills and vouchers for major expenses on foreign travel

alongwith date wise details of expenses etc. had been produced at the

time of assessment. It was further submitted that Sh. Bhawnani is the

majority shareholder of the company and for utilizing his vast

                                        3
                                                       ITA NO. 2927/Del/2011


experience and contacts for promoting the sales of the company he

had to undertake the said tours.    The details of the said tours which

were to meet       potential customers, suppliers and trade fairs /

exhibitions have already been submitted.       It was further submitted

that the expenses have been carried out as per the Board Resolution

of the assessee company authorizing Shri Bhawanani to undertake the

tours for promoting the business of the assessee.        It was further

submitted that   similar   expenses were incurred in the earlier years

and have been accepted by the department and no disallowance has

been made on this count in earlier years and there is no change in

the facts and circumstances of the case during this year.               Ld.

Commissioner of Income Tax (Appeals) noted that assessee has by

way of additional evidences submitted the balance details of expenses

by arguing that since the major details had already been submitted,

the assessee was under the impression that the same was sufficient

for assessment and further details were not called for.                 Ld.

Commissioner of Income Tax (Appeals) further noted that in the

remand report Assessing Officer has not made any valid objection to

the assessee's argument and has not brought any adverse material on

record on independent enquiry.         Ld. Commissioner of Income Tax

(Appeals) found that the arguments of the Assessing Officer that the


                                   4
                                                         ITA NO. 2927/Del/2011


assessee has made purchases mostly from Singapore and USA and

hence the travel expenses to other countries are not         allowable, is

fallacious since so long as the visits have been made for the purpose

of business it is an allowable expenditure even though such visit has

not resulted in any immediately purchase from the said countries.

Ld. Commissioner of Income Tax (Appeals) further noted that attending

trade     fairs and exhibitions in the line of the assessee's business in

other countries cannot be said to be not related with the assessee's

business.     Accordingly, Ld. Commissioner of Income Tax (Appeals)

found that the disallowance of ` 8,00,000/- made by the Assessing

Officer on adhoc basis cannot be sustained. Accordingly, he deleted

the same.


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 that all the necessary details of the travelling expenses

have been submitted. The expenditure have been carried out, as per

the     Board Resolution of the assessee company authorizing Shri

Bhawnani to undertake the tours for promoting the business of the

company.        We further    note that similar expenditure incurred in

earlier years were accepted by the department.       We agree with the

                                     5
                                                            ITA NO. 2927/Del/2011


finding of the Ld. Commissioner of Income Tax (Appeals) that

argument of the Assessing Officer that assessee had made purchases

mostly from Singapore and USA and hence the travel expenses to

other countries are not      allowable is not correct.    Further, attending

trade     fairs and exhibitions in the line of the assessee's business in

other countries cannot be said to be not related with the assessee's

business. Under the circumstances, we find that there is no infirmity in

the order of the Ld. Commissioner of Income Tax (Appeals) in deleting

the addition of ` 8,00,000/- in this regard. Accordingly, we uphold the

same.


7.      Apropos disallowance of ` 1,80,000/-


        On this issue Assessing Officer held that assessee has incurred

this expenditure under the head           `business promotion'.     Assessing

Officer    noted   that assessee could not      produce    all the bills and

vouchers. He found that bills / vouchers of approx. ` 1,80,000/- were

not produced.      So the Assessing Officer made the disallowance of `

1,80,000/- in this regard.


8.      Before the Ld. Commissioner of Income Tax (Appeals), it was
submitted that all the vouchers and books of account were produced
before the Assessing Officer and Assessing Officer has not pointed
out any mistake in the account and has disallowed the above amount


                                      6



                                                                 ITA NO. 2927/Del/2011


on adhoc basis.           Ld. Commissioner of Income Tax (Appeals) noted
that although the matter had been remanded to the Assessing Officer,
the Assessing Officer has not given any comment on it.                 Considering
the     above facts and circumstances, Ld. Commissioner of Income Tax
(Appeals) deleted the adhoc disallowance of ` 1,80,000/-.

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 Assessing Officer
has made the disallowance on adhoc basis.             It has been submitted by
the assessee's counsel that        Assessing Officer has not pointed out
the deficiencies in the vouchers actually.          Moreover, the matter was
remanded to the Assessing Officer, but the Assessing Officer has not
made any comment on it.         Under the circumstances, in our considered
opinion, there is no infirmity in the order of the Ld. Commissioner of
Income Tax (Appeals). Accordingly, we uphold the same.

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


         Order pronounced in the open court on 25/5/2012.

          Sd/-                                                  Sd/-

       JAIN]
 [A.D. JAIN]                                           [SHAMIM YAHYA]
JUDICIAL MEMBER                                    ACCOUNTANT MEMBER
Date 25/5/2012
"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
 
 
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