9911796707
TMI Blog2014 (4) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee consisted of foreign travel expenses. The details of foreign travel expenses undertaken by the various persons are tabulated as under by the AO:- Sl..No. Name of the person travelling Designation Purpose Amount Expenditure details furnished 1 Prema Mammen Mathew Chef Editor, Vanitha United Kingdom to get acquainted with cuisine and editorial contract 2,78,230 Rs.192330 for travel cheque: Rs. 85,900 for foreign currency. 2 Bina Mathew Assistant Editor Children's division Turkey, World Congress of International Press Institute 9,35,563 Rs 208263 for air ticket: Rs 727300 for forex 3 Keya Tharakan Executive Fashion and design Turkey 56 gen assembly of IPI 563,632 Rs.187,042 for Air ticket; Rs 311700 forex; Rs.61,890 forex. 4 Keya Tharakan Executive Fashion and design Australia to meet consolidated press holding 4,85,981 Rs.263.300 forex for newzealand trip:Rs. 199.681 air ticket 5 Keya Tharakan Executive Fashion and design Singapore-Life style shows and meet fashion people 2,31,398 Rs.36,780 air ticket; Rs. 34,098 forex; Rs.160,520 forex 6 Ammu Mathew Sub Editor, Vanitha Editor's Forum of WAN 1,92,732 Rs 5326 overseas medical ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O held that the provisions of sec. 40A(2) of the Act shall be applicable to the impugned expenditure. Accordingly, the AO took the view that the above said persons in most of the trips have accompanied their respective spouses and hence the business exigency is not proved. 3.2. The AO noticed that the objective of the foreign visit stated by these persons were very much general in nature and even pleasure trips can be covered by it. Some of the foreign trips were claimed to have been undertaken to attend conferences. However, the AO noticed that these persons were not the delegates of such conference and only their respective spouses have attended the conference. Further, the AO noticed that the assessee has not provided any details about the particulars of the expenses in respect of foreign exchange purchased by them. Accordingly the AO took the view that the possibility of incurring personal expenses during the course of foreign trips cannot be ruled out. 3.3 The AO also noticed that all the expenses have been incurred by the group concern, viz., M/s Malayala Manorama and the assessee has reimbursed the expenses in response to the debit note raised by M/s Malayala Manorama. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endered by the Tribunal, the Ld CIT(A) deleted the disallowances made in both the years. Aggrieved, the revenue has filed the present appeals for both the years. 6. The Ld D.R placed strong reliance on the assessment orders and submitted that the assessee has failed to show the business necessity and expediency in undertaking foreign trips. The Ld D.R further submitted that the foreign trips have been mostly undertaken for pleasure trip purposes, which is evidenced by the fact that foreign trips have been undertaken with family members that too tourist attractions. 7. On the contrary, the Ld A.R submitted that the assessee is in the business of publishing various types of magazines and hence it is imperative for the staffs and directors to undertake travel to foreign countries. The business expediency and necessity of foreign travel has been considered in a detailed manner by the Tribunal in assessment years 2005-06 to 2007-08 and the identical disallowances made in those years have been deleted by the Tribunal. The Ld A.R submitted that the employees / directors have furnished tour report on completion of each tour, which clearly shows that there was business necessity in undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey are staff. In some cases, they accompanied their husband whereas husband 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 Manoramma. The staff of the assessee company visited various places in various countries to attend international press meeting, to explore the possibilities to bring out advertisement income and to explore the possibilities for bringing out an International 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 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 bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely due to the importation of ingredients and ideas from places such as North America, china and India during the time of the British Empire and as a result of postwar immigration. The popular British cuisine consists of fish & chips, jellied eels, pie & mash with parsley liquor, boiled beef & carrots with pease pudding, tripe & onions. Roly-poly pudding with custard for afters. Roys joseph pothen Head chef, Raj Malabar, Cambridge UK, narrates some of these. The trips was very informative and useful Sd/ Prema Memen Mathew May 15, 2007" Report on travel to Turkey from 06.05.2007 to 17.05.2007 56th General assembly of the International Press Institute was being held in Istanbul, Turkey during May 2007. I have been delegated by the company to attend the World congress and General assembly. The conference provided a useful meeting place where delegates could exchange views, share experience and establish new contacts. Sd/ Bina Mathew" Gist of details of travel to Australia from May 29, 2007 to June 06, 2007 by Keya Mathew Tharakan, Executive Fashion: Keya Mathew Tharakan left for Australia from Cochin on May 07, 2010 and returned to Cochin on June, 2010. It was an official t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontain such details. 10. The assessing officer, in assessment year 2008-09, has observed that the foreign travel expenses have been accounted for in the books of the assessee company on the basis of debit note raised by the group concern, viz., M/s Malayala Manorama. In this regard it was submitted that there is commercial advantage in following the said procedure, as the bulk booking would, on some occasions, result in savings. Accordingly, it was submitted that this kind of procedure is followed through out. In our view, the said procedure followed by the group concern and the assessee company may not be found fault with in view of the claim of commercial advantage. 11. We notice that Tribunal has deleted the ad-hoc disallowance made in assessment year 2005-06 and 2006-07 on the reasoning that nothing has been pin pointed for the disallowance. However the assessing officer has pointed out that the debit notes raised by M/s Malayala Manorama furnishes details of Air ticket, Foreign exchange purchased and sometimes the details of medical insurance and nothing else. The foreign currency is obtained from the banks in order to spend them in the foreign countries. The purchase of for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en contradictory stand with regard to the quantum of disallowance. In assessment year 2008-09, the AO has disallowed 100% of expenditure relating to certain tours and 50% of the expenditure of other tours. However, in assessment year 2009-10, he has disallowed 20% of the total expenditure incurred on foreign tours. Since the assessing officer, in assessment year 2009-10, has taken the view that the business purpose involved in foreign tours cannot be altogether ruled out, we are of the view that the same position should be extended to the assessment year 2008-09 also. 15. In view of the foregoing discussions, we are of the view that the involvement of personal purpose and incurring of personal expenses during foreign travels undertaken by the key personnel cannot be altogether ruled out. The absence of details of expenses incurred out of foreign exchange coupled with the fact that the key personnels are covered by sec. 40A(2) of the Act fortifies our view further. Hence, in our view, the disallowance of 20% of the foreign tour expenses made by the assessing officer in assessment year 2009-10 is quiet reasonable. Accordingly, we set aside the order passed by the Ld CIT(A) for asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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