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TMI Blog2010 (3) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 that as per Explanation 1 to section 32 which provides that where the assessee is a lessee, it can claim depreciation on the amount of a capital nature incurred by it. Therefore, the stand that the assessee is only a lessee does not stand. Thus, the ld. Sr. DR supported the order of the Assessing Officer. The ld. CIT(Appeals) while deleting this disallowance made under the head 'expenditure' incurred for repairing the space used for recreation room by the staff found that as mentioned by the Assessing Officer in his assessment order, who himself admitted that prior to the renovation there was no recreation room. As a result of the repairs an empty derelict hall was converted into a recreation room. The Ld. CIT(Appeals) answere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 submissions and perused the materials available on record including the precedence. The argument of the Ld. Sr. DR as mentioned in the grounds that as per Explanation 1 to section 32(1) w.e.f. 1-4-1988 by way of Insertion by Taxation Laws Amendment and Miscellaneous Provisions Act, 1986, which was relied by the ld. SR. DR that when the assessee possess the premises which is not owned by it and incurred expenditure for the purpose of the business on the construction of any structure or doing any work and by way of renovation or extension then provisions of this clause shall apply as if the said structure or building owned by the assessee. In view of this explanation, the expenditure incurred is only capital expenditure and it cannot be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 objection of the assessee together, as both relate to the common issue, of course for two different years. We have heard rival submissions and perused the entire materials available on record. 8. The Ld. counsel for the assessee would submit by way of argument note as well as by way of paper book that foreign travel expenses incurred by the assessee which was subjected to disallowance is based not on facts but on mere conjunctures and surmises. The Ld. counsel for the assessee further submitted that the assessee, M/s. MM Publications is a company in which public are substantially interested and it is engaged in the printing and publishing of various periodicals since 1970. During the year under consideration, it has eight periodicals and other one time spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 these foreign travel expenditures were laid out and expended wholly and exclusively for the purpose of the business. Therefore, they are allowable under section 37 of the Income-tax Act. Being the publisher of several periodicals dealing with the subject, the editors and other staff have to undertake tours in India and abroad and gather current topics of interest to the readership. Therefore, there is no personal element involved and the expenses incurred under the head 'foreign travel' is for the purpose of business exclusively and it has to be adjudged from the point of a businessman and not as a spectator. Lastly, he relied on the decision of the Supreme Court in the case of J.K. Woollen Manufacturer v. CIT [1969] 72 ITR 612 . 9. On the other hand, the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ines 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 from the business of the assessee so as to reject the claim of the assessee. On a perusal of the orders of the authorities, we find that an ad hoc disallowance has been made and nothing has been pin pointed for the disallowance. On the other hand, the Ld. counsel for the assessee would convince us that this foreign travel was necessitated to grow the business of the assessee's magazines, periodicals, etc. which is now on globalization and on competition, which requires to know more about to cut down the cost of the publications and printings and such other matters, which are required for the purpose of the business. Under the above circumstances, we have no hesitation in accepting the claim of the assessee that the foreign travel expenses were incurred only for the purpose of bus ..... 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