M/S BIDASARIA EXPORTS P.LTD., v. THE DCIT 4(1),

ITA 272/IND/2008 | 2004-2005
Pronouncement Date: 25-02-2010 | Result: Allowed

Appeal Details

RSA Number 27222714 RSA 2008
Assessee PAN AAACB7110R
Bench Indore
Appeal Number ITA 272/IND/2008
Duration Of Justice 1 year(s) 8 month(s) 6 day(s)
Appellant M/S BIDASARIA EXPORTS P.LTD.,
Respondent THE DCIT 4(1),
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 25-02-2010
Date Of Final Hearing 28-01-2010
Next Hearing Date 28-01-2010
Assessment Year 2004-2005
Appeal Filed On 19-06-2008
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JM AND SHRI V.K. GUPTA AM ITA NO.272/IND/2008 AY: 2004-05 M/S. BIDASARIA EXPORT PVT. LTD. BHAGIRATHPURA INDUSTRIAL AREA INDORE (PAN AAACB 7110 R) APPELLANT VS. DCIT-4(1) INDORE RESPONDENT FOR ASSESSEE : SHRI C.P. RAWKA FCA FOR DEPARTMENT : SMT. APARNA KARAN SR. DR ORDER PER V.K. GUPTA A.M. THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF ORD ER OF THE LD. CIT(A)-II INDORE DATED 17.3.2008 FOR THE ASSESSMENT YEAR 20 04-05. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PER USED THE MATERIAL AVAILABLE ON RECORD. 3. GROUND NO.1 READS AS UNDER: THAT THE LD. CIT(A) ERRED IN LAW AND FACTS OF THE C ASE AND CONFIRMED THE DISALLOWANCE MADE BY AO OUT OF FOREIGN TRAVELLI NG EXPENSES AT RS.3 64 096/- AS A NON-BUSINESS EXPENDITURE WITHOUT CONSIDERING FULL FACTS AND LEGAL POSITION. 4. THE FACTS IN BRIEF ARE THAT ASSESSEE IS ENGAGE D IN THE BUSINESS OF MANUFACTURING AND EXPORT OF READYMADE GARMENTS. DUR ING THE YEAR UNDER CONSIDERATION ASSESSEE CLAIMED FOREIGN TRAVELING E XPENSES AT RS.10 14 566/- WHICH 2 WERE SUBSTANTIALLY HIGHER FROM THE AMOUNT SPENT UND ER THE SAME HEAD IN EARLIER TWO YEARS. THE AO REQUIRED THE ASSESSEE TO SUBMIT THE D ETAILS THEREOF AND ON PERUSAL OF SUCH DETAILS FOUND THAT THE EXPENDITURE INCLUDED FO REIGN TRIP UNDERTAKEN BY THE DIRECTORS WIFE ALSO. THE TOTAL EXPENDITURE ON THE TRIP OF FOREIGN TOUR OF DIRECTOR SHRI ASHOK BIDASARIA AND HIS WIFE AMOUNTED TO RS.7 28 19 3/-. THE AO HELD THAT THE EXPENDITURE INCURRED ON DIRECTORS WIFE TRAVELING CO ULD NOT BE SAID TO HAVE BEEN INCURRED FOR BUSINESS PURPOSES . HENCE HE DISALLOW ED 15% OF SUCH EXPENDITURE AND MADE AN ADDITION OF RS.3 64 096/-. 5. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE LD. CIT(A) WHEREIN IT WAS SUBMITTED THAT SMT. ANJU BIDASARIA W IFE OF THE DIRECTOR WAS ALSO A DIRECTOR OF THE CO. AND BOTH OF THEM VISITED TO THE COUNTRIES WHERE EXPORT OF GOODS WERE MADE HENCE AOS ACTION WAS NOT JUSTIFIED IN LAW. THE LD. CIT(A) HOWEVER CONFIRMED THE ACTION OF THE AO FOR THE REASON THAT THE ASSESSEE HAD NOT BROUGHT ANY INDEPENDENT EVIDENCE ON RECORD TO JUSTIFY AND ESTAB LISH THAT THE FOREIGN VISIT OF SMT. ANJU BIDASARIA WAS FOR BUSINESS PURPOSES. THE LD. C IT(A) ALSO HELD THAT THE ASSESSEE ALSO FAILED TO JUSTIFY THAT BOTH THE DIRECTORS WERE REQUIRED TO VISIT SUCH PLACES FOR THE PURPOSES OF THE BUSINESS OF THE ASSESSEE. 6. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEF ORE US. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SMT. ANJU BIDASARIA WAS ALS O A QUALIFIED PERSON HAVING GOOD KNOWLEDGE OF DESIGNING AND HAD BEEN INDEBTED AS A D IRECTOR OF THE CO. FROM 17.11.98 HENCE THE VIEW OF THE LD. CIT(A) THAT THE ASSESSEE SHOULD HAVE SHOWN JUSTIFICATION FOR HER VISIT WAS NOT BASED ON CORRECT FACTS. HE FURTHE R CONTENDED THAT IT WAS THE PREROGATIVE OF THE BUSINESSMAN SO AS TO HOW HE SHOU LD CONDUCT THE BUSINESS. HE 3 FURTHER CONTENDED THAT NECESSARY DETAILS WERE GIVEN BEFORE BOTH THE REVENUE AUTHORITIES. HE FURTHER CONTENDED THAT IN CANADA T HE VISIT HAD BEEN MADE FOR PARTICIPATING IN AN EVENT ORGANIZED BY APPAREL EXPO RT PROMOTION COUNCIL IN SEPTEMBER 2003 AND DREW OUR ATTENTION TO PAGE NO.9 OF THE PAPER BOOK TO SUBSTANTIATE THIS FACT. HE FURTHER CONTENDED THAT NO SUCH DISALL OWANCE HAD BEEN MADE EARLIER AND IN SUBSEQUENT YEARS. 7. THE LD. SR. AR HOWEVER CONTENDED THAT BOTH THE PERSONS HAD ALSO VISITED KOPENHEGAN DENMARK IN THE MONTH OF JANUARY 2004 WH ERE NO EXPORTS WERE MADE AND THE ASSESSEE ALSO DID NOT PRODUCE ANY DOCUMENTARY E VIDENCE AS REGARD TO ESTABLISH THE FACT OF ANY BUSINESS NECESSITY IN CONNECTION WITH S UCH TRIP. SHE FURTHER PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT ASSE SSEE IS ENGAGED IN EXPORT OF READYMADE GARMENTS. IT IS ALSO NOTED THAT ASSESSEE S WIFE IS ALSO A DIRECTOR OF THE CO. SINCE 1998. IT IS ALSO OBSERVED THAT MAJORITY OF TH E TRIPS HAVE BEEN MADE TO THE PLACES WHERE THE ASSESSEE ALREADY EXPORTING THE GOODS AND FOR FURTHER EXPLORATION OF POSSIBILITIES OF MAKING EXPORTS. IT IS ALSO NOTED T HAT ALL THE DETAILS OF EXPENDITURE HAVE BEEN FURNISHED. IN THIS FACTUAL BACKGROUND WE ARE OF THE VIEW THAT MERELY BECAUSE SMT. ANJU BIDASARIA IS THE WIFE OF THE DIRECTOR TH E EXPENDITURE ON HER TRIP CANNOT BE CONSIDERED AS FOR NON-BUSINESS PURPOSE PARTICULARL Y WHEN IT IS NOT A CASE OF ANY SPECIFIC DISALLOWANCE FOR A SPECIFIC TRIP WHICH WAS FOUND TO BE NON-BUSINESS PURPOSE BY BOTH THE PERSONS AS GENERAL @15% HAD BEEN MADE. ACCORDINGLY WE HOLD THAT SUCH 4 DISALLOWANCE IS UNWARRANTED AND THEREFORE WE DELE TE THE SAME. THUS THIS GROUND OF THE ASSESSEE IS ACCEPTED. 9. GROUND NO.2 READS AS UNDER: THAT THE LD. CIT(A) ERRED IN LAW AND FACTS OF THE CASE AND CONFIRMED THE DISALLOWANCE MADE BY THE AO OUT OF INLAND TRAVE LLING EXPENSES AT RS.75 000/- WITHOUT CONSIDERING FULL FACTS AND LEGA L POSITION. 10. THE FACTS IN BRIEF ARE THAT THE AO FOUND THAT ASSESSEE HAD CLAIMED INLAND TRAVELING EXPENSES AT RS.6 63 858/- AS AGAINST RS.3 33 531/- SPENT IN THE IMMEDIATELY PRECEDING YEAR. THE AO DISALLOWED A SUM OF RS.75 00 0/- OUT OF SUCH EXPENSES ON ADHOC BASIS AS HE WAS OF THE VIEW THAT ALL THESE EX PENSES COULD NOT BE CONSIDERED AS INCURRED EXCLUSIVELY FOR THE BUSINESS PURPOSES. 11. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE LD. CIT(A) WHEREIN IT WAS CONTENDED THAT NO SPECIFIC DEFECT WA S POINTED OUT BY THE AO NOR THE GENUINENESS OF EXPENSE WAS IN DISPUTE HENCE SUCH DISALLOWANCE WAS LIABLE TO BE DELETED. THE LD. CIT(A) HELD THAT ENTIRE TURNOVER O F THE ASSESSEE WAS FROM EXPORT AND NO JUSTIFICATION FOR TRAVELING EXPENSES ON THE TRAV ELS UNDERTAKEN BY THE DIRECTOR HAD BEEN GIVEN HENCE DIRECTION OF THE AO WAS LIABLE T O BE CONFIRMED. 12. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE US. THE LD. COUNSEL FOR THE ASSESSEE NARRATED THE FACTS AND REITERATED THE SUBM ISSIONS BEFORE THE REVENUE AUTHORITIES. THE LD. SR. AR HOWEVER PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT ASSE SSEE THOUGH ENGAGED IN EXPORT HOWEVER THE RAW MATERIAL PROCURED DOMESTICALLY. IT IS ALSO NOTEWORTHY THAT THE AO 5 HAS NOT GIVEN ANY SPECIFIC REASON FOR ARRIVING AT S UCH CONCLUSION. THUS IN OUR VIEW SUCH DISALLOWANCE HAS BEEN MADE IN ADHOC MANNER AND ON DOUBT ONLY AND THEREFORE THE SAME CANNOT BE SUSTAINED. ACCORDINGLY WE DELET E THE SAME. THUS THIS GROUND OF THE ASSESSEE IS ALSO ACCEPTED. 14. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.2.2010. SD/- SD/- (JOGINDER SINGH) (V.K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25.2.2010 {VYAS} COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE