AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 81
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....d from time to tome and produced the books of accounts and other relevant details. The assessee company is engaged in the business of manufacture of PEPSI brand soft drinks. During the course of assessment proceedings, the A.O. noticed that the assessee has incurred Directors' foreign travel expenditure of Rs. 29,44,193/-. Therefore, requested to furnish the details of foreign travel expenditure along with purpose for which the Directors have incurred the travel expenditure. In response to the show cause notice, the assessee submitted that the Directors of the company have visited Dubai, Australia, Singapore and London to meet the executives of PEPSI Company to discuss the marketing and production plan of the company for the coming years. It is further submitted that the Directors have attended the business meeting and also to meet the NRIs for mobilizing funds for expansion of the company's operations. The foreign travel expenditure has been incurred exclusively for the purpose of business and there is no element of personal nature in the travel expenditure. It is also submitted that the company has paid the fringe benefits tax on said travel expenses. Therefore, requested to allo....
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....izing the funds for the purpose of expansion of business. It was further argued that the expenditure was purely incurred for the purpose of business of the assessee. There was no element of personal nature in the said expenditure. Therefore, the A.O. was not correct in disallowing the foreign travel expenditure. As regards the disallowance of finance charges u/s 40(a)(ia) of the Act, it was submitted that the finance charges paid to finance companies is in respect of hire purchase of vehicles, therefore, no TDS is applicable in respect of hire charges. Consequently, disallowance u/s 40(a)(ia) of the Act cannot be made. The CIT(A) after considering the explanations of the assessee held that though assessee made various claims in respect of foreign travel expenditure, failed to file any evidence to justify the claims. The assessee has not explained why it could not produce any evidence in support of the claim. The claim of the assessee that it has paid the fringe benefit tax on such expenditure cannot substitute the evidence to be produced to prove the claim that the expenditure was incurred only and exclusively for the purpose of business. In the absence of any evidence, upheld the ....
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....dence in the form of invitations or letters from the PEPSICO holding to invite the Directors for the meeting. In the absence of any evidences, the A.O. was justified in disallowing the foreign travel expenditure. 7. We have heard both the parties and perused the materials available on record. The A.O. disallowed the Directors foreign travel expenditure for the reason that the assessee has failed to produce any evidences to show that the expenditure is incurred exclusively for the purpose of business of the assessee. It is the contention of the assessee that the foreign travel expenditure is incurred exclusively for the purpose of business of the assessee. The assessee further contended that the Directors of the company have visited the foreign countries to meet the executives of the PEPSICO holdings to discuss about the marketing and expansion plan of the company in India. In support of his contention, filed few letters addressed by the assessee to the executives of the PEPSICO holdings situated in foreign countries and submitted that the Directors have met the executives in respective countries and discussed the annual operating plan for the current year 2007 and also about the....
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....tters or minutes or proceedings of the meeting to substantiate the claim that the Directors have met the executives of PEPSICO holdings in abroad. The assessee further contended that the Directors have met the NRIs to mobilize the funds for the expansion of the business of the company. Though, assessee claims to have incurred the expenditure towards meeting the NRIs for mobilizing the funds, failed to furnish any evidence in the form of agreements between the foreign lenders for arrangement of borrowings for the purpose of the company. We further observed that two of the Directors Mr. Ruchirans Jaipuria and Mrs. Payal Jaipuria have visited the foreign countries to meet the PEPSICO officials for the business expansion of the company. The assessee filed a paper book containing various details including financial statements of the assessee for the relevant financial years. On perusal of the financial statements of the assessee for the relevant financial year, we find that in the Director report attached to financial statements, the assessee has reported the name of Mr. Ruchirans Jaipuria in the key managerial personal. The other Director Smt. Payal Jaipuria's name did not find in the ....
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.... the assessee has failed to deduct TDS u/s 194A of the Act, therefore, the finance charges cannot be allowed as deduction in computing the profits and gains of business or profession. It is the contention of the assessee that the finance charges paid to finance companies represents the hire purchase charges paid for acquiring the vehicles, therefore, no TDS is deductible u/s 194A of the Act, consequently disallowance cannot be made by invoking the provisions of section 40(a)(ia) of the Act. We do not find any merits in the arguments of the assessee for the reason that any interest paid either on loan or hire purchase agreement is in the nature of interest which attracts TDS u/s 194A of the Act. The assessee failed to deduct the TDS u/s 194A of the Act. Therefore, the A.O. was right in holding that the finance charges are liable for deduction of TDS u/s 194A of the Act. 11. Coming to the alternative plea of the assessee. The assessee submitted that the issue involved in this appeal is covered by the decision of ITAT, Visakhapatnam special bench in the case of M/s. Merilyn Shipping and Transporters Vs. ACIT (supra) and argued that no disallowance can be made u/s 40(a)(ia) of the A....