TMI Blog2016 (1) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... ll for any interference by this Court. - Decided against assessee. - ITA No. 312 of 2009 (O&M) - - - Dated:- 28-8-2015 - MR. AJAY KUMAR MITTAL AND MR. RAMENDRA JAIN, JJ. For The Appellant : Mr. Rajiv Sharma, Advocate For The Respondent : Mr. Vivek Sethi, Advocate Ramendra Jain, J. 1. The present appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 (hereinafter called as 'the Act') against the order dated 28.11.2008 (Annexure A-1) passed by the Income Tax Appellate Tribunal, Amritsar, (in short 'the Tribunal') in ITA No. 347/(ASR)/2005 for the assessment year 2001-02, reversing the order of the Commissioner of Income Tax (Appeals) [for brevity the CIT (A) ] dated 30.3.2005 (Annexure A-2) and upholding the order dated 27.2.2004 (Annexure A-3), passed by the Assessing Officer, rejecting its claim of deduction on account of 'Foreign Travel'. The appeal was admitted by this Court vide order dated 16.11.2009 to consider the substantial questions of law proposed in para 12 of the appeal which are to the following effect:- A. Whether, on the facts and circumstances of the case, the Tribunal was justified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B.Com and MBA were looking after the total business of the appellant-assessee. They had visited European and Scandinavian countries to introduce customers and study the market there. Finally, Shilpa Aggarwal started communicating with the customers making correspondence and fully took up on herself as the Customer Relation Department since 18.4.2000. The foreign trip of Deepak Aggarwal and Shilpa Aggarwal was purely business trips to know about the pulse of the market, demand and supply and the future prospect of the garden tools industries. However, the Assessing Officer did not agree with the aforesaid assertions of the appellant-assessee and disallowed the expenses incurred on 'Foreign Travel' done by Deepak Aggarwal and Shilpa Aggarwal treating the same as not related to the appellant firm as revenue expenses wholly and exclusively as they were neither agent nor employee or partner of the appellant-assessee vide assessment order dated 27.2.2004 (Annexure A-3). Aggrieved with the same, the appellant-assessee preferred an appeal before the CIT (A), who deleted the addition of ₹ 32,54,766/- made on account of foreign travelling expenses vide order dated 30.3.3005 (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in not appreciating the same and not considering the documentary evidence relatable to the business of the appellant firm which had enhanced in the subsequent years due to the personal efforts made by Deepak Aggarwal and Shilpa Aggarwal. The Tribunal has wrongly concluded that they had no concern with the affairs of the appellant firm in any capacity, whatsoever. 5. On the other hand, learned counsel for the respondent pleaded the legality and validity of the impugned order. 6. After giving our thoughtful consideration to the respective submissions of learned counsel for the parties, we find the present appeal completely devoid of any merits. The Assessing Officer while disallowing ₹ 32,54,766/- on account of foreign travelling expenses of Shri Deepak Aggarwal and Smt. Shilpa Aggarwal had concluded that their tours were completely personal tours and not wholly and exclusively for the purpose of business. It was recorded as under:- 3. During the year assessee has claimed travelling expenses of ₹ 39,93,187/-. Assessee was asked to furnish the details along with evidence and justification of the same for business purpose. Assessee furnished copy of account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiary value. It is also noted that all correspondence is in the individual name of Mr. Mrs. Deepak Aggarwal and they are not in the name of assessee firm. According to the assessee the travelling expenses were incurred to train Sh. Deepak Aggarwal and Smt. Shilpa Aggarwal, who were not associated with firm during the year under consideration, but later on associated themselves with the business. Thus even if, it is presumed and expenses have been incurred to train partner's son and daughter-in-law, these are not the expenses of the firm since these two persons are neither an employee nor partner, agent, Manager of the firm. Moreover, expenses incurred on training of the manpower with the prospective use in the business is in the nature of capital expenses and not revenue. While examining books of account it was found that foreign currency has been purchased in respect of visit of Sh. Deepak Aggarwal, however there are no bills etc. accompanying those vouchers indicating that amounts have actually been spent, if at all spent, there is no evidence that it is an expense for the business purposes spent by newly married couple. Assessee was also confronted with these observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of the visit, the business fetched etc., were produced before him. The address, the e-mal, code, fax and telephone numbers and other particulars were of the firm. The written submission filed by the assessee before the learned CIT(A), were sent by him to the A.O., seeking a remand report. The A.O., in response had nothing more to say, other than relying on the assessment order. The learned CIT(A) thus deleted the addition made by the A.O. 11. The learned CIT(A), however, erred in deleting the addition made by the A.O. It was erroneously overlooked by the learned CIT(A) that none of the evidence filed on behalf of the assessee before the A.O. proved that the expenditure in question was incurred wholly and exclusively for the business purpose of the assessee firm. The learned CIT(A) has accepted that the correspondence in respect of the expenses was not in the name of the assessee firm but was in the name of the individuals. However, this was not considered material holding that the correspondence related to the business of the assessee firm and was with the parties with whom the business was transacted by the assessee firm. This, in our considered opinion, is not in accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Tatas or their nominees for a sum of ₹ 155 lakhs. The said agreement, inter alia, provided that the sum voted by the company for payment of gratuities and/or as compensation for loss of employment to existing directors and employees of the company with respect to their service upto and inclusive of 31.3.1956 and a further amount of ₹ 16188/- payable to the Managing Director Mr. Mathalone, should be paid with respect to his services in accordance with the resolution by the company and the amount so paid should be deducted towards price paid of ₹ 155 lakhs. During the Assessment year 1957-58, the relevant previous year being 1956, the company claimed deduction of ₹ 1,64,899/- before the Income Tax Officer, under Section 10(2)(xv) of the Income Tax Act, 1922. During each of the three succeeding assessment years, the company claimed deduction of ₹ 16,885/-,being annuity paid to the former Director in pursuance to the above resolution. During the assessment year 1957- 58, the claim in respect of entire sum of ₹ 1,64,899/-was disallowed by the ITO on the ground that services of the Directors and employees had been terminated not because of the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no circumstances as such, because as discussed above, the appellant has failed to prove any nexus of the foreign tours of Smt. and Sh. Deepak Aggarwal with the business of the appellant firm. 11. In Appolo Tyres Ltd's case (supra) , the Hon'ble High Court allowed the deduction of expenditure on foreign travel of wife of Managing Director accompanying him on the foreign tour duly approved by the Directors on the ground that it was for assisting Managing Director to discharge his social -cum-business obligations, whereas, Smt. and Sh. Deepak Aggarwal have no nexus or connection with the appellant firm in any capacity, whatsoever. 12. In Sundaram Clayton Ltd's case (supra) , visits of the Chairman and the Managing Director of the foreign company was held to be in the interest of the Indian company. In these circumstances, the same was allowed to be deducted as business expenditure, whereas, there are no such circumstances in the present case. 13. The principle of law enunciated in these pronouncements is well recognized. However, no benefit can be derived by the appellant from any of the said authorities referred to above being distinguishable on facts. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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