Income Tax Appellate Tribunal - Mumbai
Grewal Export P.Ltd, Navi Mumbai vs Dcit 10(3), Mumbai on 5 January, 2018
आयकर अपीलीय अिधकरण, अिधकरण मुंबई "जीजी"
जी खंडपीठ म Income-tax Appellate Tribunal -"G" Bench Mumbai सव ी राजे ,लेखा सद य एवं सी. एन. साद, याियक सद य Before S/Sh.Rajendra,Accountant Member and C. N. Prasad,Judicial Member आयकर अपील सं./I.T.A./1580/Mum/2016, िनधा रण वष /Assessment Year: 2011-12 Grewal Export Pvt. Ltd. DCIT-10 (3) 901 & 902, Great Eastern Summit A Aayakar Bhavan, Income tax Office, Plot No.56, Sector 15, CBD Belapur, Vs. Queens Road Navi Mumbai-400 614. Mumbai.
PAN:AABCG 0544 P
(अपीलाथ /Appellant) ( यथ / Respondent)
राज
व क ओर से / Revenue by: Shri V. Vidhyadhar-DR
अपीलाथ क ओर से /Assessee by: Shri Ashok Puri
सुनवाई क तारीख / Date of Hearing: 16/11/2017
घोषणा क तारीख / Date of Pronouncement: 05/01/2018 लेखा खा सद य, सद य राजे के अनुसार/ ार PER Rajendra A.M.-
Challenging the order dated 29/1/2016 of CIT(A)-24, Mumbai the assessee has filed the present appeal.Assessee-company-engaged in the business of exporting of engineering, electronic and industrial products-filed its return of income on 28/09/2011,declaring income of Rs.95.36 lakhs.The Assessing Officer(AO)completed assessment u/s. 143(3) of the Act,on 21/11/2013,determining its income at Rs.98.26 lakhs.
2.First ground of appeal is about treating the interest income under the head income from other sources instead of income from Business.Before us,the Authorised Representative (AR) fairly conceded that the Tribunal had decided the identical issue against the assessee,while adjudicating the appeal for the AY.s. 2009-10 and 2010-11(ITA/2987/ Mum/2913, dtd. 12. 09.2014 and ITA/7087/Mum/2013,dtd.08. 07.2015). Respectfully, following the above orders the Tribunal,we dismiss Ground no.1.
3.Second ground deals with disallowance made by the AO,u/s.14A of the Act.During the assessment proceedings,the AO found that the assessee had earned exempt income of Rs.1.54 crores,that it had made a disallowance of Rs.2.88 lakhs on its own,that it had claimed total expenditure of Rs.5.77 lakhs in the P&L account.Invoking the provisions of Rule 8D(2) of the Income tax Rules,1962(Rules) r.w.s.14A of the Act.The AO made total disallowance of Rs.8.01lakhs.After considering the suo-motu disallowance made by the assessee ,he restricted the disallowance to Rs.5.77 crores.
1580/M/16(11-12) Grewal Export P.Ltd.
3.1.In the appellate proceedings,before the First Appellate Authority (FAA),the assessee made detailed submissions and relied upon certain case laws. He referred to the order of the Tribunal for AY.2009-10 (supra), wherein the Tribunal had held that disallowance made by the AO was to be restricted to 1/4th of the expenditure. He further held that the AO had disallowed the entire expenditure debited to P&L account to Rs.5.77 lakhs that he was not justified in disallowing the same, that the assessee had made advance of share application money of Rs.12.03 crores that had been included by the assessee in the investment, that the shares had not been allotted, that the same had to be excluded from average investment. Accordingly, he directed the AO to recomputed the disallowance.
3.2.Before us, the Authorised Representative (AR) stated that AO had not expressed dissatisfaction with correctness of the claim made by the assessee , that assessee on its own had made disallowance of Rs.2.88 lakhs , that the Tribunal had restricted the disallowance to 1/4th of disallowance of earlier year. The Departmental Representative (DR) left the issue to the discretion of the Bench.
3.3.We find that the AO had disallowed the entire expenditure appearing in the P&L account invoking provision of section 14A, that the expenditure included depreciation of Rs.51,113/-, that disallowance of depreciation should not have been made. Following the order of the Tribunal for earlier year we direct AO to restrict the disallowance to 25% of the expenditure disallowed by the assessee i.e. Rs.2.88 lakhs.Second Ground of appeal is partly allowed.
4.Last Ground of appeal is about disallowance toward foreign travelling expenses. During the assessment proceedings the AO found that assessee had debited Rs.4.78 lakhs to P&L account under the head 'tour and travelling expenses'. On enquiry it was found that the expenditure was incurred on account of travelling of the director and his wife. He held that travelling was more of personal nature. He asked the assessee to explain as to why travelling expenses should not be disallowed in view of the fact that no business activity was carried out by director/wife. As per AO the assessee did not furnish any valid reason except the reason that directors were staying in Dubai and were visiting India .He held that tour and travelling expense of director and members of his family should not have been shown as business expenditure.Finally, he made disallowance of Rs.4.78 lakhs.
4.1.In the appellate proceedings, the FAA held that the AO had disallowed entire expenditure debited to P&L account .He directed the AO make a partial disallowance in respect of the expenses towards foreign travelling which arose on account of directors wife accompanying 2 1580/M/16(11-12) Grewal Export P.Ltd.
him, that he should exclude the expenditure which were directly relatable to statutory board meeting of the assessee company for which the directors had to visit India.
4.2.Before us the AR stated that the directors were non resident of the company, that they were required to travel to India to attend statutory board meeting held as per the Companies Act, that the expenditure which could be disallowed under travel expenditure could not exceed Rs.1.90 lakhs after considering various expenses and disallowance made u/s. 14A of the Act. The DR relied on the order of AO and FAA.
4.3.We have heard rival submissions and perused the material before us. We find that the AO had not considered the fact that directors had to attend board meetings from time to time. He has also made disallowance u/s. 14A of the Act. Therefore, in our opinion the addition should be restricted to Rs.1.90 lakhs as suggested by AR. Ground No. 3 allowed in favour of the assessee,in part.
As a result appeal field by assessee stands partly allowed. फलतः िनधा रती ारा दािखल क गई अपील अंशतः मंजूर क जाती है.
Order pronounced in the open court on 05th January, 2018.
आदेश क घोषणा खुले यायालय म दनांक 05 जनवरी, 2018 को क गई ।
Sd/- Sd/-
(सी. एन. साद / C.N.Prasad ) (राजे
/ Rajendra)
याियक सद
य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
मुंबई Mumbai; दनांक/Dated : 05 .01.2018.
Jv.Sr.PS.
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1.Appellant /अपीलाथ 2. Respondent / यथ
3.The concerned CIT(A)/संब अपीलीय आयकर आयु , 4.The concerned CIT /संब आयकर आयु
5.DR "G" Bench, ITAT, Mumbai /िवभागीय ितिनिध, जी खंडपीठ,आ.अ. याया.मुंबई
6.Guard File/गाड फाईल स यािपत ित //True Copy// आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai.
3