PCIT VS Azure Retreat Pvt Ltd (Delhi High Court)
Delhi High Court held that disallowance of travel expenditure unjustified as the expenses incurred had a nexus with the business interest of the respondent/assessee and AO has not brought anything on record to prove that the expenditure were of personal nature.
Facts- AO while framing the assessment order u/s. 143(3) r.w.s. 153 and 153B of the Income Tax Act has made addition/ disallowance of 16,67,89,253/- u/s. 68 of the Act and travelling expense claimed by the respondent/assessee to the extent of Rs.8,30,748/- was disallowed. This amount constituted 70% of the travelling expenses claimed by the respondent/assessee.
CIT(A) allowed the appeal. ITAT dismissed the appeal filed by revenue. Being aggrieved, revenue preferred the present appeal.
Conclusion- With regard to addition u/s. 68 it is held that the onus, if at all, at this stage, in our view, shifted to the appellant/revenue. The appellant/revenue has not alluded to any material that would even faintly disclose that this was a case of round-tripping. Therefore, the deletion ordered by the CIT(A) which was confirmed by the Tribunal, was, in our view, the correct call, in the facts and circumstances obtaining in the case.
With regard to disallowance of travel expenditure it is held that the CIT(A) and the Tribunal came to the correct conclusion that the expenses incurred had a nexus with the business interest of the respondent/assessee. Further, the appellant/revenue has not proposed any question of law which would suggest of the finding returned by the CIT(A) and/or the Tribunal is perverse.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. These are the applications moved on behalf of the appellant/revenue, seeking condonation of delay in filing and re-filing the appeal.
1.1 According to the appellant/revenue, there is a delay of five (5) days in filing, and three hundred and forty-seven (347) days in re-filing the appeal.
2. As noted above, the delay in filing is short. However, the delay in re-filing is substantial.
3. Mr Sachit Jolly, who appears on behalf of the respondent/assessee, has pointed out that the explanation given in the application for condonation of delay in re-filing is, prima facie,
3.1 It is contended that the reason trotted out for seeking condonation of delay in re-filing is that the appellant/revenue had to re-type certain documents. Mr Jolly points out that none of the documents that have been placed before the court are re-typed.
3.2 Furthermore, Mr Jolly says that contrary to what has been stated in the application, no administrative approval was required for seeking condonation of delay in re-filing the appeal.
4. Clearly, the reasons furnished do not align with the record. However, having regard to the fact that the delay is in re-filing, we are inclined to condone the delay, as we wish to deal with the appeal on merits.
5. Consequently, the delay in filing and re-filing the appeal is condoned.
6. The applications are, accordingly, disposed of.
ITA 503/2023
7. This is an appeal concerning Assessment Year (AY) 2012-13.
8. The record shows that the Assessing Officer (AO), while framing the assessment order dated 10.07.2015 under Section 143(3) read with Section 153 and 153B of the Income Tax Act, 1961 [in short, “the Act”] had made the following additions/disallowances:
(i) 16,67,89,253/- was added to the respondent/as essee’s income under Section 68 of the Act.
(ii) Travelling expense claimed by the respondent/assessee to the extent of Rs.8,30,748/- was disallowed. This amount constituted 70% of the travelling expenses claimed by the respondent/assessee.
9. The respondent/assessee, being aggrieved, preferred an appeal with the Commissioner of Income Tax (Appeals) [in short, “CIT(A)”]. The CIT(A), via order dated 23.12.2016, allowed the appeal and deleted the additions made by the AO.
9.1 The appeal preferred by the appellant/revenue against the CIT(A) decision before the Income Tax Appellate Tribunal [in short , “Tribunal”] failed. It is in this background that the appellant/revenue has preferred the instant appeal before us under Section 260A of the Act, against the order dated 23.02 .2022, passed by the Tribunal.
10. The record shows that insofar as the first addition is concerned, it constituted an investment made by a company going by the name Blue Bay Hospitality Pvt Ltd [in short, “BBHL”]. BBHL is incorporated in Mauritius as per the laws prevalent in that country. BBHL was issued 15,04,978 equity shares, albeit at a premium. The face value of the shares was Rs. 10. The premium paid by BBHL was Rs. 110. It is also relevant to note that the record discloses that in and about the same time, investment in the respondent/assessee’s share capital had also been made by certain domestic investors, the details of which are given in a tabular form in paragraph 4 of the assessment order. For the sake of convenience, the same is extracted hereafter:
