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3. Apropos the disallowance of foreign travel expenses of ` 15,82,083/-, such expenses were claimed in the Profit and Loss Account. Before the AO, in the assessment proceedings, the assessee 3 ITA 5296(Del)2011 explained that the foreign travels were undertaken by the officials of the assessee limited company with a view to promote the sale and leasing of space and to hold negotiations with a South Korean Company for collaboration in the business of colonization. The assessee filed before the AO a draft of Memorandum of Understanding proposed to be signed with the Korean Company. Copies of various other documents to support the claim that the foreign travels were undertaken for the purpose of the assessee's business, were also filed before the AO. In the AO's opinion, however, there was no business of the assessee outside India and therefore, there was no necessity for any foreign travel by its officials. The AO also observed that since the negotiations with the South Korean Company was for a new project, the expenditure on foreign travel should have been capitalized. The AO also refused to accept the assessee's contention that the foreign travel had resulted in leasing of space to Commercial Bank of Korea and Korean Development Bank. The AO observed that leasing of space was not the business of the assessee Company and the income from leasing out was assessable as income from house property which does not qualify for such expenditure.

15 ITA 5296(Del)2011

21. In the present case, no material has been brought by the Department that the assessee was in the knowledge of "Brooke Bond"

(supra) or "Punjab State Industrial Development Corpn. Ltd." (supra) during the assessment proceedings.

22. Now, coming to the issue of levy of concealment penalty on the addition of ` 15,82,083/- being disallowance of foreign travel, the total claim of the assessee pertaining to foreign travel expenses, amounting to ` 15,82,083/- was disallowed by the AO, holding that there was no business of the assessee outside India; that as such, there was no necessity for foreign travel by the officials of the assessee Company; that since the negotiations with a South Korean Company were for a new Project, the expenditure on foreign travel ought to have been capitalized; that leasing of space was not the business of the assessee Company and the income from letting out of the property was assessable as income from house property, which did not qualify for such expenditure, due to which, the assessee's contention that foreign travel had resulted in leasing of space to Commercial Bank of Korea and Korean Development Bank was not acceptable.