Income Tax Appellate Tribunal - Delhi
Acit, New Delhi vs Vaishnavi Corporate Communications ... on 10 February, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'D
'D': NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND
SHRI K. NARASIMHA CHARY,
CHARY, JUDICIAL MEMBER
ITA No.
No.6760/Del/2013
Assessment Year : 2005-
2005-06
Assistant Commissioner of Vs. M/s Vaishnavi Corporate
Income Tax, Communications Pvt.Ltd.,
Central Circle
Circle-
le-25, A-14, Duggal Colony,
New Delhi. Devli Road, Khanpur,
New Delhi - 110 062.
PAN : AABCV2775K.
(Appellant) (Respondent)
Cross Objection No.261/Del/2014
No.261/Del/2014
Assessment Year : 2005-
2005-06
M/s Vaishnavi Corporate Vs. Assistant Commissioner of
Communications Pvt.Ltd., Income Tax,
A-14, Duggal Colony, Central Circle-
Circle-25,
Devli Road, Khanpur, New Delhi.
New Delhi - 110 062.
PAN : AABCV2775K.
(Appellant) (Respondent)
Revenue by : Shri Umesh Chand Dubey,
Senior DR.
Assessee by : Shri Chandra Shekhar, CA.
Date of hearing : 07.02.2017
Date of pronouncement : 10.02.2017
ORDER
PER G.D. AGRAWAL, VP :-
The appeal by the Revenue and the cross-objection by the assessee for the assessment year 2005-06 are directed against the order of learned CIT(A)-I, New Delhi dated 23rd October, 2013.
2 ITA-6760/D/2013 & C.O.No.261/D/2014
2. In the Revenue's appeal, the only ground raised is against the reduction in the disallowance of foreign travel expenses while, in the cross-objection, the assessee has challenged the addition sustained.
3. The facts of the case are that the assessee claimed the expenditure of `39,57,985/- on the foreign travel which was disallowed in its entirety by the Assessing Officer. On appeal, learned CIT(A) reduced the disallowance to `5,45,375/-. The assessee is in appeal against the relief allowed by the learned CIT(A) while the assessee is in cross-objection against the disallowance sustained.
4. We have heard the submissions of both the sides and perused the material placed before us. Learned DR had argued at length so as to claim that the assessee has not produced sufficient evidence before the Assessing Officer to establish that the foreign travel expenses were for the purpose of business. In the above circumstances, learned CIT(A) was not justified even in allowing the part relief. He stated that the onus is upon the assessee to prove that the expenditure was incurred wholly and exclusively for the purpose of business. Learned counsel for the assessee, on the other hand, pointed out that all the details were furnished before the Assessing Officer and learned CIT(A) has only considered those details and thereafter has partly allowed the relief to the assessee. He submitted that the order of learned CIT(A) should be partly modified and the disallowance sustained by him should be deleted.
5. We have carefully considered the arguments of both the sides. The finding of learned CIT(A) is reproduced below for ready reference :-
"5.3 I have considered the assessment order, the details filed and the submissions made. I find from the details filed that these expenses were mainly incurred by the directors and employees/consultants for the purpose of business of the appellant. Thus in all cases, except five 3 ITA-6760/D/2013 & C.O.No.261/D/2014 instances, the nexus between the expenditure and the business of the appellant stands established. In one instance, where the persons, who travelled abroad and the expenses were incurred by the appellant, could not be properly identified by the appellant. Therefore, the nexus between the expenditure and the business of the appellant could not be established in that case.
5.4 There are also four instances involving foreign visits by journalists who are not its employees or consultants, and who do not have any direct business relation with the appellant company. The Press Council Act, 1978 entrusts the Press Council of India (PCI) the responsibility to ensure freedom of the press and to maintain and improve the standards of newspapers and news agencies in India. Towards this purpose, the said Act empowers the PCI to build up a code of conduct for newspapers, news agencies and journalists according to highest professional standards. According to the norms of journalistic conduct prescribed by the PCI under the said Act, journalists should not accept gifts, loans, trips, discounts, preferential shares or other considerations which compromise or are likely to compromise his position. According to the guidelines on undue favours to journalist, 1998, prescribed by the PCI under the said Act, journalists are prohibited from air travel sponsored by companies/airlines as it is an inducement to write favourably about their products and services. Therefore, the expenditure incurred by the appellant company on sponsoring foreign travel of the journalists is against the law and not an allowable expense as per Explanation to section 37(1) of the Income Tax Act, 1961, which states as under :
Explanation. - For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure.
5.5 In view of the above, out of the disallowance of Rs.39,57,985/- made by the revenue on foreign travel expenses, expenditure to the extent incurred on the unidentified persons amounting to Rs.68,528/-, and on journalists amounting to Rs.4,76,847/-, totaling Rs.5,45,375/-, is confirmed and the balance amount of Rs.34,12,610/- is treated as explained and deleted. These grounds of appeal are disposed of accordingly."
4 ITA-6760/D/2013 & C.O.No.261/D/2014
6. We find that learned CIT(A) has considered the details furnished by the assessee with regard to foreign travel expenses and after considering each and every expenditure, he arrived at the conclusion that the expenditure of `5,45,375/- was not for the purpose of business and accordingly, has disallowed the same. After considering the facts, we do not find any infirmity in the order of learned CIT(A). The same is upheld.
7. In the result, the appeal of the Revenue as well as cross- objection of the assessee is dismissed.
Decision pronounced in the open Court on 10.02.2017.
Sd/- Sd/-
(K. NARASIMHA CHARY)
CHARY) (G.D. AGRAWAL)
AGRAWAL)
JUDICIAL MEMBER VICE PRESIDENT
VK.
Copy forwarded to: -
1. Revenue : Assistant Commissioner of Income Tax,
Central Circle-
Circle-25, New
New Delhi.
2. Assessee : M/s Vaishnavi Corporate Communications Pvt.Ltd.,
A-14, Duggal Colony, Devli Road, Khanpur, New Delhi - 110 062.
3. CIT
4. CIT(A)
5. DR, ITAT Assistant Registrar