Commissioner Of Income Tax, Faridabad v. M/S Porrits & Spencers (Asia) Limited, Faridabad

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH. ITA No.220 of 2007 (O&M)Date of decision: 30.7.2009 Commissioner of Income Tax, Faridabad -----Appellant Vs. M/s Porrits & Spencers (Asia) Limited, Faridabad. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:- Mr. Rajesh Katoch, Standing Counsel for therevenue. Mr. Santosh Aggarwal and Mr. A.C.Jain, Advocatesfor the respondent-assessee. Adarsh Kumar Goel,J. 1.This appeal has been preferred by the revenue under section 260-A of the Income Tax Act, 1961 (in short, ‘theAct’) against the order dated 31.8.2006 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘A’ New Delhi in ITANo.3432/DEL/01, for the assessment year 1996-97, proposingto raise following substantial questions of law:- “i) On the facts and circumstances of the case,whether the Hon’ble ITAT is right in dismissingthe appeal of Revenue thereby deleting thedisallowance made by the Assessing Officerregarding foreign tour expenses of Mrs. Tapedarw/o Shri K.C.Tapedar (MD), for which noevidence was furnished by the assessee to provethe nexus with the business activities? ii) Without prejudice to ground No.(i) above,whether the Hon’ble ITAT was right in deletingthe entire disallowance, whereby the Hon’bleITAT has itself stated in the present order that theexpenditure pertaining to travelling of wife was tobe allowed to the extent of 50%?” iii) Whether on the facts and circumstances of thecase, the Hon’ble ITAT was right in confirmingthe order of the learned CIT(A), in which thedisallowance of Rs.5,91,952/- made by theAssessing Officer on account of commission paidto Managing Director and the Executives wasdeleted? iv) Whether on the facts and circumstances of thecase, the Hon’ble ITAT was right in confirmingthe order of the learned CIT(A) in which the disallowance of Rs.4,80,191/- made by theAssessing Officer on account of personal use ofCar, was deleted?” 2.The Assessing Officer disallowed foreign tourexpenses of wife of the Managing Director. The CIT(A)allowed the same but the Tribunal allowed the same to theextent of 50%. The Assessing Officer also disallowed thecommission paid to the Managing Director and otherexecutives. However, the CIT(A) and the Tribunal allowed thesame. The Assessing Officer disallowed amount attributable topersonal use of the car but the CIT(A) held that expenditurewas not attributable to personal use.3.Even though, notice has not been issued, Shri Santosh Aggarwal, representing the assessee has put inappearance and argued the matter. He points out that QuestionNos.(iii) and (iv) are covered in favour of the assessee byorders of this Court dated 5.3.2009 in ITA No.38 of 2008(Commissioner of Income Tax, Faridabad v. M/s Porrits & Spencer (Asia) Limited, Faridabad) and ITA No.540 of2006 (Commissioner of Income tax, Faridabad v. M/sPorrits & Spencer (Asia) Limited, Faridabad), in the case of the assessee, while Question No.(i) is a question of fact. Ithas been found that wife of the Managing Director hadaccompanied her husband partly for business purpose and forpartly for personal purposes and in view of that finding,expenses to the extent of 50% have been allowed, which isconsistent with the view taken by the Kerala High Court inCIT v. Appollo Tyres,(1999) 237 ITR 706 and Calcutta HighCourt in CIT v. Indian Products Limited, (1994) 207 ITR647. However, as regards Question No.(ii), learned counsel forthe assessee submits that there is an error in the order of theTribunal in as much as if 50% expenditure of the wife wasallowed, the order of the CIT(A) was required to be partlymodified. The revenue has not sought any question onperversity of the finding of the Tribunal. This submissioncould not be rebutted on behalf of the revenue. 5.We are of the view that Question No.(i), (iii) and(iv) are questions of fact and are not substantial questions oflaw. The findings of the Tribunal on those issues are not liableto be interfered with. However, Question No.(ii) relates toperversity, there being conflict in the finding and operativepart of the order of the Tribunal. 6.Accordingly, this appeal is partly allowed withregard to question No.(ii) and while the finding of the Tribunalthat 50% of expenses of the wife are allowable, will stand, theorder of the Tribunal to the extent it holds that the order of theCIT (A) was confirmed on that aspect, is set aside. (Adarsh Kumar Goel)Judge July 30, 2009‘gs’ (Daya Chaudhary)Judge