ITAT allows Expenditure by Company for Travelling Expenses incurred on behalf of its Associated Companies [Read Order]

While dismissing the appeal of revenue, the New Delhi bench of Income Tax Appellate Tribunal in its recent order allowed a claim of expenditure by a Company for travelling expenses incurred on behalf of its Associated Companies.

The division bench, while allowing the contentions of the assesse-Company, said that the claim is allowable under the Income Tax Act since the same was incurred for the purpose of its business.

During the assessment proceedings AO disallowed an amount of Rs.23, 42,772/- out of travelling expenses claimed by the assessee company to the tune of Rs.89, 15,775/- on the ground that two major travelling expenses of Rs.10, 05,936/- and Rs.13, 36,836/- made to Taj Air Limited on 12.04.2010 and 10.11.2010 on the copy of vouchers bearing description ‘private jet falcon for Ram/Ajit’ has been furnished without any supporting documents.

The assessee carried the matter by way of filing appeal before the ld. CIT (A) who has deleted the addition by allowing the appeal with keeping in view the fact that since the assessee company is providing services to the investing companies, interest in investment in various companies working in India and the assessee company has been arranging meetings of the investing companies that the prospective clientage of investing companies for which assessee company was charging 17% and 15% over and above the total expenditure incurred by it in respect of providing their services.

Aggrieved with the decision the revenue has challenged the impugned order of CIT (A) before the tribunal.

The tribunal restored the order of CIT (A) and observed that when the assessee company is operating under cost plus markup arrangement charging 15% and 17% over and above such expenses the amount has been incurred on behalf of the investor companies, the same are certainly business expenses.

Finally, the bench including Judicial Member Kuldip Singh and President  G.D Aggarwal ordered that when the  travelling expenses have been incurred by the assessee company on behalf of the associated company with 17% and 15% markup over and above the total expenditure, for which vouchers as well as email communications have been produced, the ld. CIT(A) has rightly and validly deleted the addition of Rs.23,42,772/-.