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2016 (3) TMI 1409 - AT - Income TaxAddition on account of unconfirmed unsecured loans - Addition u/s 68 - HELD THAT:- As assessee during the course of proceedings had filed necessary information in respect of companies and had filed confirmations also and therefore, the additions sustained by learned CIT(A) is not as per provisions of law because of the fact that amount of ₹ 35,00,000/- was not found credited during the year as it is was only the opening balance carried forwarded from earlier years. In view of the judidical precedents relied upon by learned AR and in view of the facts and circumstances of the case, we allow Ground No.2. As regards argument of learned DR that section 68 was not applicable and rather it was taxable u/s 41(1) of the Act we do no agree with the arguments of learned DR as even addition u/s 41(1) cannot be made as assessee had not written back the amount during the year and had declared the same as debt of the company in its balance sheet. Addition being an amount reimbursed to M/s Goetze (India) Ltd., M/s Gossini Fashions Ltd. and M/s Akme Projects Ltd.- HELD THAT:- We find that this argument was taken before us and learned CIT(A) also had obtained remand report from AO and during remand proceedings the AO had made adverse comments in this respect and in response to remand report the assessee vide letter dated 21.02.2014 had again submitted that nature of expenses and details of cheques and bank account details of payee of each and every item of expenditure was submitted and as regards vouchers and nature of expenses the assessee had submitted that they were carried to Jammu but AO unfortunately was on tour, therefore, this could not be produced before him, therefore, in the interest of justice we restore this ground to the Office of Assessing Officer who on the basis of vouchers and nature of expenses should decide the issue afresh. The Assessing Officer should also examine the claim of the learned AR that a part of expenses was not debited to P&L Account and was taken to balance sheet. In view of the Ground No.3 is allowed for statistical purposes. Disallowance of 75% of Foreign Traveling Expenses of Directors - HELD THAT:- We find that there is no doubt about the proposition that foreign traveling expenses are allowable as a deduction if the expenses are incurred for the purposes of business. We also agree that expenditure on Foreign Travel may not result into increase in new agreements for business but the fact remains that the assessee has to first prove that expenses were incurred for the purposes of business. In respect of claim of such expenses the assessee could have filed some correspondence with the persons of visited country with whom they had explored further business opportunities or it could have filed the details of meetings and discussions with the persons with whom such business opportunity was discussed. No such details has been filed before the authorities below during original/or remand proceedings nor an argument has been made before us that the assessee can file these details before the authorities below. The assessee did not file any evidence to substantiate its claim other than break up of traveling expenses. Moreover, the learned CIT(A) has made a finding of fact that there is no business of the company in the visited countries and expenditure also included expenses on personal attendants of Directors. Therefore, we do not find force in the argument of learned AR that the expenses were incurred for the purposes of business. In view of the above, Ground No.4 is dismissed. Disallowance of legal and profession - HELD THAT:- As CIT(A) obtained remand report from Assessing Officer. In this respect, the Assessing Officer could find evidence in respect of only ₹ 7,60,724/- during remand proceedings and for the remaining amount of ₹ 10,61,949/- no documents/evidence was provided during original as well as remand proceedings - AR in his submissions has submitted that when vouchers were carried to Jammu for verification by AO, he was found to be on tour therefore, in the interest of justice this ground is restored to the office of Assessing Officer who will consider the allowability of same after verification of vouchers. In view of the above, Ground No.5 is allowed for statistical purpose. 100% disallowance of Telephone expenses and telegram expenses - HELD THAT:- We find that there is no dispute that no bill was in the name of assessee’s company or its employees, however, it is also a fact that no office can be run without incurrence of these expenses. The learned CIT(A) has upheld the addition in the absence of valid evidence in respect of these expense - AR during appellant proceedings before us had submitted that bills were in the name of M/s Goetze India and a part of expenses were charged to assessee company. Therefore, we restore this ground of appeal to Assessing Officer who should decide the issue afresh after taking into account the basis of charging of these bills to the assessee. He can arrive at the decision after taking into account the practice of assessee in allocation of these expenses in earlier years. In view of the above, Ground No.6 is allowed for statistical purposes. Deemed dividend u/s 2(22)(e) - ICD v/s loan - HELD THAT:- As the amount of ₹ 18.75 crores received by it was a not an ICD but was a loan. We find that ICD means inter-corporate deposits which term is used for making or accepting deposits between two companies. ICD as the name also suggest that it is a part of broader term deposits and therefore, it cannot be distinguished from the deposits as argued by learned AR. The case laws relied by AR relates to distinction between loans and deposits and none of the case laws relates to distinction between deposits and ICD, therefore, case laws as relied up by learned AR are not applicable to the facts and circumstances of the case. Therefore, we hold that ICD is a part of deposits and is not different from broader definition of deposits and therefore, we do not find any force in the argument of learned AR that ICD are different than loans or deposits and in fact it is part of deposits. Deemed dividend addition - HELD THAT:- Provisions of section 2(22)(e) are not applicable to the assessee as it was not a shareholder in the lending company. In view of the above, Ground No. 1 of Revenue’s Appeal is dismissed. Notional interest on interest free advances - HELD THAT:- We find that that AO in his remand report has reported that most of the amount represented charges receivable from parties and amount receivable were in the nature of debtors and did not represent cash advances. The Assessing Officer also mentioned that out of advances ₹ 60,00,000/- was for purchase of vehicles and ₹ 26,40,560/- was on account of amount embezzled by an employee, therefore, learned CIT(A) has rightly deleted the addition and we do not find any infirmity in the same, therefore, Ground No.4 is also dismissed.
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