ITAT Delhi: Assessee wins appeal, disallowances deleted for travelling expenses & under section 14A. The ITAT Delhi allowed the assessee's appeal and dismissed the Revenue's appeal, directing the deletion of the disallowances of travelling expenses and ...
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ITAT Delhi: Assessee wins appeal, disallowances deleted for travelling expenses & under section 14A.
The ITAT Delhi allowed the assessee's appeal and dismissed the Revenue's appeal, directing the deletion of the disallowances of travelling expenses and under section 14A.
*Issue 1: Disallowance of Travelling Expenses* The assessee, a public limited company involved in trading and import-export activities, challenged the disallowance of Rs. 15,96,083 towards travelling expenses. The Assessing Officer (AO) disallowed a portion of the expenses, citing lack of details provided by the assessee. The CIT(A) upheld the disallowance stating that the details did not clarify the necessity of officials' presence for company-related work. However, the ITAT Delhi found that the assessee had furnished detailed information on foreign travel expenses, including employee names, designations, countries visited, expenses incurred, and the purpose of the visits. The tribunal held that being a PSU engaged in international trade, foreign travels were essential for business purposes. The ITAT ruled that without specific discrepancies pointed out, ad-hoc disallowance was unjustified. The tribunal directed the deletion of the disallowance.
*Issue 2: Disallowance u/s 14A r.w.r 8D* The AO disallowed Rs. 13,44,93,986 under section 14A read with Rule 8D, despite the assessee not earning any exempt income during the year. The CIT(A) decided in favor of the assessee, relying on a previous order. Both parties agreed that no exempt income was earned. The ITAT referred to established legal precedents stating that when no exempt income is earned, disallowance under section 14A cannot be imposed. Consequently, the ITAT upheld the deletion of the disallowance made by the AO.
In conclusion, the ITAT Delhi allowed the assessee's appeal and dismissed the Revenue's appeal, directing the deletion of the disallowances of travelling expenses and under section 14A.
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