Tribunal overturns disallowances on foreign travel expenses & bad debts, ruling in favor of assessee

The Tribunal allowed the appeal by the assessee, overturning the disallowances of both the foreign travelling expenses and the bad debts written off. The disallowance of foreign travelling expenses for a USA trip was reversed based on the director's administrative role justifying the expenses. Regarding the bad debts written off, the Tribunal held that the write-off itself was prima facie evidence, overturning the CIT(A)'s decision and allowing the appeal on this ground.

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Issues:
1. Disallowance of foreign travelling expenses for business purposes.
2. Disallowance of bad debts written off.

Issue 1: Disallowance of foreign travelling expenses for business purposes:
The appeal was regarding the disallowance of foreign travelling expenses incurred for a USA trip, involving a director who was not considered to have the necessary technical qualifications. The Assessing Officer disallowed the expenses related to the director's trip, stating that there was no evidence of business-related activities during the visit. The CIT(A) partially allowed the claim, leading to the appeal before the Tribunal. The assessee argued that the director in question had administrative experience and was involved in administrative matters, justifying the expenses. The Tribunal noted that the strict interpretation of "wholly and exclusively" for business purposes would render all business trips disallowed. It was observed that the director's administrative role supported the claim, and the appeal was allowed on this ground.

Issue 2: Disallowance of bad debts written off:
The second ground of objection involved the disallowance of bad debts written off by the Assessing Officer, amounting to a specific sum. The Assessing Officer required the assessee to substantiate the claim as bad debts, citing the provisions of section 36(1)(vii) of the Act. The CIT(A) upheld the disallowance, noting the lack of evidence provided by the assessee to establish the debts as non-recoverable. The Tribunal referred to a previous decision where it was established that strict proof of a debt becoming bad was unnecessary. The Tribunal emphasized that the write-off of a bad debt was prima facie evidence, and the decision of the CIT(A) was overturned, allowing the appeal on this ground.

In conclusion, the Tribunal allowed the appeal by the assessee, overturning the disallowances of both the foreign travelling expenses and the bad debts written off.

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