TMI Blog2015 (1) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit and loss account, it cannot be held that the entire sale value of the shares was not taken into consideration for computing the income of the assessee. Moreover, we find that it is an admitted fact that the amount in question when received in the subsequent year by the assessee, the same was assessed to tax by the Revenue in the hands of the assessee in the year of receipt. In the above facts, we do not find any good reason to interfere with the order of the CIT(A) which is hereby confirmed. - Decided against revenue. Disallowance on account of foreign travelling expenses - assessee had not furnished details of expenses of wife and children - CIT(A) deleted the addition - Held that:- It is not in dispute that the wife of the assessee is also a Director of the assessee-company and assessee claimed before the Assessing Officer that the expenditure of wife of the Director who is also a Director and looks after the business of the assessee-company was for the purpose of business. We find that no material was brought on record by the Revenue to controvert the above submissions of the assessee. Further, it is observed that the CIT(A) deleted the entire disallowance by observing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brief facts of the case are that the Assessing Officer observed that the assessee has claimed bad debts of ₹ 13,17,300/- on account of amount receivable from Shri Nagindas Chandulal Shah, Manekchowk, Ahmedbaad who was a Share Broker and member of Ahmedabad Stock Exchange. The Assessing Officer further observed that the assessee vide its letter dated 31.01.1996 explained that the said share broker from whom the amount was due to the assessee was declared a defaulter by Ahmedabad Stock Exchange. As on 13.11.1992, a sum of ₹ 13,17,300/- was receivable from the said share broker. The assessee also stated before the Assessing Officer that the Ahmedabad Stock Exchange required the brokers who were to receive the money due from Shri Nagindas Chandulal Shah to lodge a claim with them. Accordingly, the assessee vide letter dated 27.11.1992 lodged a claim for ₹ 14,14,187.50 including interest on this sum due from the said broker. The assessee also received in the Financial Year 1993-94 an interim installment of ₹ 10,000/- in respect of dividend which the assessee had shown as income in Assessment Year 1994-95. Thereafter, in September 1994, the assessee received S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer further observed that the assessee has not carried out any share business as such, the amount of ₹ 13,17,300/- which basically represents the cost of 600 shares of TISCO given by the assessee to the said broker for badla transaction does not represent the amount which is included in computing the income of the assessee either for current year or in the earlier assessment year. He, therefore, held that the 600 shares of TISCO given by the assessee to share broker for badla transaction cannot be treated to represent the money lent in the course of money lending business. Therefore, he held that the relevant amount does not represent a debt which can be considered for allowing as deduction as the conditions of section 36(2) are not fulfilled. Accordingly, he disallowed the deduction of ₹ 13,17,300/-. 5. On appeal, the CIT(A) allowed the claim of the assessee. 6. The Departmental Representative supported the order of the Assessing Officer, whereas the Authorized Representative of the assessee supported the order of the CIT(A). 7. We have heard the rival submissions and perused the orders of the lower authorities and material available on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 300/- on account of bad-debts. This ground of appeal is allowed. 9. Before us, the Departmental Representative supported the order of the Assessing Officer and the Authorized Representative of the assessee supported the order of the CIT(A). 10. We find that no material could be brought before us to show that the Ahmedabad Stock Exchange has given any assurance to meet the entire debt to the assessee which was receivable by the assessee from Shri Nagindas Chandulal Shah who was declared as defaulter by the stock exchange. Thus, in our considered view, as the broker from whom the debt was receivable has in fact become bad during the year under consideration and the assessee had not acquired any legal right to receive the same debt from Ahmedabad Stock Exchange. In our view, merely lodging of a claim does not give rise to a legal right in favour of the assessee. 11. Further, in our considered view, after assessing badla interest as business income of the assessee, it was not open to the Assessing Officer to allege on the same breath that the transactions of giving shares in the badla transaction was not a business of the assessee. Further, in such a transaction, as per the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchana P. Parikh has been furnished by the assessee in its various submissions on this issue. He also observed that the disallowance other than fare had to be worked out on proportionate basis as the assessee had not furnished details of expenses of wife and children. Accordingly, he disallowed ₹ 3,32,034/-. 14. On appeal, the CIT(A) allowed the deduction to the assessee. 15. The Departmental Representative supported the order of the Assessing Officer, whereas the Authorized Representative of the assessee supported the order of the CIT(A). 16. We have heard the rival submissions and perused the orders of the lower authorities and material available on record. In the instant case, the Assessing Officer disallowed ₹ 3,32,034/- out of Foreign Travelling Expenses claimed of Rs. ₹ 5,42,694/-. The assessee incurred total foreign travelling expenses of ₹ 5,42,694/- and out of the same, treated ₹ 43,704/- as not allowable being fare of children of Directors and claimed the balance amount of ₹ 4,98,990/- as business expenditure. According to the Assessing Officer, the expenses of the assessee s wife was also non-business expenditure. Further, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) to the above extent and direct the Assessing Officer to disallow ₹ 1,50,000/- out of Foreign Travelling Expenses claimed by the assessee. Thus, this ground of appeal of the Revenue is partly allowed. 19. Ground No. 3 of the appeal reads as under:- 3. The ld. Commissioner of Income tax (A) has erred in law and on facts in directing the AO to restrict the deduction claimed u/s 80I by excluding the amount of duty draw back received for computation of the deduction under section 80I. 20. The brief facts of the case are that the Assessing Officer observed that the assessee has claimed deduction u/s 80-I in respect of profits of pigment division. The amount of ₹ 8,97,195/- being 25% of the profit of that division was directly reduced from the profit of ₹ 35,88,781/- of pigment division and in the computation of total income, only the net profit was included. He examined the salary and attendant s register maintained at the factory of the assessee during the course of assessment proceedings and observed that in pigment division two supervisors and 8 workers were employed. He further observed that from December 1992 to March 1993, one more worker was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyee cannot be considered to be the workers employed by the assessee for the purpose of condition in that clause. In view of this, it is held that the industrial undertaking of pigment division of the assessee does not fulfill the condition at clause (iv) of section 80-I(2) and therefore, the assessee is not eligible for deduction u/s 80-I in regard to profits of pigment division as claimed. 21. On appeal, the CIT(A) held as under:- 4.2 The deduction u/s 80I was claimed by the appellant on the pigment division. Duty draw back received by the appellant is not eligible for deduction u/s 80I, as it cannot be said to be derived from the business. As regards other three items, no interference with the claim made is called for, keeping in view the contentions of the appellant. A.O. is directed to restrict the deduction claimed by excluding the amount of duty draw back received (which is claimed to be ₹ 2,53,710/-). This ground of appeal is partly allowed. 22. The Departmental Representative supported the order of the Assessing Officer, whereas the Authorized Representative of the assessee supported the order of the CIT(A). 23. We have heard the rival submissions an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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