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TMI Blog2017 (8) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... enses ignoring the facts and evidences placed on record to show that the assessee is engaged in the business of export and the said foreign travel were undertaken for the purpose of business. Thus the addition so confirmed should be deleted. 3. The CIT(A) erred in law and on facts in confirming the disallowance of Rs. 78,075/- u/s 40(a)(ia) being amount paid towards trade fair expenses ignoring that the said amount was not liable to tax deduction at source. Thus the disallowance should be deleted. 4. The CIT(A) erred in law and on facts in confirming the disallowance of Rs. 10,56,025/- paid towards the certification fees over a period of 5 years by holding that the benefit of the same spreads over a period of five years ignoring the facts, evidences and submissions placed on record that the same is a revenue expense which has to be allowed in the year of incurrence i.e. this year. Thus the addition so made should be deleted." 3. The assessee is an individual and carrying on manufacturing and export business of building hardware & trading of door hinges under the name and style of proprietorship concerns namely M/s. Garg Industries and M/s D.P. Garg & sons respectively. Duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the sake of natural justice increase in payment of interest in proportion to the increase in turnover of the business was allowable and the balance of interest paid was disallowed. In the immediate preceding year interest expenditure was shown at Rs. 19,49,889/- against the turnover of Rs. 18,26,26,453/-. In the year under reference, total turnover of the business was increased to Rs. 19,71,50,240/-. Accordingly, interest allowable in proportion to the increase in turnover of the business was worked out by the Assessing Officer as under:- Rs.19,49,889 X 19,71,50,240 / 18,26,26,453 = Rs. 21,04,905/- Balance of interest of Rs. 65,05,094 was added back to the total income by the Assessing Officer. 4. The assessee debited traveling expenditure of Rs. 42,72,862/-. The Assessing Officer disallowed the foreign tour expenses to the extent of Rs. 33,50,176/-. As relates to TDS the Assessing Officer disallowed Rs. 78,075/- and as relates to assessee's claim under the head 'Trademark expenses', the Assessing Officer disallowed Rs. 9,24,810/-. 5. Being aggrieved by the order of the Assessing Officer, the Assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t necessary for allowance of foreign travel expenses that it should result in business. Sometimes the business meetings are fruitful and sometimes not. However, in this case, the assessee exported goods to USA in FY 2011-12 onwards as per details given on page 24 of CIT(A) order which shows that the meeting with prospective buyers in USA resulted into business though in subsequent years. Thus foreign travel expenses to visit USA were incurred for the purpose of business and therefore the same should be allowed in full. As relates to Ground no. 3 Disallowance of Rs. 78,075/- u/s 40(a)(ia) for amount paid towards Trade fair expenses, the Ld. AR submitted that an amount of Rs. 78,075/- was paid to M/s R.E. Rogers India (P) Ltd. without deduction of TDS. The assessing officer held that the same was liable to TDS and disallowed the same u/s 40(a)(ia). (Para 5 Page 8 of Asstt. Order). The CIT(A) ignored the submissions of the assessee and held that all the expenses are covered under the definition of handling expenses and therefore liable to TDS. (Para 7.1 page 31 of CIT(A) order) These expenses were incurred towards cargo expenses for sending samples for an exhibition 'Practical World' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act. The assessee exported goods to UK. As per UK standard requirements, the products required CE certification. (Refer pages 215-216 for emails from buyers) The assessee got its products CE certified from Bodycote Testing Ltd. and paid this amount towards CE certification charges. (Refer pages 217, 219-220 for bills of the said party). Photocopies of CE certificates are placed on pages 222-223 which shows the certificate issued on 03/03/08 is valid upto 03/03/13 i.e. for five years. These evidences prove beyond doubt that it is not a capital expenditure in any manner. This is a revenue expense for certification of its finished goods to enable it to sell in the UK market. Therefore, the Ld. AR submitted that the same is allowable in full in this year even though certification has been provided for 5 years. Thus, the Ld. AR prayed that the disallowance of Rs. 8,45,540/- being 80% of Rs. 10,56,925/- as sustained by the CIT(A) should be deleted and the entire expense of Rs. 10,56,925 should be allowed in this year. 7. The Ld. DR submitted that the CIT(A) has rightly made an addition on account of travel expenses incurred towards two foreign travel. The CIT(A) also has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business opportunities at Abernethie Trading, USA on 8-9/10/2007 which was enclosed at Page 190 of the paper book and the other e-mails shows the participation of Rakesh Jindal in respect of future/prospective business with USA which was enclosed at Pages 197 to 198 of the paper book. The said evidence was produced before the Assessing Officer as well as before the CIT(A). The said e-mail was addressed to B M Garg by stating initial B M. At Page 197 & 198 of the paper book it is clearly mentioned that the parties in the US was communicating for the new business and for new products and range development with Shri Rakesh Jindal who was representing Garg Industries. These documents were though on record not taken into cognizance by both the Revenue authorities. Thus, the travel expenses as related to Rakesh Jindal amounting to Rs. 6,56,593/- has to be considered as the expenses towers the business expansion. 9. As related to Trade Fair Expenses, no TDS is required to be deducted on reimbursement of expenses for which the Ld. AR relied upon the judgment of the Hon'ble Delhi High Court in case of CIT Vs. DLF Commercial Project Corporation (2015-TIOL-1609-HC-DEL-IT order dated 15.07.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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