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

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.

ADV MEGHA **ALL RIGHTS RESERVED**

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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

ADV MEGHA **ALL RIGHTS RESERVED**

FEMA, BANKING & INSURANCE/COMPANY LAW : Vicarious prosecution of independent director for cheque bounce by co. to be quashed when he was not signatory of cheque & only general allegations made in complaint.

• Where only general allegations have been made against all the directors of the accused company that they were in charge of managing the day to day affairs of the Company and at the helm of the affairs of the company and there were no specific averments or allegations carving out a specific role attributable to petitioner in relation to conduct of business of accused company, the petitioner-director cannot be made vicariously liable criminally for dishonour of cheque of company not signed by him and there being material on record to show that he was an independent director in the company.

• Such mere general allegation or bald assertion may be sufficient to implicate the Managing directors as well as those who are signatories to cheque, but not the other directors or persons, especially independent or non-executive directors .In absence of any specific averments or allegations carving out a specific role attributable to petitioner in relation to conduct of business of accused company, merely making bald statements that all the accused persons/directors were incharge and responsible for the day to day affairs of the company, does not suffice to make the petitioner herein vicariously liable for dishonouring of the cheques not signed by him and there being material on record to show that he was an independent director in the company.

• In view thereof, the impugned order dated 28.11.2018 passed by the learned MM-04, Patiala House Courts, New Delhi in CC No.16201/2017 is thus, quashed to the extent of issuing of summons to the present petitioner for alleged commission of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881.
■■■

HIGH COURT OF DELHI
Prakash Chand
v.
State
MS. SWARANA KANTA SHARMA, J.
CRL.M.C. NO. 307 OF 2020
DECEMBER 19, 2022
Sanjay Relan and Ms. Smitee Relan, Advs. for the Petitioner. Satish Kumar and Devashish Bhadauriya, Advs. for the Respondent.

**ADV MEGHA** ALL RIGHTS RESERVED.

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Independent director, who is not a signatory shall not be liable for cheque bounce in case of general complaint Delhi HC

FEMA, BANKING & INSURANCE : Where applicant had been arrested in complaint case filed by ED under sections 3 and 4 of PMLA, considering fact that applicant had taken a specific defence that he had been trapped in such organized crime and that trial was likely to take considerable time, applicant was to be released on bail.
■■■

HIGH COURT OF CHHATTISGARH
Dhiraj Sao
v.
Enforcement Directorate Government of India
DEEPAK KUMAR TIWARI, J.
MCRC NO. 7468 OF 2022
SEPTEMBER 30, 2022

Section 45, read with sections 3 and 4, of the Prevention of Money Laundering Act, 2002 – Offences to be cognizable and non-bailable – Applicant filed application for grant of bail in connection with his arrest in complaint case filed by Enforcement Directorate under sections 3 and 4 alleging that applicant was in receipt of proceeds of crime from one Pakistani National for carrying out different criminal activities and deposited same in bank account of other co-accused and applicant had received commission – This was 2nd bail application on behalf of applicant – Earlier bail application had been dismissed as withdrawn – It was found that applicant was in custody for more than 2½ years and investigation in respect of other offences commenced after knowledge of registration of schedule offence in 2013 – Thus, investigation started belatedly and complaint was filed after more than 5 years, and that schedule offence had been finished and till so far Special Court had not framed charges under PMLA – For schedule offence, applicant had been in jail for more than 8 years and was granted bail under section 389 of CrPC – Whether considering fact that applicant had taken a specific defence that he had been trapped in such organized crime and further considering statement given by applicant under section 50 of PMLA Act and that trial was likely to take considerable time, applicant was to be released on bail – Held, yes [Para 7]

CASE REVIEW

Alok Kumar Agrawal v. Directorate of Enforcement 2021 SCC Online SC 556 (para 7) followed.
CASES REFERRED TO

Bhunesh v. State of Haryana 2022 Live Law (PH) 151 (para 5), Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation [2013] 7 SCC 439 (para 5) and Alok Kumar Agrawal v. Directorate of Enforcement 2021 SCC Online SC 556 (para 7).
B.P. Singh and Anil S. Pandey, Advs. for the Applicant.

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PMLA HC allows bail to an applicant who had specifically taken defence that he was trapped in an organized crime