High Court Of Punjab & Haryana
CIT vs. Porrits & Spencer (A) Ltd.
Section 37, 40A, 80HHC
Asst. Year 2001-02
Adarsh Kumar Goel & Mrs. Daya Chaudhary, JJ.
IT Appeal No. 44 of 2009
15th September 2009
Counsel Appeared :
Santosh Aggarwal, for the Assessee
JUDGMENT
By the court :
The Revenue has preferred this appeal under s. 260A of the IT Act, 1961 (for short, “the Act”) against order dt. 6th July, 2007 passed by the Tribunal, Delhi Bench ‘B’, New Delhi in ITA No. 5365/Del/2004 for the asst. yr. 2001-02, proposing to raise following substantial questions of law :
“(i) Whether the Hon’ble Tribunal has erred in law in confirming the order of the CIT(A) vide which the disallowance of Rs. 2,91,774 made by the AO on account of personal use of cars/telephones was deleted, though the Hon’ble Madras High Court has already confirmed such disallowance of expenses in the case of CIT vs. Chitram & Co. (P) Ltd. (1991) 91 CTR (Mad) 7 : (1991) 191 ITR 96 (Mad) ?
(ii) Whether the Hon’ble Tribunal has erred in law in confirming the order of the CIT(A) in which the disallowance of Rs. 77,552 made by the AO on account of foreign tour expenses incurred on purchase of gifts was deleted ?
(iii) Whether on the facts and circumstances of the case, the Hon’ble Tribunal is right in holding the amount of Rs. 15,22,822 as revenue expenditure, whereas these expenses were held by the AO as capital, the benefit of which was of enduring nature ?
(iv) Whether on the facts and circumstances of the case, the Hon’ble Tribunal is erred in deleting the disallowance made under s. 80HHC by reducing the business profits by 90 per cent of duty draw back, interest income, misc. income and provisions made in earlier years written back ?”
In the course of assessment for the assessment year in question, the AO disallowed claim on account of use of cars/telephones and foreign tour expenses. The AO also held that expenditure claimed by the assessee towards repairs should be treated as capital expenditure. The AO also applied Expln. (baa) to s. 80HHC of the Act to the income of the assessee, claimed by the assessee to be miscellaneous income, such as from sale of scrap and some refunds and also writing back of provisions in earlier years, which according to the assessee did not fall in the said clause.
The CIT(A) partly allowed the appeal of the assessee. The Tribunal upheld the claim of the assessee. As regards question No. (i), it was held that the expenses claimed were not for personal use but were for official use. View of the Tribunal for the earlier assessment year in the case of the assessee was followed. The finding of the Tribunal for the earlier assessment year was upheld by this Court vide order dt. 5th March, 2009 in ITA No. 38 of 2008 CIT vs. Porrits & Spencer (Asia) Ltd.
As regards to question No. (ii), the Tribunal held that the claim for expenses on foreign tours was admissible on the principle of business expediency. Learned counsel for the assessee submits that the Tribunal followed its order for the earlier assessment year in the case of the assessee against which ITA No. 539 of 2006 was filed by the Revenue, but the said finding was not challenged. The finding of the Tribunal is consistent with the view taken by this Court in CIT vs. Avery Cycle Industries Ltd. (2006) 206 CTR (P&H) 347 : (2008) 296 ITR 393 (P&H).
As regards question No.(iii), following its judgment for the earlier assessment year in the case of the assess, which was affirmed by this Court in CIT vs. Porrits & Spencer (A) Ltd. (2002) 176 CTR (P&H) 333 : (2002) 257 ITR 49 (P&H), the Tribunal held that the expenditure was on repairs and was, thus, revenue expenditure.
As regards to question No. (iv), the Tribunal, following its order in the case of the assessee for the earlier assessment year, held that the expenses were not covered by Expln. (baa). Learned counsel for the assessee points out that the Revenue preferred ITA No. 539 of 2006 but the said finding was not questioned. The tax effect involved on this ground is Rs. 16,628 only.
We have heard learned counsel for the assessee and perused the record. Since questions (i) and (iii) are covered by the earlier order of this Court mentioned above, question (ii) is covered by judgment of this Court in Avery Cycle Industries Ltd. (supra) and with respect to question (iv), the Tribunal has followed its decision in the case of the assessee for the earlier assessment year, which has attained finality, we are unable to hold that any substantial question of law arises.
The appeal is dismissed.
[Citation : 324 ITR 260]
