TMI Blog2017 (9) TMI 1225X X X X Extracts X X X X X X X X Extracts X X X X ..... diture 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 dispute that the interest income accrues to the assessee during the year under consideration and as per the accrual method of accounting, the same should have been offered to tax in the instant year. Accordingly, we do not see any infirmity in the action of ld. CIT(A) in confirming the action of the AO in bringing the said interest to tax in the instant year. At the same time, given the fact that the said income has already offered to tax in the subsequent year, the assessee shall be at liberty, if so 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 groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. It is further important to mention that the assessee is a limited company and has a separate legal entity which is totally different from that of its directors. Any expenditure incurred by the assessee may not be considered for its personal purpose. There are various judicial pronouncement in which it is held that foreign travel expenses incurred to 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 of the assessee. The expenses are allowable only when the same are for wholly and exclusively for business purpose. If the directors visited abroad for business purpose than the business VISA was must. But it was found that the Directors of the company visited UAE, Maritius and Maldives on tourist Visa. Even the assessee failed to sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 govt. official. The assessee filed written submission stating therein that: Expenditure incurred on account of advertisement and publishing Expenses: Your honor the assessee has incurred an amount of ₹ 2,69,298/- under the head advertisement and publishing expenses during the year under consideration. The said expenditure has been wholly and exclusively incurred for the business of the assessee company. A copy of ledger account has already been filed before you. A perusal of the same will reveal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w the same are incidental to business. Therefore I disallowed 50% of these expenses and accordingly an addition of ₹ 3,07,887/- (50% of 615775) is made to total income of the assessee. 5.3 Thus total addition 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 private limited company, there is no basis for AO to hold that the assessee has incurred any personal expenses in relation to foreign travel of its directors and in support, reliance was placed on the decision of Hon ble Gujarat High Court in the case of Sayaji Iron Engg. Co. Ltd.(supra). 7. Per contra, the ld. DR took us through the findings of the Assessing Officer and submitted that no evidences have been submitted by the assessee in support of the foreign t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest income. In this regard, the ld AR submitted that the said income was received in subsequent assessment year 2014-15 and has already been offered to tax and where the same is brought to tax in the instant year, it will lead to double taxation. Per contra, the ld. DR submitted that the assessee is following mercantile system of accounting hence, the interest income has accrued during the year and has rightly been brought to tax by the Assessing Officer and which has been confirmed by the ld. CIT(A). 11. The relevant finding of the ld. CIT(A) is reproduced as under:- 7.3 I have gone through the assessment order, statement of facts, ground of appeal and written submission carefully. It is seen that the interest of ₹ 4,42,192/- has accrued in the F.Y. 2012-13 relevant to A.Y. 2013-14 and the appellant is following mercantile system of account. Therefore, I am of the considered view that the income of ₹ 4,42,192/- is required to be taxed in the A.Y. 2013-14. The assessee has no liberty to declare the income of the A.Y. 2013-14 in the A.Y. 2014-15. Therefore, the addition of ₹ 4,42,192/- made by the AO is hereby confirmed. 12. After hearing both ..... X X X X Extracts X X X X X X X X Extracts X X X X
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