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M/s Agribiotech Industries Pvt. Ltd. Versus The ACIT, Circle-4 Jaipur

2017 (9) TMI 1225 - ITAT JAIPUR

Disallowance out of travelling expenses - proof of business purposes - Held that:- The onus is on the assessee to demonstrate through verifiable and credible evidence that the travel expenditure on foreign trips has been incurred for the purposes of the assessee’s business. The matter is accordingly remitted back to the file of the Assessing officer to examine the same afresh as per law after providing appropriate opportunity to the assessee. - Sales promotion expenses - AO has disallowed 50 .....

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oses. Similarly, no basis has been given by the AO for disallowance of advertisement expenditure of ₹ 77,000 towards advertisement in souvenir. The matter is accordingly remitted back to the file of the Assessing officer to examine the same afresh as per law and give a specific finding after providing appropriate opportunity to the assessee. The ground are thus allowed for statistical purposes. - Addition on account of interest income - accrual of income - Held that:- There is no dispu .....

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o advised, to revise its return of income or make an appropriate application before the Assessing Officer stating that the income has already brought to tax in the instant year and the same cannot be brought to tax in the subsequent year and the AO shall examine the same as per law. The ground of appeal is disposed off accordingly - ITA No. 367/JP/17 - Dated:- 15-9-2017 - SHRI KUL BHARAT, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri Himanshu Goyal (C.A.) For The Revenue : Shri R.A. .....

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ions of the assessee and the findings of the AO are as under:- 4. Disallowance out of travelling expenses: During assessment proceedings it was found that the assessee has debited a sum of ₹ 70,30,911/- in P&L account under the head travelling expenses. Out of this, an amount of ₹ 20,14,362/- was incurred on Director s foreign travelling expenses. Vide note sheet entry dated 20.10.2015 the assessee was asked to explain as to why entire foreign travelling expenses of directors sha .....

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tries to explore business opportunities and accordingly implement the same in the business line of the assessee. It cannot be said that there is no link between the foreign travel and the business of the assessee at the growth of business is a continuous process and though every transaction may not lead to any specific benefit to the assessee but it has a great impact in future. A business man works with a long term perspective and incurs expenditure accordingly. It is for the board of directors .....

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explore new business opportunities, are eligible as revenue in nature. -CIT vs. Muchem 208 Taxman 250 (mag.) ( P&H) (high court) -Honorable High Court of Delhi in Rev. Pet. No. 668 of 2011 in ITA No. 157 of 2011 pronounced on: 1st June, 2012 in the case of Rahuljee & Company Pvt. Ltd. Versus Income Tax Appellate Tribunals & others - Supreme Court in S.A. Builders Vs. CIT(Appeals) (SC), [288ITR 2] -Sayaji Iron & Engg. Co. Ltd. vs. CIT 253 ITR 749 . 4.1 I have considered the reply .....

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s evident that Smt. Pooja Bajoria also visited abroad with Sh. Ashutosh Bajoria. Mrs. Pooja Bajoria is not director in assessee company. The assessee company not produced any evidence which proves that the directors visit was to explore the business activities. 4.2 Reliance is placed on the decision of Hon ble High Court of Karnataka in the case of Commissioner of Income-tax, Bangalore Vs. HMA Data, Systems (p) Ltd. [2015] 63 taxmann.com 144, where it was held by the Hon ble High Court that expe .....

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ort submitted to company, further except tickets, no other expense details have been furnished by the asessee. 4.3 Therefore I hereby disallowed entire directors foreign travelling expenses of ₹ 20,14,362/-. Thus ₹ 20,14,362/- is added to the total income of assessee. 4. In respect of ground no. 4, the assessee has challenged the addition of ₹ 77,000/- made by the AO on account of advertisement and publication expenses and in ground No. 5, the assessee has challenged the additi .....

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; publishing expenses and remaining amount of ₹ 6,15,775/- were incurred on sales promotion expenses. Vide order sheet entry date 20.10.2015 the assessee was asked to explain as to why disallowances shall not be made as the expenses of advertisement & publicity are on account of advertisement in souvenir to some extent and expenses on account of sales and promotion are mainly on account of hotel & restaurant bills of directors and purchases from various store, gifts and sweets to g .....

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eveal that out of the total expenditure an amount of ₹ 131357/- has been incurred on advertisement made in news paper (copy enclosed) for inviting tenders of transport service providers to the transport the goods of the company, an amount of ₹ 60,941/- has been incurred towards publishing an advertisement in news paper (copy enclosed) for recruiting Manager of boiler and turbine operations, as regards the balance expenditure the same has been incurred in the interest of the business .....

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. The said expenditure has been incurred wholly and exclusively for the business of the assessee company. A copy of the ledger account of sales promotion expenses has already been filed before your honor. A perusal of the same will reveal that all expenses are related of the business of the assessee. The expenses incurred on hotels, stay restaurants, purchases of sweets, gifts etc. either through credit cards/directly have been incurred for the purpose of the business of the assessee to take car .....

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I have considered the reply of the assessee and not found fully convincing. The assessee contention that expenditure of ₹ 1,31,357/- and 60,941/- were incurred for advertisement in news paper is acceptable. But as far as remaining amount of ₹ 77,000/- is concerned, the contention is not acceptable as the remaining expenditure of ₹ 77,000/- has incurred for advertisement in souvenir and not allowable. Thus amount of ₹ 77,000/- is disallowed and added back to total back to .....

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of ₹ 3,84,887/- (77,000+307887) is made on account of disallowance of expenses and added to total income of the assessee. 5. The ld. CIT(A) after considering the submission of the assessee has found the disallowances made by the AO as reasonable and fair and confirmed the addition so made by the AO. 6. Now the assessee is in appeal before us and the ld AR reiterated the submissions made before the lower authorities. Regarding travel expenses, the ld. AR submitted that the assessee being a .....

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such foreign travel is in connection with assessee s business or not. It was further submitted that Smt. Pooja Bajoria also visited along with Shri Ashutosh Bajoria and her expenses have also been claimed by the assessee even though she is not the Director in the assessee company. In his rejoinder, the ld. AR submitted that the expenses on the foreign travel have been incurred to explore new business opportunities and the assessee can demonstrate the same if so required through production of ev .....

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business. The matter is accordingly remitted back to the file of the Assessing officer to examine the same afresh as per law after providing appropriate opportunity to the assessee. 9. Regarding sales promotion expenses of ₹ 307,887, the AO has disallowed 50% of the total expenses holding that the assessee has not fully justified the incurrence of such expenditure as incidental to business going by the narration of the expenditure in terms of hotel bills, gifts and sweets. In our view, if .....

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e matter is accordingly remitted back to the file of the Assessing officer to examine the same afresh as per law and give a specific finding after providing appropriate opportunity to the assessee. The ground no. 3, 4 & 5 are thus allowed for statistical purposes. 10. In ground No. 6, the assessee has challenged the addition of ₹ 4,42,192/- on account of interest income. In this regard, the ld AR submitted that the said income was received in subsequent assessment year 2014-15 and has .....

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