TaxTMI 
TaxTMI 
2010 (5) TMI 547
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....ial to the interest of the Revenue. He, therefore, issued notice u/s. 263 to the assessee pointing out such error and calling for its explanation in the matter. The relevant portion of the said notice as reproduced in the impugned order of the Ld. CIT(A) is extracted below: "The income of the assessee company is from investments in shares and house property. It is seen from the P&L Account that the assessee claimed deduction of Rs. 20,21,509/- as deduction in value of investments. A loss, which is neither suffered nor incurred in the accounting year, is not deductible against the actual receipt. Only exception to this, is that stock-in-trade may be valued at cost or market value whichever is lower, as stated in the case of Edwards & Sons Ltd. Vs. IRC (1924) 12 TC 773. The deduction of Rs. 20,21,509/- allowed as reduction in value of investments is irregular. (ii) It is further seen that an amount of Rs. 315290/- is shown as expenditure in foreign currency on account of traveling expenses (Notes forming part of Accounts II (10). As there are no business activities in foreign countries as amount of Rs. 315290/- is not allowable as deduction. In view of the above, the assessment or....
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....s source of its income, the need to undertake such foreign travel for the purpose of its business did not get highlighted. He noted that there was no supporting material produced by the assessee to establish such business purpose. He held that it was, therefore, incumbent upon the A.O. to have examined this issue taking into consideration the facts of the case. Accordingly, the said issue was restored by him to the file of the A.O. for examination as per law after ascertaining the relevant facts. As regards the amount of Rs. 20,21,509/- debited by the assessee company in its P&L account on account of reduction in value of investment, the reply of the assessee of having added back the said amount in the computation of total income was apparently found to be factually correct by the ld. CIT. However, keeping in view that the issue relating the foreign travel expenses has been restored by him to the file of A.O. for fresh examination, he directed the A.O. to look into the factual aspects of this issue also. Aggrieved by the order of the ld. CIT passed u/s 263, the assessee has preferred this appeal before the Tribunal. 5. The learned counsel for the assessee at the outset has invited....
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....ign countries, the claim of the assessee for foreign travel expenses cannot be disallowed and therefore it cannot be said that the order of the A.O. in allowing the said claim was erroneous merely because there were no business activities of the assessee company in foreign countries. The ld. Counsel for the assessee therefore contended that there were no errors in the order of the A.O. passed u/s. 143(3) as alleged by the ld. CIT calling for revision u/s 263. In support of this contention, he relied, inter alia, on the decision of Hon'ble Bombay High Court in the case of CIT vs, Gabriel (India) Ltd. 203 ITR 108. 6. The Id. D.R., on the other hand, submitted that there were no business activities of the assessee company in foreign countries and keeping in view this position clearly evident from record, the A.O. should have probed the matter relating to assessee's claim for deduction on account of foreign travel expenses. He submitted that no such enquiry, however, was done by the A.O. as is clearly apparent from the assessment order passed by the A.O. He contended that it is thus not a case where a possible view was taken by the A.O. According to him, no such view could have possib....
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....s u/s. 263 in the notice issued to the assessee and sustainability of the said order proceedings has to be decided on the basis of such reasons alone. 8. We have considered the rival submissions and also perused the relevant material on record. It is observed that the assessment order dated 29.9.06 passed by the A.O. u/s 143(3) has been revised by the ld. CIT by his impugned order holding the same to be erroneous and prejudicial to the interest of the Revenue on the following grounds as given in the notice issued to the assessee u/s 263: "I have considered the aforesaid submissions. The note as reproduced above is not supported by any material. From the assessment records it is seen that the assessee is an investment company and during the relevant year it had income mainly from house property, income from business and capital gains. The assessee had also received dividend from Indian companies which was claimed exempt. From the details given in P&L A/c. it is found that the major sources of income shown are rent, hotel operating licence fees, interest and dividend. From the details filed before the A.O. and the facts mentioned in the assessment order, the need to undertake a for....
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.... fact that there was no business activity of the assessee company in foreign countries, the A.O. should have examined the claim of the assessee for foreign travel expenses carefully and having failed to do so, the assessment order was erroneous which the ld. CIT was fully justified in revising by an order u/s 263. A perusal of the notice issued u/s 263, the relevant portion of which is already extracted hereinabove, however, shows that it was not an allegation of the ld. CIT that the failure of the A.O. in making the enquiry in the matter of assessee's claim for deduction on account of foreign travel expenses made the assessment erroneous. The assessment order was held to be erroneous by him and was sought to be revised on this issue on the ground that the foreign travel expenditure was allowed wrongly despite there being no business activities by the assessee company in foreign countries. As already observed by us, his basis itself given by the ld. CIT to dispute or doubt the allowability of foreign travel expenditure was not correct and merely because there was no business activity of the assessee company in foreign countries, it cannot be said that the foreign travel expenses we....