TMI Blog2018 (3) TMI 1567X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal Corporation and it cannot be said that the expenditure was incurred before the commencement of business or it cannot be disallowed on the pretext that the assessee has not offered income from Vellayambalam project in respect of which the expenditure was incurred. The impugned expenditure was incurred by the assessee after setting up of business and it is to be revenue expenditure. - Decided in favour of the assessee Disallowance being 1/5th of expenses relating to foreign travel as having incurred for personal purposes - Held that:- In this case though the assessee has claimed an expenditure towards foreign travel expenditure undertaken by the Directors the assessee has not produced details of the work carried out by the Directors a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no income from the said project was offered for tax and further, the payment was capital in nature and paid for the enduring benefits that would accrue to the appellant over a period of time. The assessee was not in agreement with the Assessing officer and thereby contended that the payment was a statutory payment which is allowable u/s 43B of the Act. The assessee further contended that if it is disallowed for the AY 2007-08 then direction may be issued to the Assessing Officer to consider the same for the AY 2008-09 as the return filed for the AY 2008-09 on 30.09.2008 cannot be revised now. 4. On appeal, the CIT(A) considered both the views expressed. According to the CIT(A), the permit fee paid cannot be construed as statutory paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val submissions and perused the material on record. The main contention of the Ld. DR before us is that the assessee has not offered income relating to Vellayambalam Project. Hence, it cannot be allowed. Admittedly, in this case the assessee is in real estate business and carrying out various construction projects namely, Kumarapuram, Pongumoodu, Vanchiyoor and Vellayambalam. The assessee offered income from Pongumoodu, Kumarapuram and Vanchiyoor. However, there was no income offered from Velambalam project. The assessee recognized income from the project on the basis of percentage of completion method and the percentage of completion will be determined by the project management team of the company, based on which the company prepares its p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the impugned expenditure was incurred in connection with Vellayambalam project for getting approval from the Municipal Corporation and it cannot be said that the expenditure was incurred before the commencement of business or it cannot be disallowed on the pretext that the assessee has not offered income from Vellayambalam project in respect of which the expenditure was incurred. The impugned expenditure was incurred by the assessee after setting up of business and it is to be revenue expenditure. We also place reliance on the following judgments: i) Western India Vegetable Products Ltd. vs. CIT (26 ITR 151)(Bom) ii) CIT vs. Kulwant Singh and Company (144 Taxation 464 (P H) iii) CIT vs. MFar Construction Ltd. (48 DTR 360( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses. The CIT(A) rejected another argument of the assessee that the company had filed Fringe Benefit Tax return and the disallowance made tantamount to duplication as this argument has no relevance to the facts of the case since the details based on which the Fringe Benefit Tax return was filed was not made available for verification. This apart, the CIT(A) observed that Fringe Benefit Tax return was filed for the fringe benefits value of ₹ 4,24,344/- but the disallowance on travelling expenses was made for the amount debited of ₹ 18,88,928/-. The CIT(A) observed that assessee cannot say that the entire amount disallowed was considered for filing Fringe Benefit Tax return. According to the CIT(A), this argument may be factua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and the number of days spend therein, it is not possible to hold that the entire expenditure claimed by the assessee is wholly and exclusively for the purpose of the business of the assessee. It was necessary for the assessee to furnish details of the work carried out by the Directors at abroad in connection with the business of the assessee. Hence, the Assessing Officer is justified in disallowing a part of the expenditure as personal in nature. Accordingly, we do not find any infirmity in the order of the CIT(A) and the same is confirmed. This ground of appeal of the assessee is rejected. 12. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open Court on this 22nd March, 2018. - - TaxT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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