TMI Blog2019 (11) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... iture incurred was for the purpose of the business and in view of the failure on the part of the assessee in discharging its onus, we do not find any error in the order of the CIT(A) on the issue in dispute and accordingly, we uphold the same. The grounds of the assessee in relation to this issue are dismissed. Disallowance of medical expenses incurred on treatment of one of the Director - HELD THAT:- Resolution passed in the general body meeting of the company, there is no dispute as the reimbursement of medical expenses was allowed to Sh. G.L. Didwaniya as perquisite and not as commercial expediency. The assessee was required to deduct tax at source on the said amount of perquisite, which was part of the salary as defined under section 17 (2) - No error in the order of the learned CIT(A) on the issue in dispute and accordingly, we uphold the same. The grounds of the appeal of the assessee, related to the issue in dispute are accordingly dismissed. - ITA No.1558/Del/2017 - - - Dated:- 31-10-2019 - Shri Sudhanshu Srivastava, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : Shri Saubhagya Agarwal, Adv. For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law, the Ld., Commissioner erred in relying upon the fact that Mr. G.L. Didwania had not offered the sum to tax as perquisite when the fact had absolutely no bearing on the case of the Appellant. 9. That on the facts and circumstances of the case and in law, the Ld., Commissioner erred in not appreciating that the case laws quoted were directly applicable to the case of the Appellant. 10. That on the facts and circumstances of the case and in law, the Ld., Commissioner erred in holding that the Appllant has not been able to provide complete details for requisite examination wheras in fact all details had been provided at the time of assessment and no specific detail has been said to not have been provided. 11. That on the facts and circumstances of the case and in law, the Ld., Commissioner erred in upholding the addition of ₹ 16,57,798/- on account of medical expenses incurred for the treatment of Mr. G.L. Didwania by merely stating that the case laws quoted were not applicable as each case turns on its own facts without actually distinguishing the set precedents. 12. That in any case and in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g director of the assessee company. On being asked to substantiate the expenses as incurred wholly and exclusively for the purpose of the business, the assessee failed to identify the business purpose of the foreign visit and also failed to file any documentary evidence to support that the foreign tour was for the purpose of the business of the assessee company. The assessing officer asked tour report, details of clients met or seminar/conference attended, approval of board of directors, study report before finalizing the tour and such other related information/details, however, the assessee failed to produce any such information. In view failure on the part of the assessee, the AO observed that personal and pleasure trip by the daughter of the directors cannot be denied and he disallowed the relevant expenses on travel by Ms Unnnati Didwania to the USA. Before the learned CIT(A) also the assessee failed to produce documentary evidence to support that expenses were incurred wholly and exclusively for the purpose of the business. The learned CIT(A) on the basis of documents of purchase of foreign currency for the purpose of the tour, concluded that travel was private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, disallowance was justified. 4.4 We have heard the rival submissions and perused the relevant material on record. The assessee has incurred expenses of ₹ 37,24,282/- on travelling of the directors, which included expenses on travel of Ms. Unnnati Didwania to various countries of Europe, Bangkok, Dubai, Singapore, UK and USA etc. The Assessing Officer has disallowed only the expenses related to the USA trip as assessee failed to establish that travel to USA by Ms. Unnati Didwania was wholly and exclusively for the purpose of the business. The assessee failed to file copy of tour report, details of any clients met, details of any seminar/conference or any other documents which could establish that the purpose of the travel was for business. Before the learned CIT(A) also the assessee failed to establish the business purpose of the travel. Further, the learned CIT(A) from the vouchers of foreign exchange purchased by the assessee found that purpose of the travel was private in nature. In the circumstances, the onus was on the assessee to establish that the expenditure incurred was for the purpose of the business and in view of the fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961 reads as under:- 'For the purposes of sections 15 ,16 and of this section - (1) Salary includes- (i) to (iii) ** ** ** (iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages; (v) to (viii) ** ** ** (2) perquisite includes- (i) to (iii) ** ** ** (iv) any sum paid by the employer in respect of any obligation which but for such payment, would have been payable by the assessee; and (v) to (viii) ** ** ** Provided that nothing in this clause shall apply to,- (i) to(/v) ** ** ** (v) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family other than the treatment referred to in clauses (i) and (ii); so, however, that such sum does not exceed fifteen thousand rupees in the previous year. (vi) ** ** ** 4.3.9 Therefore it could not be disputed that the amounts paid as medical reimbursements is in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the learned CIT(A) and argued that expenses were incurred as commercial expediency and, thus, should have been allowed under section 37(1) of the Act. 5.3 The learned DR, on the other hand, relied on the order of the lower authorities. 5.4 We have heard the rival submission and perused the relevant material on record. The fact that medical expenditure of ₹ 16,57,798/- was incurred toward treatment of Sh. GL Didwaniya, who was director of the company during relevant time is undisputed. The assessee has submitted copy of the resolution passed in extraordinary general meeting wherein remuneration of the whole time directors was changed and medical reimbursement was offered as perquisite to the directors particularly Sh. G.L. Didwania. The relevant part of the explanatory statement of the minutes of the extraordinary general meeting of the company reproduced by the learned CIT(A) in the impugned order is extracted as under : Sri G. L. Didwania is the founder of this company and senior most Director. Since, his heath is not well in recent times, the company urges to maintain his health so that the company can get app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Duties: Mr. G. L. Didwania is employed on Whole-time basis and is overall in charge of all operational matter like finance, purchase, sales, production, liasioning, management etc. He is currently reporting to the Board of Directors. Except Mr. G. L. Didwania no other director is interested in the aforesaid resolution. 5.5 In view of the above resolution passed in the general body meeting of the company, there is no dispute as the reimbursement of medical expenses was allowed to Sh. G.L. Didwaniya as perquisite and not as commercial expediency. The assessee was required to deduct tax at source on the said amount of perquisite, which was part of the salary as defined under section 17 (2) of the Act. In the facts and circumstances of the case, we do not find any error in the order of the learned CIT(A) on the issue in dispute and accordingly, we uphold the same. The grounds of the appeal of the assessee, related to the issue in dispute are accordingly dismissed. 6. In the result, the appeal of the assessee is dismissed. Order is pronounced in the open court on 31st October, 2019. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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