Case Law Details
Havells India Ltd. Vs DCIT (ITAT Delhi)
ITAT Delhi held that disallowance of foreign travel expenditure unjustifiable as the same are incurred in connection with the business of the assessee.
Facts- During the course of assessment proceedings, AO noticed that assessee had made provision in respect of “Shahenshah Scheme” and the assessee was asked to furnish the details of the same. Assessee submitted that it had made provision of Rs.5,67,26,847/- in respect of “Shahenshah Scheme” towards sales incentive payable to dealers and distributors and had paid Rs.2,61,14,170/- in respect to the said scheme and Rs.58,43,713/- was written back and credited to Excess Provisions of bad debts/sales incentive written back. The assessee submitted that the provision made for the scheme is not a contingent liability but rather a contractual liability which is legally enforceable by the dealers and distributors. AO concluded that the provision made by the assessee was not based on any scientific method but was in the nature of contingent liability. CIT(A) upheld the action of the AO. Being aggrieved, the present appeal is filed.
Further, The assessee has claimed Rs.40,68,334/- on account of travelling expenses, vehicle maintenance expenses. The amount includes foreign travel expenses of Rs.15,90,860/-, inland travelling expenses of Rs.10,03,380/- and vehicle maintenance & conveyance expenses of Rs.14,74,086/-. The same was disallowed.
Conclusion- The Co-ordinate Bench of the Tribunal in earlier years has decided the issue in favor of the assessee by holding that the provision made by the assessee in respect of the “Shahenshah Scheme” to be on a scientific basis. Considering the totality of the aforesaid facts and following the order of the Co-ordinate bench in the assessee’s own case and for similar reasons, we hold that the Revenue was not justified in making the addition. We therefore set aside the action of AO. Thus the ground of the assessee is allowed.
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