Shridev Procon Limited Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that employees’ contribution to PF/ESI after statutory due dates but before due date of filing income tax return s not allowable as deduction. Accordingly, appeal of the assessee dismissed.
Facts- The assessee is engaged in the real estate business. The assessee filed its return of income for AY 2015-16 on 26.07.2016, declaring a total income of Rs.2,22,72,640/-. The return was processed under Section 143(1) on 01.10.2016 and the case was selected for scrutiny under CASS. The AO completed the scrutiny after making various additions.
CIT(A) partly allowed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that under Section 37(1) of the Act, only those expenses that are incurred “wholly and exclusively” for business purposes are allowable. The onus is on the assessee to substantiate the business nexus of such expenses. In the present case, no documentary evidence, such as agreements, business communications, or other substantiating material, was produced to establish that the foreign travel was undertaken solely for business purposes. The absence of such evidence weakens the claim of the assessee that the expenses were incurred wholly and exclusively for business purposes. Thus, we deem it reasonable to disallow 30% of the foreign travel expenses to account for the personal element, while allowing the balance 70% as business expenses. Accordingly, we partly allow this ground of appeal.
