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.

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

TRANSFER PRICING : Where assessee-company entered into international transactions with its AE for import of raw material (greasy wool) and benchmarked transactions by applying internal CUP method, since raw material purchased by assessee from external parties were of same product and average micron was 21.36 in comparison to 21.76 found in purchase from non AEs and weighted average purchase price from AE in comparison to weighted average purchase price from non-AE fell within tolerance range of +/- 5 per cent, TPO erred in rejecting CUP method and making adjustments by applying TNM method

INCOME TAX : Exchange loss incurred by assessee upon restatement of loan in foreign currency which was attributable towards working capital was to be allowed
INCOME TAX : Where assessee paid certain amount to different parties on account of repair and maintenance charges since assessee had produced all necessary material/evidences such as bills, vouchers and rate contract etc. in respect of repair and maintenance charges paid, impugned disallowance of said payments by Assessing officer was unjustified

IN THE ITAT KOLKATA BENCH ‘C’
Deputy Commissioner of Income-tax.
v.
Global Wool Alliance (P.) Ltd.*
SANJAY GARG, JUDICIAL MEMBER
AND RAJESH KUMAR, ACCOUNTANT MEMBER
IT APPEAL NO. 260 (KOL.) OF 2020
[ASSESSMENT YEAR 2005-06]
NOVEMBER 2, 2022

I. Section 92C of the Income-tax Act, 1961, read with rule 10B of the Income-tax Rules, 1962 – Transfer pricing – Computation of arm’s length price (Methods for determination of – CUP method) – Assessment year 2005-06 – Assessee-company was engaged in business of processing raw company wool, greasy wool etc. – It entered into international transactions with its AE for import of raw material and export of fabrics to AE – Both international transactions were benchmarked by applying internal CUP method as most appropriate method (MAM) – TPO rejected CUP method adopted by assessee and instead applied external TNM method and, accordingly, made transfer pricing adjustments – It was noted that assessee had reliable data available with regard to similar transactions with unrelated third parties and, thus, claimed CUP as MAM – Commissioner (Appeals) recorded a detailed finding of fact that raw material purchased by assessee from external parties were same product as purchased from AE and average micron was 21.36 in comparison to 21.76 found in purchases from non AEs – Further, weighted average purchase price from AE in comparison to weighted average purchase price from non-AE fell within tolerance range of +/- 5 percent – It was further found that similar CUP benchmarking done by assessee in earlier years under identical facts was accepted by TPO and there was no change in facts and in law during relevant year – Whether once revenue had accepted method or proposition in earlier years, then it was not open to revenue to take a different view in subsequent years – Held, yes – Whether thus transfer pricing adjustment made by TPO was to be deleted – Held, yes [Para7] [In favour of assessee]

II. Section 28(i) of the Income-tax Act, 1961 – Business loss/deductions – Allowable as (Exchange loss on foreign currency loan) – Assessment year 2005-06 – Assessee claimed exchange loss of certain amount resulting from restatement of loan in foreign currency which was attributable towards working capital – Assessing Officer disallowed said loss by following decision of his predecessor in earlier year – It was noted that earlier assessment order relied upon by Assessing Officer passed by his predecessor was reversed by Commissioner (Appeals) and loss pertaining to working capital was allowed – Whether, on facts, impugned loss incurred by assessee was to be allowed – Held, yes [Para11] [In favour of assessee]

III. Section 37(1) of the Income-tax Act, 1961 – Business expenditure – Allowability of (Repair and maintenance charges) – Assessment year 2005-06 – Assessee incurred expenses of certain amount on account of repair and maintenance charges paid to two parties – It also paid commission of certain amount by way of percentage of sales – Assessing Officer disallowed said payments and held that recipient parties were bogus non-existing parties – It was noted that in respect of both these parties all necessary material/evidences such as bills, vouchers and rate contract etc. in respect of repair and maintenance charges were placed before Assessing Officer as well as Commissioner (Appeals) and payments were made by cheques after proper deduction of TDS – Similarly, in respect of sales commission paid, sales invoices were placed on record in respect of which commission was paid after deduction of TDS – Whether, on facts, impugned payments made by assessee were to be allowed – Held, yes [Para15] [In favour of assessee]

CASE REVIEW – I
JSL Ltd. v. Asstt. CIT [2018] (Delhi – Trib.); Asstt. CIT v. Esser Steel Ltd. [2014] (Mum. – Trib) (para 7); Radhaswami Satsang v. CIT [1992] ITR 321 (SC) (para 7) followed.

CASE REVIEW – II
CIT v. Woodward Governor (P.) Ltd. [2009] (SC) (para 11) and ONGC Ltd. v. CIT [2010] (SC) (para 11) followed.

CASES REFERRED TO
Cognizance for Extension of Limitation, In re [2021] (SC) (para 2), JSL Ltd. v. Asstt. CIT [2018] (Delhi – Trib.) (para 7), Asstt. CIT v. Esser Steel Ltd. [2014] (Mum. – Trib) (para 7), Radhaswami Satsang v. CIT [1992] (SC) (para 7), CIT v. Woodward Governor (P.) Ltd. [2009] (SC) (para 11), ONGC Ltd. v. CIT [2010] (SC) (para 11), CIT v. Inbuilt Merchants (P.) Ltd. [GA No. 3825 of 2013, dated 14-3-2014] (para 14) and Mather & Platt (I) Ltd. v. CIT [1987] (Cal.) (para 14).
Akkal Dudhwewala, FCA for the Appellant. Smt. Ranu Biswas, Addl. CIT DR for the Respondent.

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Exchange loss incurred on restatement of loan attributable towards working capital is allowable ITAT

_*• Order 43, Rule 1 (u) CPC Remand order Suit seeking permanent injunction It is the case of the plaintiffs that proceedings were ill-motivated and the sole intention was to dispossess the plaintiffs from the Schedule-B and ScheduleC land In a suit filed by plaintiff claiming right, title and interest and consequential reliefs,

if plaintiff proves defendant’s counter claim for permanent injunction becomes redundant Same would be the case herein, whereby plaintiffs suit for permanent injunction would be redundant,

if defendant as counter claimant is able to prove his right, title and interest over the suit land described in counter claim Appeal allowed. [Paras 19, 20, 21 and 23]*_

_*ON THE DEATH OF DEVENDRA vs SHRI BINAY SAO 6/16 21/07/22 [ BINAY JJ ]*_

_*[ GAUHATI HIGH COURT ]*_

**ADV VAIBHAV**All rights reserved.

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DEVENDRA vs SHRI BINAY SAO

FEMA, BANKING & INSURANCE/IBC : 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

I. 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].

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

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