Commissioner of Income Tax vs Porrits and Spencer (Asia) Ltd. (No. 2)

Adarsh Kumar Goel, J.—The Revenue has preferred this appeal u/s 260A of the income tax Act, 1961 (for short, "the Act") against the order of the income tax Appellate Tribunal, Delhi Bench "A", New Delhi dated September 8, 2004, passed in I.T.A No. 1076 (Delhi) of 2000 for the assessment year 1993-94, proposing to raise the following substantial questions of law: (i) Whether the hon''ble income tax Appellate Tribunal has erred in law in restricting the disallowance up to the extent of Rs. 77,632 only and confirming the deletion of Rs. 12,18,208 as ordered by the Commissioner of income tax (Appeals) on account of disallowance made by the Assessing Officer regarding foreign tour expenses for which no evidence was led with regard to the nexus thereof with business?

(ii) Whether the hon''ble income tax Appellate Tribunal has erred in law in confirming the order of the Commissioner of income tax (Appeals) in which the disallowance of Rs. 4,15,126 made by the Assessing Officer on account of personal use of car was deleted?

(iii) Whether the hon''ble income tax Appellate Tribunal has erred in law in confirming the order of the Commissioner of income tax (Appeals) in which the disallowance of Rs. 2,84,072 made by the Assessing Officer on account of commission paid to the managing director and the executives, was deleted?

(iv) Whether the hon''ble income tax Appellate Tribunal has erred in law in confirming the order of the Commissioner of income tax (Appeals) in which the disallowance of Rs. 70,000 made by the Assessing Officer out of legal and professional charges, was deleted?

During the course of assessment year in question, the Assessing Officer disallowed foreign tour expenses on the ground that there was no evidence of nexus of the said expenses with the business. The Assessing Officer further disallowed expenses attributable to personal use of car, commission paid to the managing director and executives and payments towards legal and professional charges. The Commissioner of income tax (Appeals) partly upheld the claim of the assessee, which view was affirmed by the Tribunal.

With regard to question (i), the Tribunal followed its orders for the earlier years in the case of the assessee. Learned counsel for the assessee submits that the order of the Tribunal for the earlier years has attained finality. The Tribunal affirmed the finding of the Commissioner of income tax (Appeals) holding that there was sufficient evidence showing that foreign tour was in connection with the business of the assessee. The tour reports were placed on record. The purpose of the visit was to meet the foreign suppliers of raw materials, discuss technical methods with colleagues working in sister concerns on product development and marketing strategy, business and export promotion. Copies of tickets were available and the expenditure incurred was factually proved.

With regard to question (ii), the Tribunal held that expenses on account of use of car were not personal but for business purposes. The Tribunal followed its orders for the earlier assessment years in the case of the assessee. Learned counsel for the assessee points out that I.T.A. No. 38 of 2008 (CIT v. Porrits and Spencer (Asia) Ltd.) filed by the Revenue raising the same question has been dismissed by this court on March 5, 2009.

With regard to question (iii), it was held that commission paid to the managing director and executives was permissible deduction as was held by the Tribunal for the earlier years in the case of the assessee. The said view was affirmed by this court in I.T.A. No. 540 of 2006 (CIT v. Porrits and Spencer (Asia) Ltd.) decided on March 5, 2009.

With regard to question (iv), it was held that the expenses were incurred for business purposes.

We have heard learned counsel for the assessee and perused the record.

It is clear from the above that questions (ii) and (iii) are covered by earlier orders of this court against the Revenue while questions (i) and (iv) relate to questions of fact. In view of finding recorded by the Commissioner of income tax (Appeals) as affirmed by the Tribunal, which cannot be held to be perverse, no substantial question of law arises. Accordingly, the appeal is dismissed.