Tribunal directs deletion of trading additions, allows foreign travel expense, partially allows deemed rental income, and remands for further determination.

The Tribunal directed the deletion of trading additions made by the Assessing Officer, disallowed foreign traveling expenditure was allowed, and the addition of deemed rental income was partially allowed, with the matter sent back for further determination.

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Issues:
1. Trading additions made by Assessing Officer
2. Disallowance of foreign travelling expenditure
3. Addition of deemed rental income

Trading Additions:
The appeal was filed against the CIT(A)'s order confirming trading additions made by the Assessing Officer. The Assessing Officer had rejected the books of accounts and made a trading addition of &8377; 6,58,398. The CIT(A) upheld an addition of &8377; 1,20,270 and deleted &8377; 5,38,128. The appellant contended that the GP ratio decline was due to increased sales, which is a normal business phenomenon. The comparison of Gross Profit and Net Profit for the last three assessment years was presented. The Tribunal found no defects in the books of accounts and concluded that the possible revenue leakage was hypothetical. Consequently, the entire trading addition by the Assessing Officer was directed to be deleted.

Disallowance of Foreign Travelling Expenditure:
The next issue pertained to the disallowance of foreign travelling expenditure amounting to &8377; 4,87,881. The Assessing Officer disallowed this amount, but upon review, it was revealed that the actual foreign travelling expense was &8377; 115,000, with the rest being payments to staff for inland travelling mistakenly recorded as foreign expenditure. As the travelling was for business purposes related to export sales, the Tribunal found no merit in disallowing the foreign travelling expenditure. The Assessing Officer was directed to delete the disallowance.

Addition of Deemed Rental Income:
The final grievance was regarding the confirmation of an addition of &8377; 75,000 as deemed rental income. The Assessing Officer determined this based on the purchase of a house at Kamla Enclave, Bhilwara, where no rental income was declared. However, it was found that the property was used for residential purposes by the assessee and not for rental income. The Tribunal directed the matter to be sent back to the Assessing Officer to determine the municipal ratable value of the house for computing income under Section 22 of the Income Tax Act. Consequently, the appeal of the assessee was allowed in part.

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