TMI Blog2010 (3) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... . ITA No.906/Coch./2008, is filed by the department for the assessment year 2005-06 and C.O. No. 124/Coch./2008 is filed by the assessee arising out of that appeal. Both are directed against the order of the Ld. CIT(Appeals)-IV, , Kochi, dated 29-7-2008. 2. The facts relevant are that the assessee M/s. M.M. Publications, Kottayam, is a Limited Company. The assessee is engaged in the printing and publication of various periodicals. For this assessment year 2005-06 ended with the previous year 31-3-2005, assessee declared the taxable income of more than Rs. 1.61 crores. While completing the assessment, the Assessing Officer disallowed a portion of foreign travel expenditure allegedly incurred by the employees of the assessee-company. Another disallowance is the expenditure incurred for repairing the space used for the recreation room used by the staff. 3. The ld. Sr. D.R. would contend that the Ld. CIT(Appeals) ought to have seen that the expenses incurred was for creating a new recreation hall which is an asset of enduring nature. Since there was no existing asset, there cannot be any renovation as held by the Ld. CIT(Appeals). Therefore, the Ld. Sr.DR would submit tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lease is for a period of 25 years. The company had already made certain renovations and additions to the leased out building spending more than Rs.2.83 crores in the earlier financial years and these expenditures were capitalized. Certain portion of the building was used as recreation room for the staff. For that, the company had incurred Rs. 6,51,670 for repairs, replacement and creation of a recreation room for the staff. It is for the purpose of the business. The Assessing Officer disallowed it on the ground that it is capital expenditure whereas the CIT(Appeals) allowed it as revenue expenditure on the details submitted by the assessee. It is the assessee s contention that there is an enduring benefit acquired by the assessee by incurring this expenditure. It is only an advantage in the commercial sense and therefore it is to be treated as revenue expenditure. Under the above circumstances, the Ld. counsel for the assessee relying on the findings of the Ld. CIT(Appeals), advanced his arguments by contending that this expendi- ture is revenue in nature and as such, it is an allowable expenditure, which was accepted by the CIT(Appeals). 5. We have considered rival submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the construction of any structure or doing of any work in or in relation to, and by way of renovation but not in case of construction of any structure or doing any work where such building is put up or constructed for the purpose of business or profession of the assessee any land taken on lease by the assessee. The assessee did not acquire a capital asset but put up a construction of the building only for the purpose of business with the result that the entire construction cost was admissible for deduction as revenue expenditure. This decision is directly on the issue which will go to reject the arguments of the Ld. Sr.DR, who advanced his argument regarding the grounds specifically that Explanation 1 to section 32(1). Therefore, this appeal of the Revenue for the assessment year 2005-06 deserves to be dismissed and accordingly dismissed. 6. The cross objection of the assessee is with regard to the disallowance of foreign travel expenditure. In ITA No. 490/Coch./2009 for the assessment year 2006-07 the issue raised by the assessee is in respect of disallowance of foreign travel expenditure of the employees. 7. We have taken both the appeals as well as the cross obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department in earlier years, i.e., from the assessment year 1995-96 onwards except for these assessment years 2005-06 and 2006-07, the travel expenses including foreign travel expenditures which were claimed by the assessee was allowed after scrutiny. Same way, in the assessment year 2007-08 was also completed after scrutiny. For the first time in the history of the assessment of the assessee, the department disallowed a portion of the foreign travel expenditure on ad hoc basis basing of erroneous concepts. The Ld. counsel therefore would submit that there is no scope for making an ad hoc disallowance. Either the Department should accept the case and allow the claim of the assessee in full or they should have rejected the claim by disallowing the entire foreign travel expenditure. There was no personal or pleasure trips were undertaken. No personal element is involved. They were all the staff of the assessee-company. They are not the shareholders of the assessee-company. Item by item of travel expenditure incurred by the employees were called for explanation and the assessee-company filed two letters submitting their explanation and contending with relevant materials that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f who were Chief Editor, Asstt. Editors, etc. and their designations are not disputed. It is a clear cut case of the assessee that they have nothing to do with the management and they are staff. In some cases, they accompanied their husbands whereas husbands are the employees of the other group concerns of the assessee, viz., Malayala Manorama . This fact also made clear by the Ld. counsel that those foreign travel expenditure of the husbands of the staff were taken care by their employer, Malayala Manorama . The staff of the assessee company visited various places in various countries to attend inter-national press meeting, to explore the possibilities to bring out advertisement income and to explore the possibilities for bringing out an Inter-national Edition of its magazines which was necessitated to make the staff to travel abroad. This is for the purpose of business of the assessee. 11. The ld. CIT(Appeals), however, found that some element of personal nature is there, some pleasure trip was undertaken. As rightly contended by the Ld. counsel for the assessee, nothing has been pointed out that the staff of the assessee-company went on pure pleasure trips disassociating ..... X X X X Extracts X X X X X X X X Extracts X X X X
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