2013 (4) TMI 793

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... for Assessment Year-2007-08: 1. Ld. CIT(A) erred in upholding disallowance of Rs. 144562/- being 10% of expenses incurred under the head telephone and postage without properly appreciating the facts of the case that such expenses included cost of postage, courier charges, cost of telephones installed at office and residential premises of the staff and mobile telephones and all the expenses are incurred for the business of the firm. 2. Ld. CIT(A) erred in confirming disallowance of Rs. 311300/- out of foreign travelling expenses incurred by the appellant of Rs. 6226005/- being 5% of the total expenses incurred expenses being incurred in the day-to-day business of the appellant, hence no such disallowance is called for. 3. The Ld. CIT(A) .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... assessee were at Rs. 97,20,250/-. From the details it was noticed that those expenses include aggregate of Rs. 26,71,011/-, which were incurred by Smt. Shushma Agarwal, partner of the assessee firm who travelled to foreign countries viz. U.K. Switzerland and Cambodia . On the ground that these may involve some personal expenditure the AO disallowed 50% thereof and thus he made disallowance of Rs. 13,35,560/-. The disallowance was challenged in an appeal filed before Ld. CIT(A). One of the grounds raised before Ld. CIT(A) was that these were subjected to FBT, therefore, disallowance could not be made. However, Ld. CIT(A) has rejected such submissions and has upheld the addition. The assessee is aggrieve and hence, has raised Ground No.1 in .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ons have carefully been considered. In the aforementioned decision in the case of Hansraj Mathuradas(supra), relying upon CBDT Circular No.8/2005 dated 29/8/2005 it was held that once FBT is levied on expenses incurred, it follows that the same are treated as fringe benefit provided by the assessee as employer to its employees and the same have to be appropriately allowed as expenditure incurred wholly and exclusively by the assessee for the purpose of its business. No contrary decision has been brought to our notice in this regard. Therefore, respectfully following the aforementioned decision we hold that if the aforementioned expenditure were subjected to FBT, then disallowance cannot be made. However, to verify that whether or not these .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X