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2022 (10) TMI 683 - AT - Income TaxDisallowance of foreign travel expenses - Business expenses v/s personal expenses - HELD THAT:- Having accepted the fact that the directors of the assessee company had undertaken these foreign trips together with Architect and Advocate, what is to be seen is whether any person would take Architect and Advocate along with him while going on a personal trip abroad. This itself goes to prove that the foreign visits were purely meant only for business purposes and no personal purpose could be established thereon. Moreover, we hold that there cannot be any personal element of expenditure in a company as held by the Hon’ble Gujarat High Court in the case of Sayaji Iron & Engineering Co. [2001 (7) TMI 70 - GUJARAT HIGH COURT] When the assessee had furnished all the relevant details with supporting evidences together with the purpose of foreign travel, it is wrong on the part of the ld. CIT(A) to simply conclude that they were only pleasure tours and hence not meant for the purpose of business. The facts stated by the assessee supported by evidences were never controverted by the lower authorities or by the revenue before us. Hence in view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we direct the ld. AO to delete the disallowance made on account of foreign travel expenses - Accordingly, the Ground No.1 raised by the assessee is allowed. Adhoc disallowance of 25% made on account of domestic travel expenses - HELD THAT:- AO made an adhoc disallowance of domestic travel expenses @ 25% and made disallowance in the assessment. It was specifically submitted that the assessee company was previously located in New Delhi and later shifted to Mumbai. In this regard, frequent visits were mandated in order to meet various regulatory compliance requirements and hence employees and its directors had to travel frequently to Gurgoan for the purpose of business. In any event, the books of accounts of the assessee were not rejected by the ld. AO by pointing out certain defects in the evidences submitted by the assessee. Hence there cannot be any adhoc disallowance that could be made by the revenue. On this count also, apart from merits, we have no hesitation in directing the ld.AO to delete the adhoc disallowance made on account of domestic travelling expenses. The findings given hereinabove for Ground No. 1 supra together with case laws relied upon thereon, would hold good for this ground also. Accordingly, the Ground No.2 raised by the assessee is allowed. Disallowance of business promotion expenses - HELD THAT:- We find that the assessee had explained that it is engaged in the business of real estate development and in that regard , the directors had to meet various people at various places to market the real estate project for the purpose of sale of apartments. Hence the business nexus is proved beyond doubt. Since the payments were incurred out of credit cards belonging to the directors, the assessee company had reimbursed the same to the directors. It is not personal in nature. Moreover, payment to Ambey Valley City has been made through Cheque No. 003239 from the bank account of the assessee company in the sum of Rs 1,55,411/-. The entire bills issued by various vendors were duly placed by the assessee before the ld. AO .Without looking into any of those bills, the ld.AO by mere suspicion, surmise and conjecture , proceeded to treat the entire expenses as personal in nature and disallowed. We hold that the action of the ld. AO and ld. CIT(A) is certainly unsustainable in the eyes of law. The observations made by us hereinabove for Ground No.1 supra together with case laws relied upon thereon would hold good for this ground also. Accordingly, we direct the ld.AO to delete the disallowance made on account of business promotion expenses - Decided in favour of assessee. Disallowance on account of depreciation on car merely because the car was registered in the name of the director of the assessee company - HELD THAT:- Registration of the car in the name of the company is not necessary for the purpose of grant of depreciation thereon in the hands of the assessee company. What is required to be seen is whether the said car has been used for the purposes of business of the company. This fact is not in dispute at all. We find that the car is forming part of fixed assets of the assessee company. Hence by placing reliance on the decision of Hon’ble Supreme Court in the case of Mysore Minerals Ltd [1999 (9) TMI 1 - SUPREME COURT] we hold that the assessee company would be entitled for depreciation u/s 32 of the Act . We direct the ld. AO to allow depreciation thereon to the assessee company. Accordingly, the Ground No. 4 raised by the assessee is allowed. Recomputation of income of the assessee to allow short term capital loss - HELD THAT:- We find that the assessee had claimed total loss as per Return of income at Rs 39,68,046/- , but the ld. AO while framing the assessment had started the computation with loss of Rs 28,56,420/-. We find that the ld. CIT(A) had only directed the ld. AO to verify the same and recompute total income of the assessee accordingly. Hence there cannot be any grievance for the assessee in this regard as it has already been addressed by the ld. CIT(A) and the matter is pending before the ld. AO. Hence the Ground No. 5 raised by the assessee is dismissed. Seeking TDS credit anad set off of MAT credit u/s 115JAA - HELD THAT:- This aspect has been set aside to the file of ld. AO by the ld. CIT(A) to decide in accordance with law and it is pending before the ld. AO. Hence there cannot be any grievance for the assessee. Accordingly, the Ground raised by the assessee is dismissed.
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