IT : Where wife of assessee was qualified and had visited different places in lieu of business undertaken by sole proprietary concern of assessee, such travelling expenses were allowable as business expenditure
IT : Where assessee failed to produce any evidence by way of any logbook or otherwise to establish its case of having used car belonging to other firm for purposes of his sole proprietary business, disallowance of car expenses to be upheld
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[2013] 37 taxmann.com 262 (Chandigarh - Trib.)
IN THE ITAT CHANDIGARH BENCH 'A'
Munish Gupta
v.
Deputy Commissioner of Income-tax*
MS. SUSHMA CHOWLA, JUDICIAL MEMBER
AND MEHAR SINGH, ACCOUNTANT MEMBER
AND MEHAR SINGH, ACCOUNTANT MEMBER
IT APPEAL NO. 754 (CHD.) OF 2012
[ASSESSMENT YEAR 2006-07]
[ASSESSMENT YEAR 2006-07]
MARCH 6, 2013
I. Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of [Foreign travelling expenses] - Assessment year 2006-07 - Assessee was engaged in jewellery business - Assessing Officer having found that travelling expenses claimed by assessee also related to foreign and domestic travelling of his wife, disallowed part of expenses - Assessee claimed that his wife undergone a course in polished diamonds and held a diploma in jewellery technique and her travelling was for purpose of his business - Whether since wife of assessee was qualified and had visited different places in lieu of business undertaken by sole proprietary concern of assessee, there was no merit in orders of authorities below in disallowing said expenditure - Held, yes [Para 5] [In favour of assessee]
II. Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of [Car expenses] - Assessment year 2006-07 - Assessee, carrying on business as sole proprietor, claimed deduction on account of car expenses - Assessing Officer having found that such car belonged to other firm in which assessee was a managing partner and there was no evidence of use of such car for business of assessee, disallowed expenses - Whether since assessee failed to produce any evidence by way of any logbook or otherwise to establish its case of having used said car belonging to other firm for purposes of his sole proprietary business, disallowance was justified - Held, yes [Para 7] [In favour of revenue]
Sudhir Sehgal for the Appellant. N.K. Saini for the Respondent.
ORDER
Ms. Sushma Chowla, Judicial Member -The appeal filed by the assessee is against the order of the Commissioner of Income-tax (Appeals)-II, Ludhiana, dated May 24, 2012 relating to the assessment year 2006-07 against the order passed under section 143(3) of the Income-tax Act, 1961 (in short "the Act").
2. The assessee has raised ground Nos. 1 to 5 against disallowance of expenditure. The effective ground is ground No. 1 which reads as under :
| "1. | That the worthy Commissioner of Income-tax (Appeals)-II, Ludhiana has erred in confirming the addition of Rs. 1,10,739 on account of domestic travelling and Rs. 1,16,536 on account of foreign travelling (totalling to Rs. 2,27,275) in respect of expenses incurred on travelling expenses by the wife of the assessee." |
3. The brief facts of the case are that the assessee was a partner in several partnership concerns and was also carrying on business of jewellery under his proprietary concern, M/s. Windsor Diamonds, and in addition had declared income from property and other sources. During the year under consideration in the profit and loss account of the proprietary concern M/s. Windsor Diamonds, the assessee had debited the expenditure of travelling (foreign and Indian) totalling Rs. 3,97,640. The Assessing Officer on perusal of the details of travelling noted that certain expenditure was incurred by the assessee on his wife Smt. Monika Gupta. The date-wise details of both the Indian travelling and foreign travelling are incorporated under para 2.1 at page 2 of the assessment order. The total inland travelling during the year incurred on the wife was Rs. 1,10,739 and on foreign travelling was Rs. 1,16,536, including cost of foreign exchange. The Assessing Officer disallowed the total of Rs. 2,27,275 for want of capacity/evidence of the wife looking after business affairs of the assessee's proprietary concern. The Commissioner of Income-tax (Appeals) upheld the order of the Assessing Officer. The assessee is in appeal against the aforesaid order.
4. Shri Sudhir Sehgal appeared on behalf of the assessee and Shri N.K. Saini put in appearance on behalf of the Revenue and put forward their contentions.
5. We have heard the rival contentions and perused the record. The assessee is carrying on the business as sole proprietor under the name and style of M/s. Windsor Diamonds. During the year under consideration the assessee had claimed total travelling expenses on account of inland travelling at Rs. 3,11,341 and foreign travelling at Rs. 1,16,356. The perusal of the details of travelling reflected that the wife of the assessee Ms. Monika Gupta had undertaken both the inland travelling and foreign travelling during the year under consideration. The assessee had filed on record the details of inland travelling expenses at page 73 of the paper book totalling Rs. 3,11,341 in which the perusal of the said details reflect that the assessee had booked the expenditure of his employees Shri Ajay Bhardwaj visiting different cities on different dates. On some of the said trips, the wife of the assessee also undertook the said trips. The explanation of the assessee in this regard was that as the items of diamond being precious and costly his wife accompanied one of his employees. Further the assessee had furnished on record a certificate of the diamonds institution under which Ms. Monika Gupta had undergone the course in polished diamonds and holds a diploma in jewellery technique. Further details of foreign travelling expenses undertook by Ms. Monika Gupta including the foreign exchange purchased by her are enlisted at page 74 of the paper book. In the totality of the facts and circumstances of the case, where the wife of the assessee is qualified and had visited different places in lieu of the business undertaken by the sole proprietary concern of the husband, we find no merit in the orders of the authorities below in disallowing the said expenditure. The expenditure having been incurred for the purpose of business of the assessee is to be allowed as a deduction. Accordingly, we direct the Assessing Officer to delete the addition of Rs. 2,27,275 made under the head travelling expenses. Ground Nos. 1 to 5 raised by the assessee are thus allowed.
6. Ground Nos. 6 and 7 raised by the assessee are against the disallowance of car expenses amounting to Rs. 58,696. The Assessing Officer noted that the car in respect of which the expenditure was debited to the sole proprietary concern of the assessee belongs to the firm M/s. Windsor Exports in which he was a managing partner. The assessee failed to produce any evidence in respect of use of the said car for business purpose of proprietary concern. Accordingly, the said disallowance of Rs. 58,696 was made by the Assessing Officer which was confirmed by the Commissioner of Income-tax (Appeals).
7. Before us the assessee has failed to produce any evidence by way of any logbook or otherwise to establish its case of having used the said car belonging to the firm for the purposes of his sole proprietary business. In the absence of the same and in the totality of the facts and circumstances of the case, we uphold the disallowance of Rs. 58,696. Grounds Nos. 6 and 7 are thus dismissed.
8. In the result, the appeal of the assessee is partly allowed.
USPRegards
Prarthana Jalan
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