INCOME TAX : Where assessee-company claimed expenses towards foreign travel done for understanding global trends in respect of his business, since assessee had duly furnished all details related to such travel along with relevant supporting evidence, it could not be concluded that they were only pleasure tours and thus, impugned expenses was to be allowed
INCOME TAX : Where assessee claimed domestic travel expenses incurred due to shifting of its office from one place to another, since assessee gave complete details of such expenses as to purpose of travel, names of persons who travelled, break-up of fuel expenses etc. with supporting evidence, ad hoc disallowance of such expenses made at rate of 25 per cent was not justified
INCOME TAX : Where assessee-company, engaged in real estate development, claimed promotion expenses which included travel of directors for meeting various people in hotels, since assessee furnished all details and supporting evidence along with entire bills issued by various vendors and said expenses was not personal, same was to be allowed
INCOME TAX : Where a car formed part of fixed assets of assessee-company, depreciation could not be disallowed on said car merely because it was registered in name of director of assessee-company

IN THE ITAT MUMBAI BENCH ‘SMC’
Well Wisher Construction (P.) Ltd.
v.
Deputy Commissioner of Income-tax*
M. BALAGANESH, ACCOUNTANT MEMBER
AND SMT. KAVITHA RAJAGOPAL, JUDICIAL MEMBER
IT APPEAL NO.1912 (MUM.) OF 2020
[ASSESSMENT YEAR 2012-13]
SEPTEMBER 28, 2022

Section 37(1) of the Income-tax Act, 1961 – Business expenditure – Allowability of (Foreign travel expenses) – Assessment year 2012-13 – Assessee-company, engaged in business of real estate development and construction, claimed foreign travel expenses – Assessee explained that foreign travels were meant for understanding global trends in building construction – Assessing Officer disallowed same on ground that no evidence was submitted by assessee to prove benefits of such travel for purpose of business and same were only personal trips – It was noted that assessee had duly furnished all possible details with relevant supporting evidences to justify incurrence of said foreign travel expenses – Moreover, directors of assessee-company had undertaken these foreign trips together with architect and advocate as case might be which itself proved that foreign visits were purely meant only for business purposes and no personal purpose could be established thereon as why would any person take architect and advocate along with him while going on a personal trip abroad – Whether purpose of foreign visits was to be decided by assessee and Assessing Officer could not step into shoes of businessman and decide if same was required or not – Held, yes – Whether, further, since assessee had furnished all details with supporting evidence so as to show purpose of foreign travel, it could not be concluded that they were only pleasure tours – Held, yes – Whether, therefore, impugned disallowance of foreign travel expenses was unjustified – Held, yes [Para 2.3] [In favour of assessee]

II. Section 37(1) of the Income-tax Act, 1961 – Business expenditure – Allowability of (Travel expenses) – Assessment year 2012-13 – Assessee-company claimed expenses towards domestic travel – Assessee submitted that it was shifted from one State to another and in this regard, frequent visits were mandated in order to meet various regulatory compliance requirements and, hence, employees and its directors had to travel frequently for purpose of business – Assessing Officer made an ad hoc disallowance of domestic travel expenses at rate of 25 per cent – It was noted that assessee gave detailed explanation as to purpose of travel, names of persons who travelled, break-up of fuel expenses, etc. together with relevant supporting evidence – There was not any personal element in such expenses – Whether, on facts, impugned ad hoc disallowance of expenses was to be deleted – Held, yes [Para 3.1] [In favour of assessee]

III. Section 37(1) of the Income-tax Act, 1961 – Business expenditure – Allowability of (Promotion expenses) – Assessment year 2012-13 – Assessee-company was engaged in business of real estate development and construction – During year, assessee claimed business promotion expenses which included hotel stay bills for stay of directors for meetings – Assessing Officer disallowed claim on ground that evidence was not furnished relating to meetings, conference etc. held at hotel and credit card payments were also made in name of directors, thus, they were merely personal expenses – It was noted that assessee had explained that it was engaged in real estate business and directors had to meet various people at various places to market real estate project for purpose of sale of apartments and hence, business nexus was proved beyond doubt – Though payments were incurred out of credit cards belonging to directors, however, assessee-company had reimbursed same to directors – Expense was not personal in nature – Assessee had duly furnished all details and supporting evidence along with entire bills issued by various vendors – Whether, on facts, impugned disallowance made by Assessing Officer was unjustified – Held, yes [Para 4.1] [In favour of assessee]

IV. Section 32 of the Income-tax Act, 1961 – Depreciation – Allowance/Rate of (Car) – Assessment year 2012-13 – Whether registration of car in name of company was not necessary for purpose of grant of depreciation and what was required to be seen was whether said car had been used for purpose of business of company – Held, yes – Whether, therefore, where a car formed part of fixed assets of assessee-company, depreciation could not be disallowed on said car merely because it was registered in name of director of assessee-company – Held, yes [Para 5.1] [In favour of assessee]

CASE REVIEW-I
Sayaji Iron & Engg. Co. v. CIT [2002] (Guj.) and CIT v. Dhanrajgirji Raja Narasingirji [1973] 91 ITR 544 (SC) (para 2.3) followed.

CASE REVIEW IV
Mysore Minerals Ltd. v. CIT [1999] (SC) (para 5.1) followed.

CASES REFERRED TO
Sayaji Iron & Engg. Co. v. CIT [2002] (Guj.) (para 2.2), CIT v. Dhanrajgirji Raja Narasingirji [1973] 91 ITR 544 (SC) (para 2.2) and Mysore Minerals Ltd. v. CIT [1999] (SC) (para 5.1).
Khushiram Jadhwanifor the Appellant.Manoj Kumar Singh for the Respondent.

**ADV VAIBHAV TOMAR** ALL RIGHTS RESERVED

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Dep. on car can’t be disallowed merely because it was registered in name of director of Company ITAT