TMI Blog2015 (1) TMI 1378X X X X Extracts X X X X X X X X Extracts X X X X ..... ot a valid reason for disallowance. Keeping in view the fact that the assessee had furnished full details of expenses along with supporting bills, vouchers, there is no reason for making such ad hoc disallowance. The Assessing Officer is directed to allow the expenses Ad hoc disallowance being one-fifth of the foreign travel expenses - Held that:- The assessee during the course of assessment proceedings had furnished all the details as requested by the Assessing Officer including the name of the employee, place visited, purpose of the visit, etc., in respect of the foreign travel. The purpose of visit of the employees was to attend business meetings, fairs and exhibitions, training, etc. It was further clarified that the expenses incurred were only on its employees and did not include any expenses incurred on the relatives of the employees. As the travel expenses are genuine expenses incurred wholly and exclusively for the purpose of business and are revenue in nature and hence should be allowed as deductible expenses under section 37(1) of the Act. Disallowance of foreign exchange loss on forward exchange contracts entered by the assessee - Held that:- The transaction enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 4,66,018 arising on account of revaluation of forward contract. Ground No. 7-Commission expenses of ₹ 10,72,801 disallowed in the financial year 2000-01 and reversed during the previous year not reduced from taxable income. Ground No. 8-Interest of ₹ 1,12,24,491 on delayed payment of purchase consideration disallowed on the contention that it is a capi tal expenditure. 3. The rival contentions have been heard and record perused. The facts in brief are that the assessee-company is engaged in the marketing and third party manufacturing of system imaging products, graphic system products, medical diagnostic imaging products and non-destructive imaging products. During the course of scrutiny assessment for the assessment year 2002-03, the Assessing Officer disallowed sales promotion expenses of ₹ 4,46,000 incurred on Photonika Fair on the plea that documentary evidence could not be produced. By the impugned order, the learned Commissioner of Income-tax (Appeals) confirmed the disallowance. It was contended by the learned authorised representative that the assessee has participated in various trade exhibitions and fairs related to its business, many of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... telephone and mobile expenses of its employees vide letter dated March 22, 2005. The genuineness of the expenses incurred was not in doubt and as per the terms of employment, the assessee has reimbursed one-third of the expenses incurred by the employees on telephone and mobile. Even if there are any personal expenses, they can be treated as perquisite in the hands of the employees. As per rule 3(8) of the Income-tax Rules, 1962, reimbursement of telephone expenses is not to be treated as perquisite in the hands of the employees with effect from the assessment year 2002-03. The hon'ble Gujarat High Court in the case of Sayaji Iron and Engg. Co. v. CIT [2002] 253 ITR 749 (Guj) held that in a case of corporate entity, no disallowance can be made on account of personal use by the director/employees. Respectfully following the proposition laid down by the hon'ble Gujarat High Court, we do not find any merit in the disallowance made in respect of reimbursement of telephone and mobile expenses. 8. Similarly, an ad hoc disallowance of ₹ 1,49,875 being one-third of the entertainment expenses was confirmed by the learned Commissioner of Income-tax (Appeals) by observing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the hon'ble Delhi High Court in the case of Continental Seeds and Chemicals Ltd. v. Asst. CIT [2003] 1 SOT 393 (Delhi), in the case of Mahendra Oil Cake Industries P. Ltd. v. Asst. CIT [1996] 55 TTJ (Ahd) 711 and in the case of Raymon Glues and Chemicals v. IAC [1993] 46 TTJ (Ahd) 693. 13. The hon'ble Delhi High Court in the case of Continental Seeds and Chemicals Ltd. v. Asst. CIT [2003] 1 SOT 393 (Delhi) held as under : The Income-tax Appellate Tribunal in this case has held that where the assessee provided all details in respect of foreign travel showing that the same was for business purposes and, the Commis sioner (Appeals), without placing any material or evidence or cogent reason, disallowed a part of such expenditure based on ad hoc and estimated basis, such addition could not be sustained. 14. We have considered the rival contentions and found that the assessee had incurred an amount of ₹ 34,96,174 on account of foreign travel by its employees other than the managing director on business tours undertaken by them during the course of their employment with the assessee. The assessee during the course of assessment proceedings had furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. In the assessment year 2003-04, the assessee was also aggrieved by the disallowance of commission expenses of ₹ 13,38,363. In the course of assessment proceedings, the Assessing Officer observed that the assessee had debited ₹ 2.38 crores towards commission. The assessee's representative was requested to file the details of this commission payments giving the specific details of name and addresses of the recipient, purpose for which the commission was paid, the nature of services rendered and also to file confirmation from the recipient. The assessee's representative during the course of assessment proceedings filed the various details called for but could file confirmation letters in respect of payment aggregating to ₹ 2,25,17,597 confirmation only and in respect of the balance payments they could not file confirmation to the tune of ₹ 13,38,363. Since no confirmation was filed in respect of commission payment of ₹ 13,38,363 the Assessing Officer disallowed the same. Vide the impugned order, the learned Commissioner of Income-tax (Appeals) confirmed the disallowance. 21. The learned authorised representative placed on record the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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