TMI Blog2017 (4) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... description of the goods that were considered to be not usable and also the list for damaged stock clearly show the material, quantity and description of the various items which were lying at different godowns across the country which were considered to be damaged and accordingly the statement for provision for damage was prepared and on that basis the goods have actually been reduced from the closing stock of finished goods, it cannot be said that the learned CIT(A) as well as learned Tribunal has committed any error in deleting the disallowance of claim - Decided in favour of assessee Disallowance of claim of foreign travel expenses - Assessee could not furnish the details to substantiate the nature of expenses incurred whether they were for personal or business purpose - Held that:- The assessee has submitted the complete details of employees who have travelled abroad, duration of visit, countries visit, nature and amount of expenses and purpose of travel. The learned CIT(A) also observed that even otherwise considering annual turnover of more than ₹ 195 crores, the foreign travel expenditure of ₹ 3,20,467/only was required to be allowed, more particularly, when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .JUSTICE M.R. SHAH ) 1. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal, Ahmedabad dated 06.04.2016 passed in ITA No.1674/AHD/2012 for AY 200910, the Revenue has preferred present appeal with the following proposed questions of law. A. Whether the Tribunal erred in law and on facts in deleting the disallowance of claim of depreciation on non compete fees to the extent of ₹ 1,40,625/? B. Whether the Tribunal erred in law and on facts in deleting the disallowance of claim of depreciation of reduction of ₹ 5,18,761/from stock of packing material and ₹ 27,17,342/from stock of finished goods ? C. Whether the Tribunal erred in law and on facts in deleting the disallowance of claim of foreign travel expenses of ₹ 3,20,467/? D. Whether the Tribunal erred in law and on facts in deleting the expenses related to web design charges, trade mark expenses and survey expenses ? E. Whether the Tribunal erred in law and on facts in deleting the disallowance of ₹ 36,60,981/made u/s 40(a)(ia) of the Act ? 2.0. The facts leading to the present appeal in nutshel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d also deleted the disallowance of ₹ 36,60,981/under Section 40(a)(ia)of the Act. Consequently, learned CIT(A) allowed the said appeal preferred by the assessee. 2.3. Feeling aggrieved and dissatisfied with the order passed by the learned CIT(A) deleting the aforesaid disallowances made by the AO, the Revenue preferred appeal before the learned Tribunal and by impugned judgment and order, the learned Tribunal has dismissed the said appeal, which has given rise to the present appeal. 3.0. We have heard Shri Nitin Mehta, learned counsel for the Revenue at length. 4.0. Now, so far as proposed question No.A, the same relates to claim of depreciation of amounting to ₹ 1,40,625/on non compete fees which was capitalized as an intangible asset. The assessee claimed the depreciation of intangible asset in the nature of trade marks, technical know how and noncompete fees. The AO disallowed the depreciation on non compete fees by holding that payment towards noncompete fees were not in the nature of intangible assets eligible for depreciation provided under Section 32 of the Act and therefore, made disallowance of ₹ 1,40,625/. The aforesaid came to be deleted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,17,242/from stock of finished goods. It has been held by the A. O. that no proof regarding the write off has been produced. The report of the technical / audit committee who had verified such stock has not been submitted. The A. O. has further held that the reduction of ₹ 27,17,242/was the provision of damage reduced from the stock of finished goods and it was not an actual write off. The appellant has submitted that the amount of ₹ 5,18,761/was reduced due to shortage found at the time of physical verification, discontinuation of product, nonmoving materials and there were the name of earlier company Carnation Nutra Analog Foods Ltd. printed on this packing materials. The appellant has submitted a list indicating stock of packing material which also gives the detail of the stock that was written off. Regarding the stock of damaged goods, it has submitted a detailed annexure containing location of the goods, quantity rate and value of the stock written off. The write off is duly supported by the procedure followed by the appellant company and is, therefore, fully allowable. There is no .requirement of any technical or audit committee before the write off. Regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Tribunal has committed any error in deleting the disallowance of claim of Rs. ₹ 5,18,761/from stock of packing material and ₹ 27,17,342/from stock of finished goods. We are in complete agreement with the view taken by the learned Tribunal as well as learned CIT(A). 6.0. Now, so far as proposed question No.C is concerned, the same is with respect to the disallowance of claim of foreign travel expenses of ₹ 3,20,467/. The AO disallowed the aforesaid expenses on the ground that the assessee could not furnish the details to substantiate the nature of expenses incurred whether they were for personal or business purpose. However, the learned CIT(A) deleted the said disallowance by observing that the assessee has submitted the complete details of employees who have travelled abroad, duration of visit, countries visit, nature and amount of expenses and purpose of travel. The learned CIT(A) also observed that even otherwise considering annual turnover of more than ₹ 195 crores, the foreign travel expenditure of ₹ 3,20,467/only was required to be allowed, more particularly, when the same was duly supported by documentary evidence. The aforesaid has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id expenses no new asset has been acquired and / or there is no change in the fixed asset of the assessee, we are of the opinion that no error has been committed by the learned Tribunal and / or learned CIT(A) treating the aforesaid expenses as revenue in nature. We confirm the finding recorded by the learned CIT(A) as also learned Tribunal treating the aforesaid expenses as revenue in nature. 8.0. Now, so far as proposed question no.5 is concerned, it relates to disallowance of ₹ 36,60,981/made u/s 40(a)(ia) of the Act incurred by the assessee company on account of gift article purchased for sales promotion. From the order passed by the AO, it appears that the AO disallowed the said expenditure on the ground that the assessee failed to deduct TDS as per the provision of Section 194 C of the Act. On facts, learned CIT(A) has held that the expenses related to purchase of gift article cannot be termed as work contract and therefore, the provision of Section 194 C are not applicable. The relevant observations of the learned CIT(A) in para 8.3 are as under: I have carefully perused the assessment order and the submissions given by the appellant. The A. O. has treated the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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