TaxTMI 
TaxTMI 
2019 (11) TMI 93
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....aw, the Ld., Commissioner erred in not appreciating the fact that the AO has made an addition of Rs. 3,21,062/- incurred on foreign travel of a Director of the Appellant on the ground that there may be an element of personal and pleasure trip cannot be ruled out without bringing any other material fact on record. 4. That on the facts and circumstances of the case, even if there was some personal element in the expenditure, disallowance of the whole sum cannot be made. 5. That on the facts and circumstances of the case and in law, the Ld., Commissioner erred in not appreciating the fact that the Appellant had incurred expenditure on the mediacl treatment of its Director Mr. G.L. Didwania only on the grounds of commercial expediency, so that it could continue to make use of his knowledge. 6. That on the facts and circumstances of the case and in law, the Ld., Commissioner in not appreciating the fact that Mr. G.L. Didwania was the founder of the appellant company and possessed immense know how and that it was in the Appellant's interest to continue to utilise the knowledge and that it was commercially expcuiv*^ Appellant to incur this expenditure. ....
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....essors. For the year under consideration, the assessee filed return of income on 27/09/2012 declaring total income of Rs. 1,74,44,220/-. The case of the assessee was selected for scrutiny and statutory notices under the Income-tax Act, 1961 (in short 'the Act') were issued and complied with. In the scrutiny assessment completed on 02/03/2015 under section 143(3) of the Act, the Assessing Officer made disallowance of Rs. 3,21,065/- on account of expenses incurred on foreign travel and disallowance of medical expenses of Rs. 18,13,574/- on treatment of one of the directors of the assessee company. On further appeal, the Ld. CIT(A) upheld the disallowances. Aggrieved, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 4. In the grounds raised, mainly two disallowances made by the Assessing Officer, have been challenged, i.e., firstly, the disallowance out of foreign travel expenses and secondly, disallowance out of medical expenses incurred on treatment of one of the Director. 4.1 The facts qua the first issue of disallowance of foreign travel expenses are that the Assessing Officer (AO) out of the travelling of directors amounting to Rs. 37,2....
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....ing to Rs. 113,525/- (for $2,500) shows that the sale of foreign currency has been made under scheme of "PRIWTSIT", which is indicative of the fact that the purpose was private in nature and in absence of any details furnished by the appellant, the requirements of section 37 (that to be allowed the expenditure has to be wholly and exclusively for business and not being of capital nature and not involving personal elements) are not met. No case of business expediency has also been made out, except a general statement made in this behalf. 4.2 Before us also, the Ld. counsel of the assessee failed to furnish any evidence to substantiate that the expenses were incurred wholly and exclusively for the purpose of the business. The only contention which has been made before us is that entire expenditure of Rs. 3,21,065/- should not have been disallowed and a part of expenses should only be disallowed. 4.3 The learned DR, on the other hand, relied on the order of the lower authorities and submitted that the assessee has failed to substantiate the business purpose of travel and for the vouchers of foreign exchange purchased by the assessee, it was evident that the foreign travel in ....
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....d expertise and management skill of Sh. G.L. Didwania. The assessee submitted that application of section 17(2) of the Act was not relevant and no tax was required to be deducted on the same under section 17(2) of the Act as the expenditure has been incurred on the ground of commercial expediency. The copy of the resolution has been produced by the learned CIT(A) in the impugned order. The learned CIT(A) distinguished the case relied upon by the assessee and held that the claims failed to pass the muster and dismissed as not a permissible deduction. The Ld. CIT(A), held that medical reimbursement paid falls in the nature of the perquisite in terms of section 17(2) of the Act and relying of the decision of the Gururaj Mahuli (supra) sustained the disallowance observing as under: "4.3.8 As it stands on going through the CBDT circulars and instructions and as held in CIT vs Raghu Sinha 2003] 130 TAXMAN 254 (RAJ.) whether the medical reimbursement is perquisite or not within the meaning of section 17(2) of the Act, 1961, we have to see the provisions. The relevant sub-section (2) of section 17 of the Act, 1961 reads as under:- 'For the purposes of section....
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....urse of the, employment and due to the employment, it is the primary duty on every account for the employer to strive hard and restore the employee of his health 7. Therefore, amount received by the employee for his treatment due to an accident in the place of work during the course of employment will not amount to perquisites and hence cannot be taxed. 4.3.11 Thus the amount here could be treated as a perquisite. 4.3.12 In fact, the medical reimbursement is to be treated to be part of perquisites, even as per the resolution. The resolution increased the perquisite up to Rs. 25 lakh in addition to other benefits along with salary of Rs. 36,000/- per month. But it was not so treated by the company in the salary of the director. Neither this was included in the salary nor any TDS effected thereon." 5.2 Before us, the Ld. counsel of the assessee reiterated the submission made before the learned CIT(A) and argued that expenses were incurred as commercial expediency and, thus, should have been allowed under section 37(1) of the Act. 5.3 The learned DR, on the other hand, relied on the order of the lower authorities. 5.4 We have heard the riva....