TMI Blog2006 (6) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act as maintained by the CIT (Appeals) is arbitrary, unjust and at any rate without prejudice, very excessive." 3. The assessee is a Pvt. Ltd. company. It is engaged in the business of sale purchase of shares and financing. The assessee apart from the income from leasing operations and interest received a dividend of Rs. 3,56,848. This dividend income was exempt from tax in view of the provisions of section 10(33) of the Income-tax Act, 1961 (hereinafter referred to as the Act). The assessee incurred a total expenditure of Rs. 36,44,313 , which was debited to the profit and loss account. Out of this the Assessing Officer disallowed a sum of Rs. 1,57,555 towards foreign travelling expenses. The remaining expenses debited to the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es incurred for earning dividends. The remaining expenses are mainly in the nature of administrative overheads, which are required to be incurred to keep the business of the company running and are not incurred for earning the dividend income. At best, it was claimed that a part of the salary of Rs. 45,969 paid to one Shri Kashi Prasad, who was in-charge of handing over and depositing documents on behalf of the appellant, could be said to be expenses incurred for earning dividends. Thus, it was submitted that no disallowance could be made under section 14-A and at the most, a reasonable proportion of the salary paid to Shri Kashi Prasad could be considered for disallowance. 6. The CIT (Appeals), however, was of the view that out of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tum of expenditure to be disallowed is a question of fact to be decided in the facts and circumstances of each case. The bifurcation of the various expenses debited to the profit and loss account includes a sum of Rs. 21,90,773 on administrative expenses, the details of which are given in Schedule 10 of the balance sheet. Perusal of these details, a copy of which is placed at page 19 of the assessee s paper-book clearly shows that none of these items of expenses could be attributable to the earning of the dividend income, which was exempt from tax. The remaining items of expenditure also included depreciation of Rs. 4,12,826 , which again cannot be attributable to the earning of the dividend income exempt from tax. In the present case, in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... air-tickets and other expenses for stay on a visit by the Managing Director to Bangkok. The assessee explained that it was a business tour undertaken by the Managing Director for study of market for expansion of the company s business outside India. The Assessing Officer held that the assessee did not furnish the required details to explain the claim of the assessee that the foreign tour was in connection with the business of the assessee. 10. Before the CIT (Appeals) the assessee pointed out that the Managing Director visited Bangkok to explore the possibilities of expansion of company s business. The assessee submitted that the business of leasing and finance was well developed in Bangkok and, therefore, the M.D. visited Bangkok to u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancing business could be carried on by it with countries outside India, with such a meager capital. I am also unable to comprehend as to what is meant by "techniques" in a business of leasing and finance. This is not the case of a manufacturer who could visit concerns abroad for adopting latest technology to be used in the production. This is a case of a finance company where the profits depend on the rates of interest and the nature of services offered. Further, the visiting cards furnished by the appellant are of two persons connected or employed with Indo-Rama Textiles (Thailand) Limited, which is essentially a joint venture company in the business of textiles. There is no indication on record that the appellant was contemplating branc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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