Due to suo motu disallowance, additional disallowance on travel and foreign travel expenses unjustified

Garware Finance Corporation Limited Vs DCIT (ITAT Mumbai)

ITAT Mumbai held that based on suo motu disallowance, additional disallowance on travel expenses and foreign travel expenses unjustified.

Facts- The assessee company was engaged in the business of providing consultancy and financial services, trading in shares etc. For the year under consideration, the assessee filed return of income u/s 139(1) of the Income-tax Act, 1961 declaring total income at Rs.1,00,18,070/-. A search action u/s 132 of the Act was carried out in the case of the assessee on 09.03.2021 along with other cases on “Nihal Garware” and consequently notice u/s 153A of the Act was issued. In the assessment completed u/s 153A of the Act dated 28.03.2022, AO made disallowance of travelling expense amounting to Rs.5,41,634/ – and business promotion expenses of amounting to Rs.1,81,075/ -.

On further appeal, the Ld. CIT(A) upheld the disallowance. Aggrieved, the assessee is in appeal before the Tribunal.

Conclusion- In our opinion looking to the business operations of the assessee company and suo motu disallowance made by the assessee, additional disallowance on foreign travel expenses by the Assessing Officer is not justified being a non-resident director ,it was necessary for him to travel to India for looking after affairs of the assessee company. The Assessing Officer cannot dictate to the assesseeas how to manage affairs of the assessee.

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