Enterprising Enterprises, Chennai vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, CHENNAI ी ए. मोहन अलंकामणी, लेखा सद य एवं ी वी. दग ु ा# राव, या$यक सद य केसम%

BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER

आयकर अपील सं./ITA No.101/Mds/2013 $नधा#रण वष# /Assessment Year : 2008-09

M/s Enterprising Enterprises, The Deputy Commissioner of 9, 50th Street, Ashok Nagar, v. Income Tax, Chennai - 600 083. Business Circle III, Chennai - 600 034. PAN : AAAFE 0195 N (अपीलाथ*/Appellant) (+,यथ*/Respondent)

अपीलाथ* क- ओर से/Appellant by : Shri Philip George, Advocate +,यथ* क- ओर से/Respondent by : Shri A.V. Sreekanth, JCIT

सन ु वाई क- तार ख/Date of Hearing : 13.01.2015 घोषणा क- तार ख/Date of Pronouncement: 20.02.2015

आदे श /O R D E R

PER V. DURGA RAO, JUDICIAL MEMBER:

This appeal filed by the assessee is directed against the

order of the Commissioner of Income Tax (Appeals)-VIII, Chennai,

dated 27.11.2012 for the assessment year 2008-09.

2. Facts in brief are that the assessee had filed return of

income by declaring a total income of ` 5,52,020/-. The case of the 2 I.T.A. No. 101/Mds/2013

assessee was selected for scrutiny and the assessment was

completed under Section 143(3) of the Income-tax Act, 1961 (in

short 'the Act'). In the course of the assessment proceedings, the

A.O. has observed that it is seen from the records that the assessee

had expended an amount of ` 32.91 lakhs on account of Fair

expenses met in foreign countries which included travelling

expenditure of ` 18.44 lakhs. The assessee had taken part in Trade

fairs in China, Germany and Italy. A substantial part of such

expenditure included travel and stay expenses. Considering that

there was a possibility of personal expenditure, the A.O. disallowed

` 5,00,000/- as the expenditure incurred for non-business purposes.

3. The assessee carried the matter in appeal before the Ld.

CIT(Appeals). The Ld. CIT(Appeals) has observed that the total

expenditure shown as incurred by the assessee was ` 53,28,864/-.

The Ld. CIT(Appeals) was of the opinion that as there was no

evidence that the assessee met the above expenses for

canvassing/advertising in promoting the export sales turnover and in

the absence of direct nexus between the fair and foreign travel

expenditure and business promotion, the expenditure met on

account of foreign travel, fair and stay expenses cannot be fully

allowed at ` 53,28,864/-. However, keeping in view the nature of 3 I.T.A. No. 101/Mds/2013

the expenses, the Ld. CIT(Appeals) held that a reasonable amount

of ` 10,00,000/- is allowed for incurring foreign travel, fair expenses,

stay expenses relatable to the business of the assessee and the

balance amount of `43,28,864/- is treated as personal expenditure

and added to the income of the assessee.

4. On being aggrieved, the assessee carried the matter before

the Tribunal. The Ld.counsel for the assessee submitted that the

Ld. CIT(Appeals) enhanced the disallowance without appreciating

the facts of the case properly and submitted that the order passed

by the Ld. CIT(Appeals) has to be set aside.

5. On the other hand, the Ld. D.R. pointed out that the

assessee has not filed any details before the A.O. with regard to

foreign trade expenses and business promotion expenditure and

therefore, the Ld. CIT(Appeals) has rightly disallowed the

expenditure claimed by the assessee.

6. We have heard both sides and perused the records and

gone through the orders of the authorities below. The assessee has

filed a return of income by declaring a total income of ` 5,52,020/-.

In its return of income, it has claimed business promotion

expenditure of ` 32.91 lakhs including travelling expenses of ` 4 I.T.A. No. 101/Mds/2013

18.44 lakhs. Before the A.O., no details were filed by the assessee.

Before us, statement of expenditure and copies of Credit Card

statements and bills were filed. We find that the assessee had

incurred a huge expenditure and all the details in connection with

business promotion expenditure and foreign travel expenses need

to be verified. Hence, we set aside the order passed by the Ld.

CIT(Appeals) and direct the assessee to file all the details in respect

of business promotion expenditure and foreign travel expenses.

After considering the details filed by the assessee, the A.O. is

directed to adjudicate the issue afresh and pass a de novo order in

accordance with law.

7. In the result, the appeal filed by the assessee is allowed for

statistical purposes.

Order pronounced on Friday, the 20th of February, 2015 at

Chennai.

Sd/- sd/- (ए. मोहन अलंकामणी) (वी. दग ु ा# राव) (A. Mohan Alankamony) (V. Durga Rao) लेखा सद य/Accountant Member या$यक सद य/Judicial Member

चे नई/Chennai, th =दनांक/Dated, the 20 February, 2015.

Kri. 5 I.T.A. No. 101/Mds/2013

आदे श क- +$त?ल@प अAे@षत/Copy to: 1. अपीलाथ*/Appellant 2. +,यथ*/Respondent

3. आयकर आयुBत (अपील)/CIT(A)-VIII, Chennai

4. आयकर आयुBत/CIT-VI, Chennai-34

5. @वभागीय +$त$न ध/DR

6. गाड# फाईल/GF.