Commissioner Of Income Tax, Ludhiana v. M/S Bhogal Sons(Regd.) Industrial Area 'B' Ludhiana

ITA NO. 168 of 1999 1 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA NO. 168 of 1999 (O&M) Date of order: 17.12.2013 Commissioner of Income Tax, Ludhiana ..... Appellant Versus M/s Bhogal Sons(Regd.) Industrial Area 'B' Ludhiana -- .... Respondents CORAM:HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR.BHARAT BHUSHAN PARSOON Present: Mr. Rajesh Katoch, Advocate for the appellant. Ms. Supriya Garg, Advocate for the respondent. *** RAJIVE BHALLA, J(ORAL). The revenue is, before us, challenging correctness of order dated26.05.1999 passed by the Income-tax Appellate Tribunal, Chandigarh Bench by raising the following questions of law:- “1- Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in concluding that the travellingexpenses of Rs.1,92,488/- incurred by Shri S.S. Bhogal were correctlyclaimed as a deduction in the case of M/s Bhogal Sons (Regd.)?. 2- Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in deleting the disallowance ofRs.1,92,488/- made on account of foreign travelling expenses of Shri S.S.Bhogal when the assessee firm is admittedly not engaged in export ofgoods?” Counsel for the appellant submits that Mr. S.S. Bhogal, is a partner in individual capacity in M/s Bhogal Sons (Regd.) and a member of H.U.F. that constitutes M/s Bhogal Exports. M/s Bhogal Sons (Regd.) is a manufacturingconcern which does not export any goods whereas M/s Bhogal Exports is theexporter house. The expenses incurred for “Export Sales Promotion” would,therefore, have to be computed against M/s Bhogal Exports. It is further arguedthat reason assigned by the Income-tax Appellate Tribunal that it does not fall tothe jurisdiction of Income Tax Authorities to regulate the business of an assesseeis irrelevant. The expense for export sales promotion must be excluded from theexpenses of M/s Bhogal Sons (Regd.) and included in the expense of M/sBhogal Exports. Counsel for the assessee, however, submits that only if the exportbusiness of M/s Bhogal Export increases, would M/s Bhogal Sons (Regd.) beable to increase its business. A foreign trip undertaken by Mr. S.S. Bhogal forexport promotion would necessarily enure to the benefit of M/s Bhogal Sons(Regd.). The opinion recorded by the Income-tax Appellate Tribunal, is legaland valid and not liable to be interfered on any question of law, much less, thesubstantial questions of law framed by the revenue. It is further argued that theIncome-tax Appellate Tribunal has rightly recorded a finding of fact that there isno violation of any statutory provision. We have heard counsel for the parties, perused the impugned orderand have no hesitation in holding that no question, much less substantial questionof law arises for adjudication. Admittedly, there are two concerns i.e. M/sBhogal Sons (Regd.) and M/s Bhogal Exports. Mr. S.S. Bhogal is a partner inM/s Bhogal Sons (Regd.) and member of the HUF that runs M/s BhogalExports. It is not denied that Mr. S.S. Bhogal undertook an export sales We have heard counsel for the parties, perused the impugned orderand have no hesitation in holding that no question, much less substantial questionof law arises for adjudication. Admittedly, there are two concerns i.e. M/sBhogal Sons (Regd.) and M/s Bhogal Exports. Mr. S.S. Bhogal is a partner inM/s Bhogal Sons (Regd.) and member of the HUF that runs M/s BhogalExports. It is not denied that Mr. S.S. Bhogal undertook an export sales promotion trip. The Assessing Officer disallowed the expense so incurred toM/s Bhogal Sons (Regd.) on the premise that it should have been debited to theaccount of M/s Bhogal Export. The Income-tax Appellate Tribunal has reversedthese findings by holding that the revenue cannot determine the mode andmanner of conduct of business particularly where the expense claimed by anassessee does not violate any provision of the Income Tax Act. A perusal of theorder passed by the Assessing Officer as well as CIT(A) reveals that theseofficers have not referred to any provision of law that prohibits the assesseefrom claiming export expense by debiting it to the income of M/s Bhogal Sons(Regd.). Even otherwise, only if export orders were available, would M/sBhogal Sons (Regd.) be able to increase its production and consequently itsincome. The Income-tax Appellate Tribunal has, therefore, rightly held thatexpenses for foreign trip admittedly for sales promotion of exports has beendebited to the account of M/s Bhogal Sons (Regd.). In view of the findings recorded above, the appeal is dismissed. ( Rajive Bhalla )Judge 17.12.2013dinesh ( Dr. Bharat Bhushan Parsoon )Judge