TMI Blog2012 (11) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... poses - CIT(A) deleted the addition - Held that:- The assessee also could not justify how the travelling by the directors would have enhanced or bought value to its own business and these expenses have any relevance to the business of the assessee and in reply to a specific question from the Bench as to the date-wise details of foreign visit by two directors of the assessee-company, the same could not be produced on behalf of the assessee. Onus is on the assessee to prove the business purpose of the expenses to claim deduction, as the same is out of its taxable income, which in this case, the assessee has failed to discharge. The assessee was expected atleast to maintain a date-wise detailed programme of the directors during their foreign t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessee-company could not prove that it represented on behalf of the principal company and not of its own. He has relied on the order of the AO. The learned counsel of the assessee submitted that the assessee has not claimed any deduction of the amount in dispute, and therefore no disallowance under Section 40(a)(ia) of the Act should be made. He submitted that it was a case of reimbursement of the expenses, and therefore, the amount was not taken to the profit and loss account. He relied on the order of the CIT(A). 4. We have considered rival submissions and have perused the orders of the AO and the CIT(A). We find that the submissions of the assessee that it was a case of reimbursement of the expenses and no part of the disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee was specifically asked to furnish any evidence in support of its claim of business purpose in incurring of travelling expenses, but the assessee could not furnish any evidence in support of its claim. There is no material brought on record by the assessee to suggest that the travelling by the directors to foreign land have enhanced and brought value to its own business and in fact these expenses did not have any relevance to the business of the assessee. He referred to the relevant portions of the assessment order in support of the case of the revenue. The learned counsel for the assessee has opposed the submissions of the learned DR. He submitted that one of the directors has gone to USA and other director has gone to China for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business purpose of these visits could not be established by the assessee-company. The assessee was given a specific opportunity to show cause the business purpose of the foreign traveling expenses vide order sheet entry dated 19.11.2010 by the AO. The AO has recorded that the assessee could not furnish any evidence in support of this claim. There is force in the argument of the AO recorded in the assessment order that the assessee s business is that of franchisee of Aditya Birla Nuvo Ltd., and the assessee was engaged in selling the products of its principal mainly comprising of ready-made garments and as per the prevailing business norms, the agreement and general practices, the assessee was not supposed to carry out any other activity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , has any relevance to the foreign visit undertaken by the one of the directors to the USA is not established. The letters of the two directors during the relevant period addressed to the assessee-company mentioning the places where they have visited does not inspire confidence. We find that preponderance of probabilities are not in favour of the assessee, and the assessee should have led more evidence to establish the business purpose of the foreign visit by its two directors. In this view of the matter, we hold that the disallowance was rightly made by the AO, and accordingly, the ground no.2 of the Revenue is allowed. 8. Ground no.3 of the Revenue s appeal reads as under: 3. The ld.CIT(A) has erred in law and on facts in restricting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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