TMI Blog2011 (11) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses for traveling of the assessee's relatives, it could not have been indeed open to the A.O. to allow the similar expenses on the ground inter alia, by simply taking the submissions on record and not dealing with the merits. There was thus clear incongruity in the approach of the A.O. and this intricacy is indeed erroneous and prejudicial to the interest of the revenue – Decided against the assessee. - IT APPEAL NO. 6829 (MUM.) OF 2008 - - - Dated:- 30-11-2011 - B.R. MITTAL, PRAMOD KUMAR, JJ. H.D. Sanghvi for the Appellant. Sanjiv Dutt for the Respondent. ORDER Pramod Kumar, Accountant Member The short issue that we are required to adjudicate in this appeal is whether or not the CIT was justified in directin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to establish the nexus of visits to India by these persons to the business of the assessee. The Assessing Officer further noted that merely because the visit is said to be official, the visits cannot be treated as business purposes. It was also noted that on perusal of passport of these persons, it is noticed that these persons are visiting India several times every year in a routine manner and that no supporting documents such as bills/vouchers are produced in connection with the same. It was also noted that while the assessee was following cash system of accounting in earlier years, the assessee has switched over to mercantile system of accounting in the current year, and thus, even the assessee has not made payments, the assessee is cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssionally qualified and the expenses were incurred on foreign travel to India in respect of bonafide business purposes. It was also pointed out that as these persons are highly qualified and professionally experienced in the field and that when inhouse talent was available, there was no reason to disallow the expenditure merely because they are relatives. The CIT was not impressed with these submissions and he was of the view that the assessee has not been able to establish the fact of incurring the expenditure of Rs. 12,01,113 in relation to foreign travel expenses by relatives that had direct nexus with the business purposes and as such the expenditure should have been allowed. In the view of the CIT, the AO clearly ignored this aspect wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses disallowance made during the assessment proceedings, to contend that no findings are given against the assessee on services not having been rendered and nexus with assessee's business. It is contended that the observations made by the CIT(A) show that if the expense was claimed on actual basis, rather than on the provision basis, the same would have been allowed. 7. We are, however, unable to see any merits in this line of arguments. Merely because the person is professionally qualified by itself does not establish or prove that he has rendered any professional services to the assessee. We have also noted that in the present case, the AO has himself disallowed foreign travel expenses in respect of the expenditure on similar trip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Once the AO takes the stand that the expenditure in respect of traveling expenses of these persons are to be disallowed on the ground that the expenses are not incurred for the business of the assessee and the expenses are personal expenses for traveling of the assessee's relatives, it could not have been indeed open to the Assessing Officer to allow the similar expenses on the ground inter alia, by simply taking the submissions on record and not dealing with the merits. He ought to have at least dealt with the merits of the issue and examined if different considerations must apply here. There was thus clear incongruity in the approach of the Assessing Officer and this intricacy is indeed erroneous and prejudicial to the interest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsons having not been employed by the assessee nor any contract for rendering the services and that the complete details of expenses are not on record. Under these circumstances, the AO should indeed have examined the claim of deduction of Rs. 12,01,113 incurring of these expenses on merits. There is no discussion whatsoever about admissibility of this claim of deduction in the order. 8. Therefore, the CIT was indeed justified in invoking his revisionary powers u/s 263 and thereby asking the AO to reexamine the admissibility of the said expenses on merits. Whatever the assessee may have to say on merits against the non admissibility of this claim, he can certainly put up the same in the revision order effect proceedings, but, given the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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