Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 735 - AT - Income TaxDisallowance of foreign travel expenses - assessee argued that foreign travel expenses pertained to director/employee which was incurred in the course of business and therefore the disallowance made by the AO out of such expenditure was unwarranted on facts and in law - CIT-A disallowing 50% of the foreign travel expenses of the director - HELD THAT:- As we note that both the authorities below have not doubted at all the genuineness of the foreign expenses. We also note that the disallowance is made at the whims of the AO without pointing out any specific reason. In case the expenditure is not connected with the business of the assessee, it has to be allowed in toto and the disallowance made at 50% of the total expenditure shows an ad hoc approach on the part of the AO based on presumption, assumption and surmises. Similarly, the ld. CIT(A) has confirmed the order of the AO without giving a valid reason as to how the ad hoc disallowance of 50% could be sustained. In view of these facts, we are not in agreement with the conclusion drawn by the CIT(A) and consequently the order of the CIT(A) cannot be sustained. The ld. Assessing Officer is directed to delete the disallowance. Ground No.1 and 2 are allowed. Addition on account of dividend earned from business and held by the assessee as stock-in-trade - AO held that dividend received on shares and securities held as stock in trade embeds the character of business income and is not exempt u/s 10(34) - HELD THAT:- Having persued the provisions of the Act u/s 10(34) and 115 of the Act, we are of the opinion that the dividend received by the assessee is exempt u/s 10(34) of the Act irrespective of the fact that the whether the same is derived from investment in shares or the shares and securities held as stockin- trade. We find merit in the contentions of the ld. AR that the dividend income is exempt u/s 10(34). Decision in the case of CIT vs. Excellent Commercial Enterprises & Investment Ltd. [2005 (5) TMI 29 - DELHI HIGH COURT] held that the dividend income was taxable in the hands of the shareholders. We also note that section 10(34) was inserted by Finance Act 2003 w.e.f. 01.04.2004 providing that income received by way of dividend as referred to section 115 of the Act which deals with the dividend distribution tax as exempt. The case of the assessee is find force on the decision CIT vs. Maxopp Investment Ltd.[2018 (3) TMI 805 - SUPREME COURT] wherein the Hon’ble Apex Court has held that where the shares are held as stock-in-trade and the main purpose is trade in those shares and earned profits therefrom and in the process of certain dividends earned which is exempt u/s 10(34), this attributable to that exempt income will have to be disallowed u/s 14A. Accordingly, we set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition. Appeal of assessee allowed.
|